If you've fallen behind on credit card bills, a statute of limitations places a deadline on any lawsuit against you. In California and other states, the length of this timeline varies, according to the type of debt covered. Although a creditor is never legally barred from attempting to collect a debt, there is a clock running on any civil claim it files in order to win a court judgment.
Open-Ended Accounts in California
California law classifies revolving credit accounts as "open-ended," and sets a statute of limitations of four years on such accounts. The four years is timed from the last activity on the account, either a purchase or a payment to the original issuer or the issuer's representative, such as a collection agency or attorney. If no payment is ever made, the statute runs from the account's first purchase date. Collection agencies often press for small payments on overdue accounts in order to reset the four-year statute of limitations, and allow more time to file a valid lawsuit.
Answering the Lawsuit
The statute of limitations does not prevent the filing of a civil lawsuit for debt, in California or any other state. When a creditor files suit, it's the job of a defendant to file an answer, before a short deadline expires, and raise the statute of limitations defense. If no answer is filed, or the debtor does not appear at the hearing, the creditor can request a judgment from the court without submitting account statements or any other evidence that the SOL has not run. If the court issues the judgment, the debt would be legally enforceable through garnishment, liens or levies.
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Restrictions on Collections
The statute of limitations does not apply to collection actions. There is no legal deadline on letters, phone calls or other communication in an attempt to collect a debt.The Fair Debt Collection Practices Act bans harassment, misrepresentation, calling at certain hours, and threats of arrest and/or jail time. It also requires collection agencies and attorneys to identify themselves and who they represent, and gives a debtor 30 days to dispute the debt after the first contact.
Disputing a Debt
Californians have the right to dispute a debt on the grounds of a billing error such as an unauthorized charge that appears on the bill, or failure of the purchaser to receive the goods charged. There is a 60-day deadline to dispute a credit card bill, however, and ask to have the charge removed or claim a refund. In addition, if a credit lawsuit is filed, the debtor can demand that the plaintiff prove they have authority to file the claim. When a credit card issuer sells a past-due account to a collection agency, for example, that agency must have an "assignment" that transfers legal custody of the account.
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