Potential Defenses To Lawsuits

Statute Of Limitations Defenses

Statute of Limitations

This refers to the time in which a creditor must file a lawsuit, or be forever barred from suing. The limitation period varies from state to state. In California, it is four years in most cases. There are several websites that list the statute of limitations for all states, including http://www.cardreport.com/, but we can't vouch for the accuracy of these.

The question may arise, which state law will apply - that of the credit card company's state or that of the consumer? In the absence of an agreement to the contrary, the statute of limitation that generally applies is that of the state where the lawsuit is filed. Normally, this is the debtor's home state, since the FDCPA generally requires that lawsuits be filed in the county were the debtor resides.

Once the time limit has passed, the debt is no longer LEGALLY collectable. This does not mean that the creditor can't continue to ASK the debtor to pay. Attempting to collect a time barred debt is not a violation of the FDCPA, unless the creditor also threatens to bring, or actually does bring a lawsuit.

Creditors do, however, sue on time barred debts. In fact, it is becoming fairly common. We had a recent case where a debtor had had a judgment entered against her many years previously. The consumer contended that the debt was well over four years old at the time the lawsuit was filed. We sued the debt collector and obtained a judgment for our client.

Also, a debt can be reported on one's credit for seven years, even though the statute of limitation has passed. This will give some debtors the incentive to settle time barred debts.