Personal funds generally safe once debt is uncollectible

A collector can always sue, but can't collect after debt gets too old

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,

My 89-year-old mother defaulted on her Visa and MasterCard accounts in 2008. She was told to only deposit government checks like Social Security in her bank account, so the credit card companies wouldn’t be able to garnish her account if she is sued. Eight years later, is she now past the statute of limitations. So she can deposit personal checks in her account now? – Lori


Dear Lori,
You are correct in assuming the statute of limitations should have run out on your mother’s credit card debts by now, meaning the debt is too old to collect. Most states have a statute of limitations on credit card debt of between three and seven years. For example, the statute of limitations in Florida for credit card debt is generally five years.

A credit card agreement is not always governed by the state the cardholder lives in. Credit card companies can name the state whose laws should apply to their credit card agreements. The fine print on her agreement should say which state’s laws apply. If it’s Delaware, for example, the statute of limitations is only three years.

The starting date is important when you are determining whether the statute of limitations has run out. It begins the last time your mother made a purchase or a payment or the date the credit card company charged off the debt. It can be restarted if she acknowledges the debt or makes even a small payment. If your mother defaulted in 2008 and hasn’t made any payments or acknowledged the debt since, the debt is generally uncollectible. Check with the laws of her state to be sure.

Once you’ve decided the debt is uncollectible, don’t make the mistake of assuming she has the all clear sign. The statute of limitations doesn’t mean collectors can’t sue her. It only means they can’t win if she uses the statute as a defense.

Before the credit card companies or collectors can try to take money from your mother’s account, they must go through the court system. She should receive a notice that she is being sued by a collector. Ignoring a court notice because a debt is past the statute of limitations would be a mistake. She must respond to any notices she receives. If she does not respond, she could lose by default.

If your mother is no longer receiving collection notices, and has not received notice that she is being sued, she shouldn’t have to worry about the debt anymore and should be safe depositing money in her account.

As your mother gets older, it becomes more important that you take an active part in overlooking her finances. You may want to look at her mail and bills every month, or ask to have duplicate paper or email statements sent to you. If she did get collection notices, but she didn’t understand what they were or didn’t open the mail, she could be in trouble. Checking on her finances regularly can help save her the distress and expense of missing something important at this point in her life.

See related: 10 tips for dealing with debt collectors, collection, Re-aged debt, what it is and how to avoid it

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Updated: 01-23-2018