Statutes of Limitation on Credit Card Debt Varies from State to State

CreditCards.com reporter Fred Williams has posted an informative report on the statute of limitations that apply to credit card debts.

To determine how long a credit card issuer can file suit, a consumer has to figure out which state’s law applies, how long the statute is in that state, and figure out when the statute began to run on the debt. Each of our 50 states has different laws that apply. In California the statute of limitations is 4 years. Generally, the statute begins to run when the debt first becomes delinquent.

The reporter found that some 17 states have “statutes of limitation” that say credit card debts become legally uncollectible after three or four years.

Courts usually apply contract law on a case-by-case basis. But in many states, a card debt may fall short of the legal definition for a written contract, giving it a shorter lifespan.

Another complication is that some card issuers say the law in their home state applies — not the law in the consumer’s home state. For example, Citi’s card agreements typically state South Dakota law applies where the statute of limitations is a very long six (6) years.However, most judges apply the law of the consumer’s home state regardless of what the fine print states in an agreement signed a long time ago, an agreement the consumer probably never read.

These statues are not to be confused with the 7 year period debts may remain on a consumer’s credit report. The 7 year maximum is what is mandated by the Fair Credit Reporting Act.

The report includes what state’s law applies according to the banks that issue the most popular credit cards:

Issuer State Years credit card debt is collectible in court

  • American Express Utah 4
  • Chase Delaware 3
  • Bank of America Delaware 3
  • Citi South Dakota 6
  • Capital One Virginia* 3
  • Discover Delaware 3
  • US Bank ** **
  • Wells Fargo South Dakota 6
  • USAA Nevada 4
  • Barclays Delaware 3

*Capital One says Virginia law rules, unless the cardholder’s state has a longer statute.

**US Bank’s terms and conditions agreement specifies which state law should apply to arbitration, but not for other matters, such as unpaid debt.

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