SOL Terms on Credit Cards

[Anonymous]

There has been much written on how each state sets their own statute of limitations for collections. Have three credit card balances totaling 17k from a business that has closed and I was the guarantor. I was unable to pay them and they were charged off. I have heard nothing from collection agencies for more than three years. 

The SOL in my state is three years. Now someone told me that credit card companies can set their own terms for SOL in the fine print of the agreement, much longer then what the state says. Is this true? I don't have the original agreement anymore and wouldn't know how to check. Thanks. 

[Anonymous]

@RobertEG can likely put this to bed but until he chimes in, my understanding is No. individual companies cannot set policies that supersede state law. If your state’s SOL is three years, and that date has passed, you cannot be sued. Collection efforts can continue indefinitely and the accounts can be listed by CAs on your reports up to the standard exclusion date, but nothing can be filed in court to force repayment.

[Brian_Earl_Spilner]

No, if the SOL is 3 years, they can't sue you after that. Some banks or lenders used to try to sue in different jurisdictions to use the longer SOL in those locations, but I believe that's illegal now.

[RobertEG]

No, a creditor cannot set a statute of limitations on debt within their account agreements that is longer than the relevant statutory period.

A creditor can gain flexibility in SOL period based on which state they bring civil action, but once they file a civil action, the SOL legally is that of the state of jurisdiction of the court.

Debt collectors, for example, have the explicit option under federal law (FDCPA 811 to  bring civil action in either the state of current residence of the consumer, or in the state where the contract that created the debt was signed.

Once they file in either jurisdiction, the SOL for that state then prevails before that court.

Some state SOL statutes, however, include "borrowing provisions," which include within their state statute the provision that the SOL period of another state can be used (borrowed) if it is longer than the period within that state under certain provisions, such as the contract was signed in another state.

[Brian_Earl_Spilner]

@RobertEG thanks for clarifying. I know lenders used to try to file in their home state which is why so many lenders have the same locations, such as Omaha and delaware. That is not allowed, correct?

[vntrsc]

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@Brian_Earl_Spilner wrote:

@RobertEG thanks for clarifying. I know lenders used to try to file in their home state which is why so many lenders have the same locations, such as Omaha and delaware. That is not allowed, correct?

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One of the reasons a number of credit card banks are located in South Dakota and Delaware is the interest rates those states allow banks to charge.