How is the statute of limitations on credit card debt determined?

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How is the statute of limitations on credit card debt determined?

About 5 years ago, we hired a credit settlement company for the 4 credit cards we have. We were able to negotiate on 2 of them and pay those, but we have been unable to pay the last 2. The statute of limitations in our state is 4 years for credit cards so we have met that criteria but a collection agency for one credit card is starting to call to collect but we are still unable to pay. I read that if you have no contact with the creditor within the statute of limitations and they cannot collect on a lawsuit. However, through the credit settlement company in the last 4 years, the collection agency has given us offers that we could not pay so we counter offered. Can that still be considered contact with the creditor within the statue of limitations in which they can still sue us?

Asked on January 14, 2012 under Bankruptcy Law, Nebraska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The statute of limitations has nothing to do with contact or communication; it is based on the time since the default or other act which gave rise to a legal claim. For credit card debt, that is typically counted from when first went into default on the cards--that is, when you first did not pay (at least make the minimum payment) on time.

Two caveats--

1) If after you defaulted the first time, you started paying, then defaulted again, the SOL starts running again from the later default.

2) If you entered into a payment plan or agreement then breached it, the SOL runs from the breach.

Again, it runs from when you did the act giving rise to the right to sue you, not from when yo talked to, etc. the creditor or its collections agent.


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