Statute of Limitations for Credit Card Charge-off in Texas

A credit card charge-off occurs when the card issuer believes an account is beyond collection and reports the debt as a loss for the applicable tax year. The Texas statute of limitations on credit card debt applies to the timeframe in which a creditor can sue you for delinquent debt. In either case, the debt remains valid, but the statute of limitations does limit a debt collector's rights regarding court-ordered garnishments, liens and bank levies.

Timeframe

Under Chapter 16.004 of the Texas Civil Practice and Remedies Code, the statute of limitations on credit card debt is four years after the cause of action accrues or when the debt is in default. Making a payment or setting up a new payment plan with the original creditor or an outside collection agency restarts the clock on the statute of limitations. The law prevents creditors from suing you for credit card debt beyond four years; it does not eliminate the debt.

Debt Collection Process

Once you default on a credit card, the issuer will attempt to collect through an in-house collection department. If a payment plan cannot be reached, creditors may employ an outside collection agency or write the debt off as a loss. Creditors generally charge off delinquent debts after 180 days. Creditors may attempt to collect after the charge-off or sell the account to an outside collection agency for much less than the original debt. The new collection agency then attempts to collect the debt, but the transfer does not reset the statute of limitations on lawsuits.

Credit Reporting

The four-year statute of limitations does not apply to your credit report. A charge-off will appear on your credit report as paid, settled or delinquent for seven years. The seven-year period begins 180 days after you default. You may contact the original creditor and request that a paid charge-off be removed from your credit history, but creditors are not obligated to do this. Selling or transferring debt does not change the original credit reporting timeframe.

Considerations

Barring a court order, a collection agency may attempt to collect on an outstanding debt indefinitely. However, debt collectors must abide by the Fair Debt Collection Practices Act. The Act prevents a debt collector from suing, threatening to sue or otherwise claiming action they cannot legally take. Adversely, if you are sued, do not assume the creditor or the court knows the account is beyond the statute of limitations. Ignoring a lawsuit may result in a default judgment against you.