Credit card companies have only a certain period of time in which they can legally collect on the debt that you owe. Each state sets its own amount of time, called a statute of limitations. In North Carolina, this amount of time is generally three years.
Statute of Limitations
The statute of limitations is the time window in which creditors can legally sue debtors who have not paid on their credit cards. (See References 1 and 3). These laws exist to prevent people from being pursued in perpetuity or when evidence no longer exists to support the lawsuit. (See References 1). Once a debt goes beyond the time prescribed in the statute of limitation, a debt collector forfeits the right to sue. (See References 2).
Type of Debt
The statute of limitations can vary based on the type of contract. For example, some states have different statutes of limitations for written contracts than for oral contracts. (See References 2). Promissory notes and open-ended accounts like credit cards may also have different time windows. (See References 2). In North Carolina, written contracts, oral contracts and open-ended accounts have a three-year statute of limitation. (See References 2). Promissory notes carry a five-year statute of limitation. (See References 2). So unless you sign a separate promissory note agreement with a creditor, the three-year rule would likely be the statute that controls your credit card agreement. (See References 2).
The statute of limitations kicks in on the date of your last payment. (See References 3). For example, if your last payment on your account was January 1, 2012, your creditor has until January 1, 2015 under the three-year statute of limitations. (See References 3).
Even though you live in North Carolina, it's possible that another state law may dictate which state's statute of limitations is used. For example, if you incur the debt in one state and then move to another state, the law in the state in which the contract was formed typically controls. (See References 4). For example, if you lived in Tennessee and incurred the debt there, where the statute of limitations is six years and then moved to North Carolina, the Tennessee statute of limitations would likely apply. (See References 2). If the credit card contract stipulates which law applies, this specific information takes precedence over the state where the consumer resides. (See References 1).
Defending with Statute of Limitations
If a creditor sues you for the debt beyond the time prescribed by the statute of limitations, it has violated the Fair Debt Collection Practices Act. (See References 2). The Federal Trade Commission recommends informing the court or the judge that the debt is time-barred to get the lawsuit dismissed. (See References 1).
Credit cards can be "re-aged" when a debtor makes a payment on a debt that is close to the end of the statute of limitations, basically resetting it. (See References 1). Even if the creditor can't sue you, it can still include the delinquent account on your credit report. (See References 4).
Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.