People who have had debt on their credit card for long time often ask if there is a statute of limitations on credit card debt. The answer isn’t a simple yes or no. It depends much upon where you live.

Collectors are aggressively going after repayment of debts. Occasionally this may include debts that are already paid up or belong to other people. If you know about the statute of limitations you will be able to deal better with incorrect attempts at debt collection.

For those confused about the subject, there are two types of limitations. Firstly, the statute deals with how long your debt problems can be seen on your credit report. Federal law states that normally seven years is the limit for credit bureaus to keep negative information on your report. The exception to this is for a bankruptcy which lasts for ten years and tax payment problems which can stay on forever.
The facts are that the seven year period doesn’t start until the debt is paid in full. So if the debt still exists, it’s treated as though you still have the credit card, but in this case it will be a collection. The collection company or credit card company reports on the debt every month and the seven year period starts when the debt is cleared.
Secondly, there’s the statute of limitations on credit card debt which states how long the debt companies can sue you for the debt. This is different across many US states and varies from three to six years. States also have different rules over the two types of debt called either ‘closed ended’ or ‘open ended’ contracts. Credit card debt usually falls under the open ended rules.
You shouldn’t count on the Federal Trade Commission to back you up on a case against a debt company that takes too long to chase you.
As an example, the state of California has a four year statute for written contracts (which may include credit cards) and two years for oral agreements. Kentucky allows creditors to sue, after the last payment is made up to 15 years later. Luckily it’s just five years for credit cards.
While states have different rules for different debts, they can also treat similar debts in a different way. For example, your credit card outstanding amount may be seen as a written agreement in one state and an open-ended account, in another. Being aware of your rights under the statute of limitations on credit card debt will help your long term planning, but using a debt settlement company can help you clear your debt quicker and more efficiently.

This entry was posted on Sunday, January 18th, 2009 at 7:14 pm and is filed under Blog, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.