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Statute of Limitations on Credit Card Debt

Understanding the Statute of Limitations on Credit Card Debt

What does statute of limitations even mean? The statute of limitations is both a legal term and a concept. In essence, it is a time deadline. Whenever someone does something wrong, the person wronged has a deadline to file litigation and obtain recourse. The basic purpose behind the statute of limitations is to make sure that people bring timely causes of action.

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.

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Kevin Fallon McCarthy

Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.