Tuesday, August 9, 2022

What’s The Statute Of Limitations On Credit Card Debt

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How The Statute Of Limitations For Debt Works

âWhat is the Statute of Limitation on an old credit card debt in Alabama?â?

Having your states statute of limitations run out does not mean that your creditor no longer has the right to try to collect money owed. However, it does mean that the courts will not be a viable method of doing so, provided that you explicitly notify the judge that your debt is time-barred. Failing to bring this information to the courts attention could result in the progression of a lawsuit that could have easily been dismissed.

Consider the disclaimer that creditors in New York City are required to include in collection efforts:

The legal time limit for suing you to collect this debt has expired. However, if somebody sues you anyway to try and make you pay this debt, court rules REQUIRE YOU to tell the court that the statute of limitations has expired to prevent the creditor from obtaining judgment.

Making a payment is not always the only act that can re-age debt either. According to the New Mexico Attorney Generals handbook, this occurs if you:

  • make any payment of the debt
  • sign a paper in which you admit that you owe the debt or in which you make a new promise to pay
  • sign a paper in which you give up your right to stop the debt collector from suing you

Court Rulings May Take Precedence

To construct the chart above, CreditCards.com examined statutes and judicial opinions and consulted legal experts to cover all 50 states and the District of Columbia. In most states, the statute of limitation is clear. In some, however, we could find no definitive answer because of ambiguities in state law or conflicts between the law and court rulings.

The uncertainty over when credit card debt expires arises because state laws governing contracts are interpreted by the courts when they are applied to individual circumstances, and those interpretations may change over time.

That was the case in Georgia in January 2008, when a Georgia Court of Appeals ruled that the statute of limitations on an unpaid credit card debt was six years. The Georgia code sets the limit on open-ended accounts at four years, but the appeals court applied the law for written contracts to card debt in this case. Another 2008 Court of Appeals ruling affirmed the Hill ruling and settled the law in the state, according to the Georgia Department of Law.

Why The Account Stated Theory Does Not Apply In Alabama To Debt Buyer Lawsuits

This is a legal theory that says if you have an open account , and the company sends you a letter detailing all of the charges and payments, then it transforms the open account into a stated account and becomes the same as a new loan.

Heres the problem.

Debt buyers claim every month you receive a new statement from your credit card company, it is now an account stated but the credit card companies would be shocked to know this. If it is a new loan, they must do brand new Truth In Lending Act disclosures among other things.

They dont think it is a new loan this is simply an after the fact argument made by debt buyers.

So the debt buyers will now start sending you a sheet of paper called Account Stated and say when you dont object to this, it becomes a stated account and now they have 6 years to sue.

This is not what the law allows in our judgment. This is forcing a square peg into a round hole it just doesnt fit.

But what about the breach of contract claim?

No luck either for the debt collectors.

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Can They Keep Calling And Billing You On Debts Too Old

The Fourth Circuit says , yes, they can. At least as long as they dont threaten to sue. Heres the decision,Mavilla 4th Cir FDCPA. Even if a credit card debt is barred by the Virginia statute of limitations, phone calls and bills, without some kind of threat, are not illegal, harassing or misleading.

Can A Debt Collector Contact Me And/or Sue Me After The Statute Of Limitations Has Expired

Statute of Limitations for Debts, Credit Cards &  Judgments

Yes, debt collectors can contact you after the statute of limitations has expired. You still owe the debt and if you dont respond, the debt collector could still sue you. However, you can present a successful defense that the statute of limitations has expired IF you show up for the court hearing. That IF is in caps because many consumers dont appear in court. Either they dont check their mail to see that a court date has been scheduled or simply ignore the summons to appear. If you dont show up in court, you lose. Case closed. A judgment will be awarded against you.

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When Does The Clock Start Running For The Statute Of Limitations

The clock starts the date you make your last payment and runs for whatever time period is applicable in your state. If, for example, you havent made a payment on your credit card since January of 2021 and you live in California where the statute of limitations is four years, the SOL expires in January of 2025. If, at any time in between, you got tired of debt collectors harassing you and decided to make just one payment or sign an agreement to make a payment, the clock could start again on that date. Check the laws in your state to find out how long the statute of limitations applies and whether payment of any kind restarts the clock.

Why You Should Never Pay A Collection Agency

On the other hand, paying an outstanding loan to a debt collection agency can hurt your credit score. … Any action on your credit report can negatively impact your credit score – even paying back loans. If you have an outstanding loan that’s a year or two old, it’s better for your credit report to avoid paying it.

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How To Handle Time

Once your debt becomes time-barred, you have options. Keep in mind regulations vary by state and type of debt. Therefore, it can be helpful to consult with an attorney who specializes in debt settlement. They can navigate your options with you and help guide you to the best path with the least risk.

Run out the clock and dont pay the debt. This is not the recommended strategy by debt experts. Yet, after seven years, the debt will fall off your credit report. Dont expect everything to be peachy, though. Your phone will probably keep ringing with calls from the collections agency.

After the statute of limitations has passed, they cant do anything but call over and over again. You can send them a letter instructing them not to contact you anymore. The Fair Debt Collection Practices Act stipulates if they receive such a letter, they must cease all contact, says Christensen.

How Can I Verify That The Debt Is Really Mine

Statute of Limitations for Credit Card Debt

If you get a call from a debt collector, never assume the debt they are trying to collect is legitimate. Do research and make sure you owe it, and the statute of limitations hasnt expired. Your first step is to insist on a debt validation notice from the debt collector. Ask the debt collector for their name, the companys name, the street address, telephone number and a professional license number. Then ask the company to mail you a validation notice, which details how much you owe and the name of the creditor seeking payment. The validation notice must be sent within five days of when the debt collector first contacts you. You have 30 days to dispute the information in the validation notice. It is wise to have your credit report available when you receive the validation notice so you can compare the information between the two and determine if the debt is yours.

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But I Dont Owe John Watts My Mortgage Or Car Payment

Ahh

That is the key to these cases.

You are sued by one of these companies:

  • Asset Acceptance

They say You owe this debt!!

So what if I do?

Did I do business with you?

Did I ever borrow money from you?

Or, did you ever fix my air conditioner or my car?

OK, then before I owe you, you must prove you own the debt.

Without proving that, these debt collectors have as much right to get paid as I do to get your mortgage payment, car payment or rent payment.

Regardless Of All Of This The Truth Is The Statute Of Limitations Is The Least Important Defense When Sued By A Debt Buyer

Virtually everyone who calls my office to talk about being sued and we typically are hired by 5-10 new clients a month for this is focused on statute of limitations.

But . . . it really is not that important.

I think once, in defending hundreds of Alabama consumers, have I ever relied upon statute of limitations.

The critical factor is to remember the debt collector must prove it owns the debt.

If it does not do this, then nothing else matters.

Let me use an illustration.

Do you owe a mortgage company or a landlord for your house? If you dont, do you owe a car payment?

Whatever it is here is what I want you to do.

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Paying Your Debts To Avoid The Actions Of Collection Agencies

How To Permanently Stop Debt Collectors From Calling You

In conclusion, the statute of limitations can help you not be sued as a result of your debts, but it doesnt eliminate the debt completely. The debt is still yours to pay and will leave a huge black mark on your credit score and credit report if it goes unpaid for too long. So, instead of letting your debts run their course to protect yourself from being sued, do your best to work out a way of paying them before things get to this level.

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Check If Your Debt Is Covered By Payment Protection Insurance

If you have a mortgage, loan or credit debt, you might have Payment Protection Insurance . If you do, the insurance company might cover your debt repayments if you fall ill, become unemployed or have an accident. Check your credit agreement or mortgage documents to see if you have PPI.

PPI will only cover your payments for a fixed amount of time. Your PPI policy will tell you what youre covered for and how and when you should make a claim.

If you think you should be covered by PPI but the insurance company says youre not, check if you can complain about mis-sold PPI.

Florida Statute Of Limitations For Debt Compared To Other States

The statute of limitations for debt in Florida is one of the lowest in the country at only five years. Many states instead have a statute of limitations for six years. Some states even set the statute of limitations at ten years for debt based on written contracts.

Furthermore, Florida asset protection laws are some of the strongest in the country, making the state very debtor-friendly compared to others.

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Different Types Of Bankruptcy

Bankruptcy is governed by federal law and is codified in the U.S. Bankruptcy Code. There are various chapters of bankruptcy, and which one you choose depends on the specific details in your individual case.

Chapter 7 BankruptcyTo qualify for help from Chapter 7 of the Bankruptcy Code, you can be an individual, a partnership, a corporation, or some other business entity. A married couple may also file jointly. Goals of filing Chapter 7 bankruptcy include 1) putting a stop to harassing creditor phone calls, 2) discharging certain debts, and 3) getting a fresh financial start. After the process is over, you wont owe money for discharged debts, and creditors are prevented from collecting any money from you in the future. Your creditors are paid from the sale of your nonexempt estate property. Exempt property many times a house or vehicle is the property you can keep.

To qualify for Chapter 7, you must pass a means test. If your monthly income is greater than the states median, you must pass this test to determine whether you qualify for filing under Chapter 7. Not all debts can be discharged in bankruptcy, including child support, alimony, most student loans, taxes and a few other debts. Individuals must get credit counseling from an approved credit counseling agency 180 days before filing.

Don’t Make Excuses For The Holidays

What is the Statute of Limitations on Credit Card Debt in Arizona?

The second thing we need to consider when it comes to this new data is that its really easy to sink deeper into debt over the holiday season. Its pretty easy to use Christmas and gift-giving as an excuse to reverse any progress youve made bringing your debts down over the course of the year. During the holidays, more than ever, its important to budget, plan and save, because you never know what could be coming around the corner.

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If Youre In A Breathing Space When The Time Limit Ends

While youre in the Breathing Space scheme, your creditors cant contact you or try to make you pay.

The time limit for your creditor to take action against you is automatically extended. It will end 8 weeks after your breathing space period ends.

After the time limit has passed, the debt might be statute barred this means you dont have to pay it.

Your debt could be statute barred if, during the time limit:

  • you , havent made any payments towards the debt
  • you, or someone representing you, havent written to the creditor saying the debts yours
  • the creditor hasnt gone to court for the debt

Check the date that you last made a payment to find out if your debt is within the time limit.

If you know your debt is still well within the time limit and isnt statute barred, you should make sure you’ve collected information about all of your debts.

If your debt is outside of the time limit and statute barred, you should use this as a defence if you have to go to court. If you dont defend your case the court will make a judgement. A judgement will stay on your credit file for 6 years and might make it harder for you to get credit.

You can find out more about what to do if you’re being taken to court for debt.

Statute Of Limitations And Credit Reporting

The credit reporting time limit is generally independent of the statute of limitations. You can’t rely on your credit report to keep up with the statute of limitations on your debt. Negative information can only remain on your credit report for seven years, and nothing can restart this period, not even a payment on the account. Credit reports also won’t track any communication or verbal agreements you made with a creditor or debt collector.

While the average statute of limitations is about six years or less, some states have much longer statutes of limitations. Depending on your state, some debts may fall off your credit report before the statute of limitations has expired. In other cases, debts may still be on your credit report after the statute of limitations has expired.

You largely have to rely on your records to help you keep up with the statute of limitations on a debt. Keep track of the dates of payments and communications about your debts. This will help you be more aware of the statute of limitations timing.

Some debt collectors may let you know that debt is beyond the statute of limitations and no longer legally enforceable. If they don’t give you this information, you can ask. The debt collector isn’t required to answer, but if they choose to answer, they’re required to answer truthfully. This is a precarious conversation to have thoughyou must walk a fine line between asking about the debt and admitting you owe it.

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In Most Cases Your Credit Card Company Must Sue You Within Four Years Of Your Payment Default

The COVID-19 outbreak is having a severe impact on the operations of civil courts across the country, forcing courts to prioritize criminal matters over less urgent civil cases. Some courts are tollingstopping temporarilycivil statute of limitations periods during the coronavirus pandemic to help reduce case backlog. Check your court’s website or on the Chart: Statutes of Limitations in All 50 States to learn whether your state has implemented such measures. For more coronavirus-related legal changes, see COVID-19: The Law and Your Legal Rights During the Coronavirus Outbreak.

A statute of limitations is a law that tells you how long someone has to sue you. In California, most credit card companies and their debt collectors have only four years to do so. Once that period elapses, the credit card company or collector loses its right to file a lawsuit against you. However, there are certain things that you or the creditor might do that could reset or extend the statute of limitations. In order to avoid giving the credit card company more time to sue you, it’s important to understand how the statute of limitations works in California.

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