When Does the Clock Start Ticking?
For credit card debt, it begins on the date of the last payment or last charge you made on an account. Creditors, collectors, or debt buyers often file a breach of contract claim, as when you take on debt, you’re making a contract to pay it in exchange for credit to purchase a product or service. The contract will be considered breached when you stop paying off the debt.
A breach of contract usually occurs when the account is charged off, which occurs when the account is 180 days delinquent. This is important to know when being sued. You can determine the date of the last payment, and count 180 days ahead, to see if the statute of limitations can be used as a defense.
Does Anything Stop the Clock from Running?
There are many events that can stop, or “toll”, the statute of limitations clock. Under California state law, some of the reasons this can happen include:
- You are out of the state for a period of time
- The time you are in bankruptcy and debt is not discharged
- A voluntary agreement signed by both parties
- Equitable tolling circumstances, such as fraud, interference, or unforeseen circumstances
Reviving the statute of limitations on collecting debt in California generally requires a written agreement. But there are other ways you can acknowledge you owe debt or intend to pay it. There are a few categories depending on the debt you have; the time limits differ for each type, including:
- Written contracts signed by you and the creditor, with the amount owed, monthly payments, and terms and conditions.
- Oral agreements to pay back money; there does not have to be a written contract.
- Promissory notes, or written agreements to pay back debt in increments, at a specified interest rate, by a given deadline.
- Open-ended accounts like credit cards with revolving balances that you repay and borrow from again.
Does Only California Statute of Limitations Apply?
You may be subject to terms that reflect other state laws. For example, Chase, Discover, and Bank of America credit cards typically follow the laws of Delaware, while Capital One refers to Virginia law. This is significant because Delaware has a 4-year statute of limitations for open-ended accounts and, in Virginia, it is 3 years.
In California, while written, promissory, and open agreements have a 4-year deadline, for oral agreements it is 2 years.
How Do I Know Which Statute of Limitations Applies?
Raising a statute of limitations defense requires being attentive and assertive. A range of issues can determine whether the applicable statute of limitations has expired. One issue is to decide if California’s 4-year statute applies to your case. It’s therefore wise to meet with an attorney familiar with the law and debt collection in general.
Contact Oak Tree Law
If you have issues with debt or debt collectors, our legal experts can provide representation and find the best legal solutions for your situation. Applying a statute of limitations to a debt-related case can be challenging. Whether you have high amounts of outstanding debt, have faced harassment from debt collectors, or are considering filing for bankruptcy, contact us for a free evaluation or call 888-348-2609.