If you fail to make payment on an outstanding credit card balance, the original creditor may consider your account uncollectable and refer it to a collection agency. Either the original creditor or the collection agency may file a lawsuit against you in an effort to remedy the deficiency.
Legal Statute of Limitations
Kentucky Revised Statute 413.120 establishes the statute of limitations on credit card debt as five years. This is the amount of time a creditor has to sue you for the unpaid debt. After the statute of limitations has expired, the lender may continue to attempt to collect the debt, but may no longer pursue legal action.
Account Activity
In Kentucky, the statute of limitations takes effect based on the date of last activity on the account. If a collection agency purchases your account from the original creditor, it must retain the original last activity date. If you make a partial payment or acknowledge the debt in writing to the creditor, this is considered account activity and may reset the statute of limitations.
Credit Reporting
Federal law prescribes how long derogatory credit items may appear on your credit report. The Fair Debt Collection Practices Act allows creditors to report a negative item on your credit report for seven years after the last account activity.
Responding to a Lawsuit
If a creditor attempts to sue you in Kentucky after the five-year statute of limitations has expired, you should immediately file an answer to the lawsuit. The answer should provide documentary evidence and clearly indicate that the statute of limitations has expired. Both KRS 413.120 and the FDCPA prevent the creditor from pursuing further legal action against you.
Life of the Debt
Although KRS 413.120 establishes a five-year period in which the creditor may pursue legal action, and the FDCPA establishes a seven-year reporting period, the debt will survive until it is paid or discharged in bankruptcy. The creditor may continue to request payment via telephone, letter, or other communication.
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