A statute of limitations prevents legal action after a certain amount of time. In the United States, debt collectors typically have between three and ten years to file suit against you. If they do not file within that timeframe, they lose the right to pursue repayment in court. These laws help ensure that debt collection occurs within a reasonable amount of time. Without them, companies could wait decades before filing lawsuits against people who owe them money.

Credit card statutes of limitations are complex and varied. Unfortunately, it isn’t a straightforward subject that offers easy answers. There is some information that can give you a basic understanding of how time-barred debt works.

Know the Statute of Limitations in Your State

Statutes of limitations vary from state to state. It’s important to know how long it takes for that state of limitations to pass in your state. The following list will help you determine your state’s law.

The following states have a three-year statute of limitations on collecting debt:

  • Alabama
  • Alaska
  • Delaware
  • Kansas
  • Louisiana
  • Maryland
  • Mississippi
  • New Hampshire
  • North Carolina
  • South Carolina

These states have a four-year statute of limitations:

  • California
  • Nebraska
  • Nevada
  • New Mexico
  • Pennsylvania
  • Texas

These states have a five-year statute of limitations:

  • Arkansas
  • Florida
  • Idaho
  • Illinois
  • Missouri
  • Oklahoma

Most states have six-year limitations:

  • Arizona
  • Colorado
  • Connecticut
  • Georgia
  • Hawaii
  • Indiana
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Ohio
  • Oregon
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Washington
  • Wisconsin

These states have limitations of seven or more years:

  • Iowa
  • Montana
  • West Virginia
  • Wyoming
  • Rhode Island

The law is unclear in Kentucky and Virginia because courts have not settled on agreed limitations.

Statutes of Limitations Do Not Get You Out of Debt

Many consumers make the mistake of thinking that they do not have to repay credit card debts after their state’s statute of limitations has passed. No matter how much time elapses, you will always owe that money to your debtor.

The statute of limitations simply means that the debtor cannot sue you for the money. The information usually stays on your credit report for seven years, so it can have devastating effects on your financial health. Debt collectors can also still continue to contact you about repayment. Even though they cannot file a lawsuit, they will usually try to collect well after the statute of limitations passes.

Expect a Debt Agency to Contact You

Credit card companies don’t usually spend a lot of time pursuing old debt. If you have not made a payment in 180 days, the company will consider the account defaulted. At this point, they will write off the remainder as bad debt and sell the account to an agency that specializes in collections. Debt collection agencies often go to extremes when getting you to repay. They may contact you daily by phone and mail. They will also contact credit bureaus to blemish your report and lower your credit score.

Many collection agencies don’t want to spend money on lawsuits. If they feel that you will not repay the debt, though, most of them will use the court system to force you. They must file lawsuits before the statute of limitations expires. If they wait too long, they will lose the option to pursue repayment in court.

When the Clock Starts Ticking

Since companies must file suits before the statute of limitations expires, it’s important to know when the clock starts ticking. In most cases, it starts on the date of your most recent account activity. If you made your last credit card payment on December 5th, then the countdown typically begins on that day. If you use your credit card after that date, though, it could restart the clock. Even using the card to purchase a small item could change when the deadline for the company to file suit against you.

If you aren’t sure when you last used your account, you can usually find the date on your credit report. Federal law requires each credit reporting company to give you one free report per year, as long as you request them. That means you can get three reports per year by contacting each bureau.

Judges Can Disagree on Where Debt Resides

Judges often disagree on where debt resides. This can make it difficult to determine exactly how long it takes for your debt to become time-barred. Confusion is often caused by the debtor and the collector living in two different states. For instance, if you live in Mississippi, you may assume that no one can sue you for unpaid credit card debt that has existed for more than three years. If the credit card company is based in Iowa, where the statute of limitations is more than seven years, a judge may decide that the company can still sue you after three years have passed. If the court determines that the debt resides in Iowa rather than your state of Mississippi, then the case may get transferred to Iowa, where the statute of limitations has not expired.

Since judges disagree on how to handle such cases, there is a level of luck involved. Some cases go to judges who insist that credit belongs to the individual. If that happens, then your case will follow the laws of where you live. Other judges believe that credit card debt belongs to the company. If that happens, your case may get transferred out of state.

This is obviously a complicated issue with steep consequences. Most people do not have the time or resources to protect themselves from credit collectors in court. If you have any doubts about when the statute of limitations frees you from legal threats, you should talk to a lawyer licensed to work in your state.