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Statute of limitations on credit card debt

Like most other states, New Jersey law has a statute of limitations in place for credit card debt owed by consumers. The statute of limitations is designed to limit creditors to only being able to sue a debtor within a specified time period.

In New Jersey, the statute of limitations on credit card debt is six years following the date it became delinquent. Making a single payment, however small, starts the clock over. This is called re-aging the debt. It may make some sense, then, for a debtor who is close to the statute of limitations to not send in a payment.

The statute of limitations does not mean the debt is gone or that debt collectors must stop trying to collect it. It simply prevents them from being able to sue the debtors who owe in court for a judgment. The statute of limitations also does not mean the debt will automatically disappear from the debtor's credit report when the time period is up. If someone files for bankruptcy and includes the debt, the bankruptcy information will remain on their credit report for 10 years.

If a person is sued for a credit card debt beyond the statute of limitations, the debtor should include that information in their filed response to the court. If someone is sued for a debt within the statutorily allowed time period, they should not ignore the lawsuit. People in that situation may do well to seek the advice of a bankruptcy attorney to determine if bankruptcy may be a better option for them. Bankruptcy can provide some people with a fresh start financially and might also stop further collection activities. If debt collectors continue to try to collect debts when a bankruptcy has been filed, they can be liable for damages.

Source: Credit, "What a statute of limitations is, how it works Read more: Follow us: @CreditCardsCom on Twitter | on Facebook Compare credit cards", October 21, 2014

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