How Long Does a Credit Card Company Must Enforce an Unpaid Account & Statute of Limitations

What is a Statute of Limitations?

So you are having trouble making your credit card payments and probably wondering what will happen next? The next few paragraphs will speak about the treatment and removal of unpaid credit card accounts based on the Fair Credit Reporting Act and the statute of limitations under New york Civil Procedure section 337 only. Each state has its own statute of limitations for causes of action like enforcing an unpaid credit card debts.

When does the Statute of Limitations start?


The first issue is what is the statute of limitations? The statute of limitations is the length of time that has to file a lawsuit to enforce a claim such as an unpaid debt, a personal injury cause of action or a products liability claim. When you sign up for a credit card, you are entering in to a written contract agreeing to pay back the money you charge to the credit card under varying terms. When payment is not made, the contract is breached. Pursuant to CCP section 337, the statute of limitations for breach of contract in New york is years.

Usually the statute of limitations begins to run when the reason for action accrues or begins. This is a complicated area of the law and this article will only touch on general information and not a case by case analysis your case may need. When the statute of limitation usually begins is when you breach the contract by not paying, or the reason for action accrues arising from the date of last payment or when demand for full payment is received. In New york, pursuant to CCP Section 337, the statute of limitations for breach of contract resulting from nonpayment is five years. In New york, the statute of limitations can be extended only by a new agreement in writing to agree again to repay the credit card debt. If a credit card company does not file a lawsuit within five years from the date of last payment or when demand for full payment was received, and no new agreement in writing has been executed, the debt is then time-barred and is not legally enforceable. The only way the credit card company can then receive a payment from you is in the event you voluntarily pick to make a payment. Some credit card agreements have an acceleration clause that must be invoked and two times a payment is missed, then the statute of limitations begins to accrue.

What Happens if a Credit Card Company Does Not File Suit Within the Statute of Limitations and the Debt is Time-Barred?

There is as well as a statute of limitations regarding credit reports. The statute of limitations for reporting accounts and credit reports is controlled by the Fair Credit Reporting Act (FCRA). If a credit card company in New york does not sue within five years and the debt becomes time-barred, it is still a negative account on a credit document though. Pursuant to the FCRA negative accounts can stay on a credit document for 7 years and positive accounts can stay for ten years. There's some exceptions that are not listed here, so consult a professional in your state for the exceptions. If a credit card company does not sue to enforce the payment of the debt, the next step is to dispute the negative account with all credit bureaus. The credit bureaus, Experian, Equifax and Trans Union are prohibited from continue to list elderly negative accounts on credit reports and must remove inaccurate item in 30 days. To dispute a credit account on a credit document you will require a recent copy of your credit document. There's a considerable number of websites that will provide a free credit document. Then to dispute an item on a credit document, you may write a letter, file a dispute online at the credit bureaus web-site and even by phone. Go to the Federal Trade Commission web-site at: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm