How Long Can a Credit Card Company Collect a Debt

Title: How Long Can a Credit Card Company Collect a Debt?


Credit cards have become an integral part of our lives, offering convenience and financial flexibility. However, it is essential to understand the terms and conditions associated with credit card debt. One common concern among consumers is how long a credit card company can pursue debt collection. In this article, we will explore the statute of limitations on credit card debt, the factors that affect debt collection, and provide answers to frequently asked questions.

Understanding the Statute of Limitations

The statute of limitations refers to the time frame in which a creditor can legally pursue payment for a debt through the courts. It varies from one jurisdiction to another and is typically determined by state laws. For credit card debt, the statute of limitations can range from three to ten years, depending on the state. Once this period expires, the creditor loses the legal right to sue for the outstanding debt.

Factors Affecting Debt Collection

1. Time since the last payment: The statute of limitations clock usually begins ticking from the last time a payment was made on the account. If you have been current with your payments, the clock will reset each time a payment is made.

2. Written acknowledgment of the debt: Some states consider a written acknowledgment of the debt as a restart to the statute of limitations clock. It is crucial to be aware of your state’s laws regarding this provision.

3. Relocation: If you move to a new state, the statute of limitations may differ, depending on the laws of the state you now reside in. Credit card companies can file lawsuits in either the state where the debt was incurred or the state where the debtor currently resides.

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4. Legal action: If a credit card company has already obtained a court judgment against you, there is no statute of limitations for collecting the debt. The judgment allows them to pursue collection indefinitely, including wage garnishment and asset seizure.

Frequently Asked Questions (FAQs)

Q1: Can a credit card company continue to contact me after the statute of limitations expires?
A: Yes, a credit card company can still contact you to collect the debt even after the statute of limitations has expired. However, they lose the legal right to sue you for the debt.

Q2: Can a credit card company re-age the debt and restart the statute of limitations?
A: Re-aging the debt refers to resetting the clock on the statute of limitations, typically by getting you to make a payment or acknowledging the debt in writing. It is illegal for credit card companies to re-age debt, but it’s crucial to keep track of your payment history and be aware of any suspicious activities.

Q3: Does the statute of limitations affect my credit score?
A: The statute of limitations is a legal concept that determines the time frame during which a creditor can sue to collect a debt. It does not directly impact your credit score. However, unpaid debts can negatively affect your credit score, making it harder for you to secure loans or obtain credit in the future.

Q4: Is it advisable to pay off old debts once the statute of limitations has expired?
A: While the statute of limitations may have expired, it is still morally and ethically responsible to repay your debts. Additionally, unpaid debts may continue to appear on your credit report, impacting your creditworthiness. It is recommended to consult with a financial advisor or credit counselor to understand your options.

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Understanding the statute of limitations on credit card debt is crucial for consumers to navigate their financial obligations. While this article provides a general overview, it is important to remember that laws can vary by state, and seeking professional advice is always recommended. Responsible financial management and open communication with creditors can help alleviate the burden of credit card debt.