Card debt past the statute of limitations? Yes, you still owe it

Debt might have legally expired, but that won't keep creditors from seeking payment

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

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Question

Dear Credit Guy,
Back in 2003 I opened a credit card, but did not have the ability to continue payments. I may not be the only one in this situation, but mine may be more unique than most. My failure to pay was due to two years of imprisonment.

I received a call yesterday from some sort of law firm stating that I was about to have a civil suit filed against me. From what I have read, I should be far beyond the time frame of actions pertaining to this. I may have reaffirmed the debt to a collector back in 2006, but since then I have heard nothing of it.

Twelve more years have passed, and boom. What could have only been a $200-$500 debt originally has jumped to over $2,200.

If anything is true to what these people are saying, if they take me to court and win, I would then owe over $5,000.

Considering the time frame of all this, what is the likelihood that this is true? Thanks for your time. – Jason

Answer

Dear Jason,
While I admit that yours is a somewhat unique situation, being in prison for two years did not change your state’s law in regard to its credit card debt statute of limitations – which sets limits on how long you can be successfully sued over credit card debt.

Most states’ legal time frame for collecting on credit card debt is from three to 10 years, so 12 years – assuming you did reaffirm the debt in 2006 – is well past any state’s statute of limitations.

What to do if taken to court over legally expired card debt

I do understand your frustration and concern that this debt could end up costing you 10 times over. The most important thing for you to remember is not to ignore any court summons regarding the debt.

I can’t really tell you what the likelihood is that you will be sued. It may be that the collector has no real intention of taking you to court and is just trying to scare you into paying, but you will need to keep an eye out for any legal documents.

If you are sued, you must show up in court to defend yourself, preferably with a lawyer who specializes in these types of cases at your side.

Your defense would likely be that the debt has passed your state’s statute of limitations and is time-barred from collection.

Although I am not a lawyer and can’t give you legal advice, this seems like a solid defense. However, not showing up virtually guarantees that you will lose and then you could be looking at a judgment being leveled against you. This could result in garnished wages or seizure of assets. It will also hurt your credit, as jugments go on your credit report for seven years.

The amount you would then owe could easily be as high as you say in your letter, since you will be responsible for court costs as well.

Card debt doesn’t have an expiration date

Finally, I want you to know that just because your debt is almost certainly now time-barred (meaning you can’t be sued) that does not mean that you don’t still owe the money. As long as you owe the money, collectors can contact you seeking payment for this debt.

The Fair Debt Collections Practices Act says that if you inform the collector that the debt is past the statute of limitations and then follow that up with a letter to the collector telling them not to contact you again about the debt, they must comply.

But if the debt is then sold to another collector, the process of notifying the collector by phone and by mail will start all over again.

Only you can decide if you want to just go ahead and try to get the debt paid off to keep from dealing with this over and over.

Take care of your credit!

See related: Taken to court for card debt? What to expectTime-barred debt can still do damage even after 13 years, 5 steps to rebuild credit after prison

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Updated: 12-12-2018