The statute of limitations is a legal concept that precludes a plaintiff from filing a lawsuit after a specified period of time has elapsed from the date on which his cause of action first accrued. Arizona, like other states, has established specific limitations periods for bringing civil actions in court for various legal causes of action, e.g., negligence, fraud or breach of contract.
Arizona Statute Of Limitations
Arizona has established two separate limitations periods for actions to recover debt owed. 12-548 of the Arizona Revised Statutes provides a six-year limitations period for actions where indebtedness is evidenced under the terms of a written contract. Arizona, like other jurisdictions, has a separate and distinct statutory limitations period for revolving credit card agreements, referred to in the statute as "open accounts." Arizona Revised Statutes 12-543 provides for a three-year limitations period for filing civil actions to recover debt based on a credit card agreement.
The Statute Of Limitations Period
Pursuant to the language of the Arizona statute, the statute of limitations clock commences upon the date "the cause of action accrued." For breach of written contracts, the cause of action accrues on the date the contract was breached. For revolving credit card agreements, the cause of action accrues on the date the account first went into default or delinquency. The statute of limitations period stops on the date an action for recovery of the default balance is filed in court by a creditor.
Significance
An action by a creditor that is filed outside the designated statute of limitations period is considered time-barred and must be dismissed by the court if the defense is properly raised by the debtor. Once the suit is dismissed, the creditor has no further legal recourse against the debtor.
Considerations
A debtor against whom a civil action has been filed for repayment must raise the affirmative defense of the statute of limitations, or he will be deemed to have waived it. The Arizona Rules of Civil Procedure require a debtor to plead the statute of limitations in his Answer to the Creditor's Complaint. Once timely raised, on request of the debtor, the court will dismiss the lawsuit.
Misconceptions
Operation of the statute of limitations does not extinguish the debt; it only prohibits the creditor from using the legal system to enforce payment. Even though a creditor's lawsuit for repayment is dismissed for failure to comply with the statute of limitations, he may continue -- however futile -- with traditional collection efforts such as dunning letters or phone calls.
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