Understanding the Statute of Limitations on Credit Card Debt

The applicable statute of limitations or deadline depends on the type of offense, such as breach of contract or negligence. When a consumer defaults on a credit card debt, they are breaching the contract they signed with the lender. In California, a breach of contract action has a four-year statute of limitations.

For example, if a consumer stopped paying a credit card, the lender would have fours years from the first missed payment to sue the consumer. If the lender did not sue the consumer in that four year window, then the lender would lose it’s opportunity to take any legal action against the consumer. The same is true if the lender sold the account to a third-party debt collector. The debt collector would need to sue the consumer within the same four year window that applied to the lender.