Read this BEFORE you file for BANKRUPTCY! Know the Statute of Limitations on Credit Card Debt!
94
 | Amazon Price: $5.89 List Price: $7.99 |
 | Amazon Price: $6.89 List Price: $13.99 |
 | Amazon Price: $9.16 List Price: $16.99 |
Did you know that in many states after 3 years of consistent non-payment on credit card bills that the credit card company or collections agency CANNOT sue you for the debt? Did you know that if you don't own a home, or a car, have no expensive assets like a boat for example and have no job that you are considered Judgment Proof? Judgment Proof means that a creditor cannot collect on a judgment even if the do sue you and win.
The following 13 states and Washington D.C. are 3 year states:
Alaska
Arizona
Oklahoma
Louisiana
Mississippi
Alabama
South Carolina
North Carolina
Maryland
Delaware
D.C.
New Hampshire
Vermont
Virginia
If it has been 3 years since you've made a payment on a credit card in one of these states and you've not been sued, the statute of limitations has run out and you cannot be sued for a debt in these states. Your credit will still show the default for another 4 years but after that it will drop off of your credit report as well. The statute of limitations is from 3 years (as in the states above) up to as much as 7 years in Montana, Iowa and Wyoming.
A creditor can still try to collect on the debt, which means he may still call you or write letters and ask you to pay but you are under no obligation to pay and you should probably not even talk to them unless you would like to remind them that the statute of limitations has passed and then hang up immediately after that. If you don't want to be harassed on the phone get rid of your land-line and screen your calls. If you are sued after the 3 years you should most definitely go to the court and tell them that the statute of limitations has run out and the case will be dismissed. If you do not go to court then the creditor can win by default so it is very important that you attend. If you cannot afford an attorney call legal aid.
A lot of people will call an attorney to ask for advice when the get in over their heads and the creditors are calling incessantly. Many bankruptcy attorneys will try and get you to file for bankruptcy (after all that is how they make a living), however bankruptcy stays on your credit report for 10 years after you've filed! If you have already surpassed the 3 year window and live in one of the states mentioned above you will only have to put up with a dinged credit report for 4 more years. It is not in your best interest to file bankruptcy if you fit the above mentioned criteria. Not only that but filing bankruptcy itself can cost quite a bit of money, something you are probably short of or you wouldn't be reading this now would you?!
The long and the short of it is to inform yourself of the laws in your state and to proceed accordingly. Do not let the collections agencies or the bankruptcy attorneys dictate your decisions. You must take care of yourself especially considering the economic climate we are now finding ourselves in.
- Statute of limitation for credit card debt collection, all 50 states
Creditors have a limited time in which to file suit over unpaid credit card debt. Here are the statutes of limitation for all 50 states and Washington, D.C.
Related articles by Brie Hoffman
- Facing Foreclosure: FIGHT BACK!
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation,... - Gold Investment for Uncertain Times
Gold is at historical heights these days. With all the chaos around the world people with money just don't know where to put it. So even though Gold is at an all time high I still think its a good... - Sick and have no Health Insurance?
Did you know that we already have free health care here in America? I'm not talking about the Obama Health care plan, no, before the Obama Health Care plan existed we had and still have a system called... - Advice for those who Can't Pay their Credit Card Bills
This blog is for people out there who cannot pay their credit card bills. If you have lost your job or possibly have suffered from an illness, whatever the reason and you cannot pay your credit card...
 | Amazon Price: $20.44 List Price: $24.95 |
 | Amazon Price: $17.69 List Price: $30.00 |
CommentsLoading...
Jim: Maybe it's different for different states? Also once you stop paying your 7 years starts ticking whereas with bankruptcy it doesn't start ticking away until you file.
What about California?Does California follw this 3 year non-payment law?
4 years last I looked.
Useful information to consider when it seems there is no way out. Great Hub!
Thanks...I'm all about useful :)
Really found you Hub quite interesting. I have not paid any of my credit cards in the last year. I live in Florida. I own a home, but it is way under water and not only that, it has leins over the value. Of my unsecured debt, I have not paid. I don't have a steady job, just social security. Can then take my social security? Or any money that family gives me from time to time? Can they freeze my bank accounts? Thanks
They can't take your SS, they can freeze your bank accounts...so take your money out of the banks. If you have quite a bit you should buy silver and gold coins and then it will stave off inflation. The money you need day to day should be given to you as cash and kept by you. Don't use the banks. Good Luck...Oh if you liked my article please rate it up, thanks.
Thanks for the reply,I don't have any money in the bank, only my social security, which gets direct deposited, I take it out the minute it goes in. The most I ever leave in my account is 200 - 300. I don't want to close the account because I pay my bills online. But, I never leave any money in it.
You should be ok then.
bankruptcy stays on your report for 10 years,not 7.
i am just about to file bamkruptcy .. i charge up all the open balanances on the cards then i stop paying.. does that look fraudlent..
That IS fraudulent and you will be prosecuted for it!
First, I think it was a great post. Everyone should check the statute of limitations for their state, it can help. Incidentally, I do believe that bankruptcy is necessary at times. Here are some other things I feel is important as well.
Chapter 7 bankruptcy is on your credit bureau for 10, chapter 13 bankruptcy stays on for 7 years, both beginning from discharge of the debt. The statute of limitations can help in certain situations as mentioned. Before you think about waiting it out though, take a look a how much you owe. If you have credit card debt in excess of $10,000 credit card companies will sue and they will get a judgment.
If you have a judgment for money, that stays on your credit report until 7 years after satisfaction. Also, no lender will loan you money (car loan, house loan, etc) with a judgment, even if you pay all your bills on time afterwards. Also once a judgment is won, they can garnish your wages, each state determines the amount that can be garnished. WI is 25% of disposable income, this is income after basic living expenses such as rent, food, utilities are paid.
In this situation bankruptcy is your only option. Know what the Fair Credit Collections Act says and how it works. Knowledge is power.
Everything you said is true except one. I know someone who owes more than 10k and was never sued because he has nothing, no house, no car, no job...so not everyone is sued.
this is good information to know. thanks for the hard work you obviously put into this hub! thumbs up from me
Thanks, I'm glad you like it.
This makes for some interesting reading - the financial situation in the USA is certainly different to here in the UK
How so debt-management?
I LIKE YOU!!!
:) I like u 2
You resemble Sarah Palin who I like. So only three years in AZ?
I wonder about what you have said about being sue proof. OF course if you own nothing and live under a bridge no one will sue you but what kind of existance is that?
I don't think I look like SP, but to each his own. What does "so only three years in AZ mean"? About the sue proof, personally I think you can live a very nice life without having a lot of material things and more than that I think that material things are used as a substitute for the more important things in life...especially in America.
Thanks for this information. I am going to do some research.
Brie, you said "...they can freeze your bank accounts...so take your money out of the banks. If you have quite a bit you should buy silver and gold coins..."
This doesn't sit well with me. If you borrowed money for some reason you should pay it back if possible.If you can't,then make plans for how you CAN pay it back.
There is a concept called "personal responsibility" which apparently is somehow overlooked here. There is no free money,somebody has to pay when others fail for whatever reason to repay a loan.
Cougo: Under normal circumstances I would agree with you, however, we are not living under normal circumstances. The banks have pretty much taken over this country with a secret coup...this is one way to fight back. The banks are stealing money from you and you don't even know it..through illegal taxation, bail outs, QE2, inflation, unlawful usury, lobbying..etc..in so many ways you and I probably don't even realize.
This is one way in which we can fight back.
So I have been avoiding the constant calls and occasional letter from two credit card companies, Discover and BofA. I am in California and believe the statute of limitations is four years which for me will be up in July of 2011. Can they take me to court without personally serving me by a process server? I am not at my primary residence a lot because I am trying to avoid these guys. They have even gone as far as calling my surrounding neighbors and asking them to have me call about some urgent problem. While this is embarrassing to me as I have to explain to my neighbors there is no "emergency" were talking about $30 grand in CC debt I'm trying to skate on. I never pick up the phone unless I know who I am talking to. I have 7 months to go. If I don't get personally served and obviously do not confirm the debt verbally or pay anything on it, am I in the clear? Thanks for your response.
Lynn, I believe that they do have to serve you but in some states they can mail something to you (and I've heard that in some cases they will lie and say that you have been served even if you haven't). If you do get served ...make sure to attend, it's always better to attend and explain your circumstances..ie, no money, no job, whatever. Usually they wont sue if there is no money, no job, no assets. Don't ever admit to owing anything. You should also make them verify the debt...that is prove that they are the creditors. Usually, they cannot because they don't have the original agreement between you and the credit card company. If they cannot verify the debt, YOU WIN! Good luck
Excellent hub. Thanks for the valuable info. I've passed it on to a good friend of mine in dire need of this peace of mind.
I'm so glad, it makes me very happy to help. I hope you rated it up too! :)
Well OK Brie,I admit I don't know too much about the secret coup,and the context obviously was "before filing bankruptcy". I would have to add that stashing "quite a bit" of wealth in gold coins etc.could be a bit problematic. Where would you store these? How would you insure them? What if gold and silver prices take a major dive? What if you do end up filing,do you list the coins or risk jail for fraud?
But I do agree about not using banks. I never even had an account until I was in my 50s and had to stash a major settlement somewhere. I was actually better off before in some ways. Thanks for the article.-Cougo-
There are all kinds of places you can store them...your freezer for one. I don't believe in insurance. If you file bankruptcy then you should list them, don't file!
Thanks for writing
Just a quick addition for UK users - currently after six years, a debt becomes "Statute Barred" and cannot be pursued via the court system. New bankrupcy laws have been introduced which mean that a bankrupcy can be discharged within 12 months of the judgement allowing for the business to start up again - however, this is usually a one time chance - further bankrupcy would not be taken so lightly.
Great Hub.
Jim
Thanks for the added information Jim.
*I am NOT an attorney*
In Ca. you CAN own a home and still file BK. The court allows you approx $75,000 in equity that is untouchable. You can also severely discount the value of your home and nobody will ever come look or do an assessment/appraisal. You should also file a "Homestead declaration" in your county which protects the first $150k in home equity from creditors, it is easy. With well over $200,000 in credit card debt, I personally know of cases where NO suit or judgement was EVER made against the individual. The BK court does limit your equity/ownership of a vehicle to about $1800. You can liquidate assets prior to filing BK and spend the money, even foolishly. You are in BK court because you are bad with money. Some stash large amounts of cash in safe deposit boxes as a sock drawer is not secure enough while being too tempting for most. IRS debts and Student Loans are some types of debt not cleared by BK. In almost all BK cases I have seen, no representative of any creditor will even show up to the BK hearing.
Talk to a Bankruptcy Attorney who will usually advise you for free and if needed will file bk for you for around $1500.
Eddie: In some cases it is the best thing to file bankruptcy but in others it is not, depends on the circumstances.
I found this to be a very interesting hub! I think if more people knew what was going on with their bank they would freak out. I have had several loans that I signed off on and come to find out they changed the terms without me being in default. I won't pay them a nickel. It's not skating it's about common decency. I am the first person to promote personal responsibility. Who do you complain to when the bank, credit card company, or loan agent screws with you. The government, get real, they can't even pay their own bills.
That's just it...a lot of people don't realize that the Banks and the Governmental are behaving in a criminal fashion until it happens to them. Thanks for writing Independentwriter.
I stopped paying on a Credit Card a while ago not sure how long a Collection agency was taking me to court but I was going to work a payment arrangement with them if it has been more then 3 years since I made an payments to the card your saying I can say see you in court? But I'd have to worry about them freezing my bank accounts/assets if they win till I paid up? What If they are joint bank account could they touch them?
If you have assets then you need to file bankruptcy because they will go after them.
Thank you for this info. I'm facing the possibility myself.
I hope it helps...spread the word.
This is very good information for people in a desperate situation. 99% of American people don't know there rights when it comes to debt collection agencies!
Thanks, I hope you will share it on your facebook page and help get the word out.
Could you provide some details for filing bankruptcy? As one of my brother living in NYC is facing this problem.
I will be grateful to you for this.
Sagbee, I am not a lawyer you would have to seek legal aid if you want to file bankruptcy.
What I dont get is why people max out their credit cards.
Don't they plan & budget?
A lot of people lost their jobs and/or have medical bills so it's a matter of life and death.
Watch out for those pesky student loans. They cannot be dissolved in a bankruptcy. There is no statute of limitation for them either that I know of. They will only grant you a forbearance, which is a delay of your payment. I was in the situation of no job, no assets and a student loan for thousands of dollars.
I know, I wrote another article about that: http://hubpages.com/hub/The-Student-Loan-Scam
People, don't be afraid of bankruptcy if you have to do it. Yes, it is a hard decision, but do not think life is over because you have crappy credit for a few years. In fact, since I filed, my wife and I have used no credit except for a car and a house. And yes, we bought the house DURING our Chapter 13 bankruptcy, with court approval. So given the right circumstances, bankruptcy can actually make your situation better!
I am facing either debt settlement...or??? I have over 30k in debt from my previous marriage. It was all in my name and after we split, he wouldn't help until divorce was final...which was 2 years later. I stopped paying CC almost a year ago, I live in CA, I don't own a home (that got foreclosed on a year ago) I do own a car (making payments) and I have a good job. If I pay these people off, I will have ZERO dollars to live... Can they take my car, or my pay if I don't pay them? I need advise. The Debt settlement company wants $650 to start, then $450 a month for 4 years....??? Seems a little fishy to me. Please help, or direct me to someone in southern CA that can. Thanks!
ABSOLUTELY DON'T GO WITH A DEBT SETTLEMENT CO! They are complete ripoffs. Read this: http://hubpages.com/hub/Advice-for-those-who-Cant-
Call a bankruptcy attorney and get advice, because you have a good job they can attach your wages. Otherwise I would advise just not paying them. If you file bankruptcy you wont be harassed at work and your wages wont be attached. Call a few attorneys to get the best advice for your situation and then go to legal aid because they wont charge you nearly as much as an attorney. Whatever you do DON'T GO TO A DEBT SETTLEMENT Co. All they do is tell you to stop paying the debt, then the credit card company will lower the amount to settle, you can do this yourself without paying the settlement company money. Read my other article it will help. They can't take your car...if they are unsecured credit cards that you owe.
Hi agian!
I only meant that I didnt know it was 3 years in AZ.Btw I think sarah palin is gorgeous wich means I think you are too and you are clearly smart too.
Thanks Todd
That's great post
Just call it 51 things Americans should know about the collapse of the economy. http://www.bushstole04.com/monetarysystem/economy_
I have no sympathy for high interest rate credit card companies.
Fantastic post. Keep it up.
Thanks Vikramshanti
Check out or Google search "Re-Aging". Creditors and collection agencies has been doing it for years and year! The will re-age the statue of limitations to their advantage. I disagree with this post, when in debt, filing is ALWAYS better than waiting it out. I've had so many clients come to me after 8-10 years, when the creditors took them to court, it's cheaper to file than to fight it.
It depends on your circumstances..if you are off grid and underground, you don't need to file...if not, well maybe.
After doing this, how do you get your credit rating back up?
You have to have a little money..like 100 dollars and then take that to the bank and get a $100 dollar loan..using that as collateral. Pay it off and keep doing it, making larger loans, paying them off early and you will restore your credit.
Great post, I appreciated all the little details, especially the down to the state ones, great hub, voted up and useful and following.
Thanks Baker.
This was really useful. I believe that if you owe something, you should pay it. But I was eighteen and had a kidney stone. Due to the idiocy of doctors, I had the kidney stone for a month and had to have it surgically removed. A lot of money later, no job, no house, no car, and you can get screwed. Sometimes things pop up, but as much as you try, hospitals and doctors are very picky about how quickly they get paid. For most hospitals, payment plans are only 12 months long! If the debt is not paid off in a year, then they can call the collection agency hound dogs on you!
I agree Ash but things are very different now and the powers that be are not playing fair with us so I see no reason to be fair with them. Good luck to you!
That's a very good take on it!
Thanks
Thank You Ms Hoffman!
I was in here looking for a different article and found your Hub here on credit card issues. I WAS thinking of Bankruptcy--and then someone reminded me that THEY charge fees also =o/ What the? IF I had the money to pay a lawyer, I'd have the money to do everything else expected of me. Geez haha
I AM bothered about simply NOT paying--You are correct about how some of use think; if I bought it, I should pay for it. The issue of Keeping these Usurious Creditors in golf balls ALSO bothers me. Thanks for the reminder of WHO is the big bad wolf here!
What kills me is that over the years, I worked like mad to not "overuse" my cards and to keep my debts paid on time; I even paid them all off, including ex spouses, THREE TIMES. Windfall moneies was the opportunity those cases.
Today, however, I'm flat broke: Horrific costly divorce and economy/less income and moving and disability/lack of work, illness and yadda yadda...I simply cannot pay. I can barrrrrely pay my utilities! Lately, I've used my cards just to buy FOOD. :( I'm MORTIFIED.
I worked SO SO hard at keeping my credit score up and those bills paid SO THAT--in late life I'd have them for emergency/a cushion. If the Creditors had not been allowed to HIKE the interests rates so high, I might be okay. These are some of the UGLIEST times in my lifetime. I'm 63.
I'll do more reading and research and thinking on what You've written here before I decide which is best for me but I'm almost in tears of "relief" after reading your Hub.
Thanks again---destitute in CA
Aremelle: Please Please read some of my other hubs..in fact I would hope that you would read them all! I am telling you this because there is a lot of information besides this one that will help you. I'm so glad you wrote..you are the reason I am writing these. Feel free to repost these articles on your facebook and to write to me if you have any questions. Also, make sure you watch all the videos because there is a lot of good information in those as well. Good luck to you.
Really enjoyed your article. A few years ago, my consulting business dried up. I tried everything to find work, but eventually had to default on my cards. I paid on the debt for over a year, but eventually my savings gave out. That was well over four years ago. One creditor sued me, the rest gave up. All that time, I was only able to find small, part-time work, so I eventually went back to grad school to try and change careers. When I graduated, no one was hiring in the field I graduated in, so I went for another year unemployed. And now - after all that-- I'm back doing what I used to do, and wish I had never gone to graduate school. On the positive side, it has been so long, that I've been written off by most of the creditors. On the down side, I will have to pay the judgement off. As soon as I can get a full-time perm job, that's my first step. The worst part of all of it was that I took out the so-called credit-card insurance, but when I went to use it, they said it was no longer on the account. If you have to have your cards cancelled due to fraud, it's a good idea to check to see if the credit protector is still on them. I didn't check, because I was working and never carried a balance on them. But back in 2006, I started to carry a balance, and when I checked, I no longer had credit protector. Moral of the story is the credit card protector is worthless. Also, don't ever take a balance transfer out during a lean time. You'll only end up regretting it. I couldn't have known my business would completely dried up--I'd been doing it for years. But creditors will try to fight any bankruptcy claim if they think you took out the transfers when money wasn't coming in. I wasn't able to file bankruptcy because my lawyer told me some of the creditors would try to fight it. He said my only option was to wait it out and see who would sue me, while I kept looking for work. If I found work, he suggested I file chapter 13 and work out a payment plan. But I never found a gig-- I lived as a student for four years, so now the debt is now time-barred. I wouldn't recommend this path for anyone who can file and try to reorg their finances, but sometimes it's just not an option. I went from a 730 score to about a 580 and now am up to about a 660.
Thanks for sharing Time Barred.
Hi I need some advice. Both my wife and I don't qualify for a chapter 7 so we are thinking of a chapter 13 but I calculated all of our bills without the credit cards and we have maybe $200 left every month will that go to the creditors in a chapter 13
I don't know, you need to talk to a bankruptcy attorney.
I have a appointment with one next week, would you happen to know what time frame a credit card company will freeze my savings account if not paid? 3months? More?
I have no idea, they could do it at any time.
Thanks for the hub! I found it useful and unfortunately applicable to the current market many of us are trying to survive.
You're very welcome, please feel free to repost on your facebook. Thanks for commenting.
Brie,
LOOOVE your hubs! I AM about to spread the word, but I just NEED to ask this...we DO need to file bankruptcy (though not sure which as of yet)...but, BEFORE we speak to an attorney, we need to know, how much in assets are we ALLOWED to have before filing (if it differs for each, I'd GREATLY appreciate knowing the amount for each)! THANK YOU VERY MUCH (in advance)!!!!!!!!!!!!
Thanks ENDcorruption but you need to ask the bankruptcy attorney that question. I am not an attorney. Good Luck.
If the CC's can't touch your SS or unemployment money
what do the get for freezing or putting a lien on your checking account?
Nothing if that is all you have.
Jim 19 months ago
7 years not 10 is how long bankruptcy stays on your record. I know b/c I filed for bankruptcy.