http://www.illinoislegalaid.org/index.cfm?fuseaction=home.dsp_content&contentID=5834
The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, "Q&A: The Law," runs in the St. Louis Post-Dispatch (Illinois Edition) and the Champaign News Gazette.
Question
What’s the statute of limitation on credit card debt? I’m getting letters threatening to sue over a card I haven’t used in years. How old does the card have to be before they can’t sue anymore?
Answer
"[Ten years is the statute of limitation on most credit card debt. That’s the statute of limitation on written contracts. The time limit begins upon “default,” which is usually your last payment.]"
A statute of limitation sets a deadline for suing. It’s designed to get cases into court when evidence and memories are still fresh. If a case is “stale,” and filed too late, it can be dismissed.
There are many different statutes of limitation. A few exotic cases have no limit at all, and can never get stale. Otherwise, though, the time limit for filing a case in Illinois or Federal court can range from one year to 75.
The time limits for filing cases with administrative agencies—rather than in court—are different still, and can be very short. Some local agencies, for example, give you just 90 days to file complaints about illegal discrimination.
Figuring out which statute of limitation applies can be exasperating. It depends on the particulars of each case. In general, though, debt collection cases have a statute of limitation of 4, 5, or 10 years.
The 4 year statute of limitation applies to sales of goods. A motor vehicle retail installment sales contract, for example, has a 4 year statute of limitation.
The 5 year statute of limitation applies to unwritten (i.e., oral) contracts. That covers most informal IOUs.
The 10 year statute of limitation, finally, applies to written contracts. Or, as the Illinois law says, to “actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness.”
These time periods are not measured from the date of the oral agreement or written contract. If they were, a 30 year mortgage would be unenforceable after 10 years.
Instead, the clock starts running when “the cause of action accrued.” On debts, that’s usually the last payment—and why debt collectors have been known to coax payments out of people just to re-start the clock.
Since there should be a written cardholder agreement somewhere behind a credit card debt, the statute of limitation on that debt should be 10 years. If you’re sued 10 years after your last payment, you can get the case dismissed.
That’s how a statute of limitation works. It’s a defense, which stops the case, but only if the defendant raises it. It doesn’t stop a plaintiff from filing the case in the first place, or from getting a judgment if the defendant doesn’t say anything.
“Zombie debt” lurks amidst the high volume of credit card collection cases now being filed. Defendants should beware, and check their records to see if it’s been more than 10 years since their last payment. If it has, they need to respond to a lawsuit by proving that to the judge.
