According to statistics provided by the U.S. Census Bureau, there are over 173 million Americans that carry credit cards. When a consumer is unable to pay back accumulated credit card debt, a clock begins ticking on how long the creditor has to collect on it--otherwise referred to as the statue of limitations.
Significance
The statute of limitations is different for each state. In Texas the creditor has four years to collect on an unpaid debt. After that point they can no longer make attempts at collection. However, the debt can be reported to credit agencies for up seven years.
Time Frame
The statute of limitations to collect on unpaid debts to creditors begins from the time that the debt is written off as a bad debt. For instance, if a consumer stopped paying on a credit card in December of 2009, but the debt was not written off by the creditor until June of 2010, the creditor has from June of 2010 thru June of 2014 to collect on the debt.
Considerations
In Texas, if a creditor files a court judgment against a consumer for unpaid debt it changes the rules both on the statute of limitations as well as how long the debt can be reported to credit bureaus. The statue of limitations on judgments is eight years, and judgments can be reported on credit reports for up to 10 years. This begins from the time that the judgment is filed, not from the first missed payment or charge off.
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