Credit Cards And The Famous Statute Of Limitations

Some of you may have heard that after a certain amount of time, a debt incurred on a credit card can no longer be chased up in a court of law. This information is true, and it is based on the 'Statute of Limitations' (SOL.). However, there are legal loopholes and complications that mean this isn't exactly true, despite being a statute. This may be a little confusing, and you may be thinking 'how can something be both true and not true simultaneously?'

The Time Period Varies
For starters, the time period until the SOL takes affect can vary from five or more years, and changes depending on the type of debt owed. Other factors can cause a variance to this law, such as if you incurred the debt in more than one state or country, if you have previously lived in a different state, and even the discretion of a judge, should the matter be taken to court. This means, that essentially, even with the statute in place, it doesn't exactly mean what most people would logically assume it means. So, thinking that if you incur a large debt you can wait for a certain amount of time and it'll disappear, you may be surprised to find it may not.

Debt Collection Agencies
Also, a credit provider can sell the debt to a debt collection agency, which will hound you until you pay. If your debt goes through to one of agencies, you will receive threatening letters and phone calls until you pay. If you have reached outside of the time frame to pay the debt, then state the SOL to the person you are speaking with, this should legally stop them from harassing you. However, it still allows them to take you to court and attempt to sue you for the money owed. Your defence will most likely be to state the SOL, however it is up to the judge is he decides to rule based on that law.

Again, even if you win the case and are not successfully sued, that debt collector can sell your debt to a different agency, which started the whole process over again. Depending on the size of your debt, if the cycle continues it may not be worth your time and effort ignoring the letters and phone calls. It may be time to just pay the debt back. This situation can keep going on and on, each time with the same outcome.

Is It Really Worthwhile?
If your debt is forgotten about and debt collectors have stopped chasing you, it is still hanging over your head. This comes in the form of a poor credit rating and a negative report for good measure. Your credit rating will show that you failed to pay the debt, and that you were taken to court over the matter. This can drastically hamper your ability to get a credit card again, home and/or car loan, or any other loan for that matter. You may have gotten out of the situation without paying, but you still lost out despite what seems like a 'win.'