When a person owes credit card debts, but the amount to be paid has grown to a level that the person realistically cannot repay, the individual may experience overwhelming anxiety about what a creditor or debt collector might do. If you are in this situation, you cannot let anxiety keep you from looking at possible options. For example, with debt collectors purchasing older debts for pennies on the dollar, you have to view the possibilities with the credit card debt’s age in mind because you might be inclined to file for bankruptcy when the defense provided by the statute of limitations could be a better solution under the circumstances.
A statute of limitations exists for most civil and criminal matters in order to provide finality and to ensure that this will occur when evidence remains reasonably fresh. In Pennsylvania, credit card debt generally stems from an open-end, or revolving, account based on a written contract. This places the statute of limitations for such debt at 4 years. This means that, if you have not used a credit card during the last 4 years, you could use the limitations period as a perfect defense against an attempt by a creditor or debt collector to obtain and enforce a judgment against you.
You have to be careful, however. If you discuss the debt with a debt collector, for example, you must avoid reaffirming that you owe the debt, entering into a new payment arrangement, or – especially – making a payment on the credit card debt because you do not want to act in a way that actually starts the statute of limitations over again. The defense cannot protect you for at least another 4 years.
For this reason, you want to avoid talking with anyone attempting to collect an old debt. You do not want to do anything that would be seen as an acknowledgment by you that you owe the debt. You always should bear in mind that you do not have to speak with a creditor or debt collector, which is the safest course of action to take.
You could have an attorney speak or write on your behalf not to make a deal but to deal with the issue of the statute of limitations. A letter also can be written which communicates that you are not to be contacted and that doing so could result in a penalty being paid by a debt collector to you under the Federal Fair Debt Collection Practices Act. Pennsylvania has a similar law – the Fair Credit Extension Uniformity Act – that applies to creditors as well. It describes unfair and deceptive debt collection practices and sets forth the penalties that can be enforced against those engaging in these practices.
These and other laws provide some protection against harassment by creditors and debt collectors. However, even after the statute of limitations has run out your credit card debt, the debt still exists. You may find yourself receiving notice of a lawsuit to obtain a judgment for this debt. This is when you need to know what to do – after you have been served with the required notice, you probably should consult with an attorney to make sure that you are protected and, possibly, to pursue a claim for damages under the various laws that apply.
When this situation occurs, you no longer are safe if you do nothing. Because you owe the credit card debt, you will face a default judgment if you do not answer the other party’s complaint. You could lose things that you own when such a judgment is enforced. Also, judgments have a 5-year statute of limitations but can be revived before this period ends, potentially resulting in a long string of 5-year periods when you may face enforcement of the judgment.
However, instead of doing nothing, you need to have an answer to the complaint filed on your behalf in which the statute of limitations that applies to credit card debt is raised as a defense. As long as it applies and is raised in a timely manner after you receive the complaint, you have a perfect defense against the creditor or debt collector because, although the credit card debt exists, the other side waited too long to enforce the right to a judgment for that debt. This is the power of the statute of limitations.
I had mentioned bankruptcy earlier. Your factual circumstances will dictate whether or not it should be considered. When faced only with an unsecured debt, such as most credit card debts, that can be defended by the appropriate statute of limitations, you probably would want to delay taking the more drastic action of filing for bankruptcy. You do not want to file now because you have a perfect defense against the creditor or debt collector at this time. Also, you may need to pursue a bankruptcy in the future but could be prevented from doing so if you file when you would not gain more relief through bankruptcy.
In addition, you need to consider the statute of limitations regarding credit reports. The credit card debt can be reported for 7 years, even though it technically can be collected only for 4 years. Even so, a bankruptcy can remain on your credit reports for ten years after you file. This means that you should be able to clean up your credit reports sooner in this scenario by relying on the 4-year statute of limitations applicable to your credit card debt.
Of course, this is a brief look at some options that you have in handling your debts. Different situations will point to different courses of action. The defense provided by the statute of limitations may be the best solution when people attempt to collect credit card debt from you. To review and understand what you can do, you should contact an attorney when problems with debt need to be resolved.