While creditors have the authority to collect delinquent credit card debt, California law restricts certain collection actions to a set time frame. Debtors remain morally responsible for the debt, but credit card issuers cannot sue beyond the statute of limitations. Claiming expiration of the statute of limitations is a valid defense during a court proceeding. Additionally, the Fair Debt Collection Practices Act, FDCPA, details consumer rights and recourse regarding deceptive collection practices.
Time Frame
Under Section 337 of the California Civil Code of Procedure, the statute of limitations on credit card debt is four years. The clock starts when contract terms are broken. In cases of fraud or misrepresentation, the clock begins when facts concerning the dispute are clear. Credit card issuers and debt collectors cannot sue you for debt beyond that date.
Resetting the Statute of Limitations
Regardless of the statute of limitations, debt collectors have the right to try to obtain payment. They may try to work out a payment plan, request a "good faith" payment or otherwise establish your responsibility for the debt. Making a payment, agreeing to a payment plan and in some cases just admitting that you owe may reset the statute of limitations. Transferring debt to an outside collection agency does not reset the clock.
Lawsuit Defense
Creditors may still try to sue regardless of the statute of limitations. While this practice violates the law, ignoring a court summons will not make the problem go away and may in fact result in a default judgment against you. Provide the court with proof that the last action on the credit card is beyond the statute of limitations to have the lawsuit dismissed. If you do not have proof, request a copy of the last action from the original creditor. If the credit card issuer refuses or ignores the request, file a small claims subpoena with the court requesting access to the information. Follow court instructions carefully as failing to file, submit documents or respond within a certain time frame may cause you to lose the case.
Enforcement and Your Rights
The FDCPA prohibits debt collectors from harassing or making false statements to consumers. Individuals may send a written "no contact" request to creditors. The only time a debt collector may contact a debtor after they receive a no contact letter is to notify them of further action. Consumers retain the right to file complaints against unlawful debt collection practices with the Federal Trade Commission, the California State Attorney General and file a lawsuit for civil damages plus court fees.
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