What are the Credit Card Debt Laws?

Credit card debt laws are generally the same throughout the United States; however it is worth noting some of these variations in order to properly be informed should the need ever arise. Most of the West Coast has roughly a three-year period by which credit agreements, or “written contracts” can actively be pursued for non-payment. The increase in years is at its max in Montana and Wyoming: seven years, and much of the East Coast hovers around five or six years for the collection of repayment.

Basically, the statute of limitations says that creditors or debt collectors have a small window of time by which they may attempt collecting debt. So, if the agreed time should pass, the debtor is no longer held responsible for repayment, legally that is. Remember, the repayment schedule varies form state-to-state. As a rule-of-thumb, in most states the period that debts can legally be requested is from three to ten years—quite a deviation.

Any requests that go beyond the requirement within that state become what are known as Time Barred Debts: collectors can attempt by any means legal to collect debts, yet they cannot gain assistance of the courts to do so. A debtor often can have a Time Barred Debt dismissed, by letting the courts know what type of debt it is. The debtor needs to understand that these collectors will still probably try all methods under-the-sun to collect their debts, but again they cannot sue legally.

There are particular court rulings that can interfere with agreed upon repayment schedules, so under these circumstances repayment schedules are malleable: e.g., a statute may say that a request for repayment may be six years, yet in Georgia the maximum is four years, so that statute of six years is essentially thrown out in the court of law.

The federal law dictates which legal options can be in place, for collectors and credit card companies, to contact consumers and request repayment. There are always stipulations, e.g., section 811 states that the debtor is only required to make payment in the jurisdiction where the contract was signed. Collectors then can only attempt to do so within that assigned area; so if the debtor lives elsewhere, those laws will govern the situation respective to location. Although many credit card agreements will have a clause that usurps the location requirement, thus making the debtor responsible for repayment wherever he or she currently resides.

The debtor must not forget, however, that bankruptcy is a separate issue altogether, and credit will be affected negatively upon defaulting under any circumstances; i.e., ten years or so, even when legally the debtor is not required to pay. Typically, the clock begins ticking upon the first signs of delinquency in an account. Moreover, when a debtor acknowledges an old debt by paying even the smallest installment, oftentimes the clock will start over, giving the debtor more time to pay, thereby preserving his or her credit.