Statute of Limitations on Credit Card Debt Collection

A statue of limitations for credit card collections is the period of time a creditor or debt collector can successfully sue you in court for failure to pay. If a creditor does sue you after the statue of limitations has expired, all you have to do is show up in court and tell the judge that the debt collector has no right to sue because the statue of limitations has passed. The judge will then dismiss the case, according to the website Bank Rate.

Warning

You should always answer a court summons regarding debt lawsuits, even if the statue of limitations has passed. If you fail to show for the hearing the judge could award a judgment to the debt collector. Your only recourse after that would be to request a new hearing and have the judgment vacated because of the statue of limitations.

Time Frame

Statue of limitations vary by state (see Resources, below), but in most states the statute of limitations is about six years from the date you defaulted on the account. However, new activity on the account, such as a partial payment or even telephone contact with the debt collector can reset the clock to the beginning of the period. Because of that, Bank Rate advises people nearing the end of the statue of limitation periods to avoid contact with bill collectors until the statue expires.

Misconceptions

An expired statue of limitations does not mean that the debt goes away. You still owe the debt until it is paid, discharged in bankruptcy or resolved through a settlement agreement. Thus, the debt collector can still attempt to collect from you

Credit Reports

Delinquent credit card debt can remain on your credit reports for up to seven years -- even if the statue of limitations on the debt in your state is less than that.

Settlement

An expired statue of limitations could provide you with a great opportunity to settle your debt for far less than the original balance. With the threat of a lawsuit removed, the creditor or debt collector loses a tremendous advantage, and may be willing to settle. According to The New York Times, debt collectors will often accept as little as 20 percent of the balance to settle a debt.