Credit Card Statute of Limitations

Credit Card Debt Statute of Limitations in Arizona

Debt LawsuitRecent Changes in Arizona Law Give Lenders a 6 Year Statute of Limitations to Collect Credit Card Debt in Most Cases

A statute of limitations is a law that provides a deadline to file a lawsuit.  Failure to file the lawsuit prior to the time period specified in the statute of limitations results in the permanent loss of the right to file that lawsuit.  In other words, if you don’t file the lawsuit before the deadline, you can never file.

In Arizona, the legislature recently passed a law clarifying that credit card companies have the right to file a lawsuit to collect on credit card debt for up to 6 years.  This law is found in Arizona Revised Statutes (A.R.S.) § 12-548.

A.R.S. 12-548

A.R.S. 12-548 says:

A. An action for debt shall be commenced and prosecuted within six years after the cause of action accrues, and not afterward, if the indebtedness is evidenced by or founded on either of the following:

1. A contract in writing that is executed in this state.

2. A credit card as defined in section 13-2101, paragraph 3, subdivision (a).

B. If there is a conflict between another jurisdiction and this state relating to the statute of limitations for a debt action as described in subsection A of this section, this section applies.

Prior to the change in law, in some cases, credit card companies only had 3 years.  However, note that the statute itself specifically carves out exceptions and in some cases a different and possibly shorter statute of limitations may apply.

Once the statute of limitations expires, the credit card company or debt buyer cannot sue you for the debt.  But they could continue to contact you and request payment, however unlikely that would be to succeed.

In short, the expiration of the statute of limitations on your credit card debt is a good thing, a very good thing for you as the borrower.  And it is one of the first things we analyze when you come in for a free consultation with our firm.

Should You Try to Wait Out the Statute of Limitations?

This approach may seem tempting, the theory being that if you just lay low and wait it out, maybe the problem will go away.  But it rarely works that way.  Here are some of the problems with this approach:

The Creditor Could be Waiting it Out

If the debt is more than a tiny amount, someone somewhere is going to want to collect.  And they may just be biding their time.  They could be checking your credit report to see when you come into some money and then pounce.  Do you really want that hanging over your head?  And wouldn’t you be in a worse bargaining position then?

Interest is Still Accruing

Unpaid credit card debt continues to accrue interest and fees.  Imagine how much more your debt will be in 6 years!  While you’re trying to get your life back on track, that interest accumulation will be working against you.

You Could Get Sued

Not dealing with your credit card debt for extended periods of time can often lead to getting sued by the bank.  If you’re sued and you ignore it or lose, you could have a judgment entered against you. This allows the creditor to garnish your bank accounts and wages, among other collection tactics.

So What is the Best Strategy?

If you are really close to the expiration of the statute of limitations, and that is your only debt, then it may make sense to try to wait a bit longer for it to expire.  But for most people, that is not the case.

An attorney negotiated credit card debt settlement is a great option for those struggling with debt.  Our firm can develop a custom plan for you that may allow you to settle your credit card debts for a fraction of the balance the creditor is claiming.  All of this is done without bankruptcy.  And if you’ve been sued, we can defend you while we negotiate a settlement.

Call today for a free consultation and debt analysis with an attorney.