Different laws apply in each state in terms of the statute of limitations on credit card debt. The range could be anywhere from three years to ten years with a portion of the states maintaining a longer period for the statute of limitations on credit cards. The consumer is protected by the laws that are in effect, not credit card companies. This means the collection of credit card debt is not able to star the process of suing over the debt after the passing of a statute of limitations.
Now, this doesn’t mean that you can just ignore your debt. The credit card company can sell your debt to a debt collection agency and they can come after you then. But once the statute of limitations has ended, that credit debt collector cannot sue you for the balance owed.
Debt collection agencies will buy outstanding debts from credit card companies for next to nothing. By selling off the bed debt, the credit card company can try to get back some of the money they lost from the consumer. Then the collection company will come knocking at your door, wanting you to pay the full amount owed. The collection company then keeps all the money you send in since they have bought the debt from the original company.
There are federal laws that protect consumers from harassing phone calls and threatening letters from debt collectors, but if they work within the letter of the law, they can do whatever is necessary to get their money. And while there is a statute of limitations, the debtor will still owe the money no matter the time frame. Think about if you borrowed money from friends or family, you are still under a moral obligation to pay them. And you should think the same of credit card debt.
Many people think that the statute of limitations on credit card debt will pass and the debt will be erased from their credit history and credit report. There is no truth to this. Collection agencies are not authorized to sue you, but you still owe the debt. That is the only thing that the statute changes. Because many of the collection agencies purchase the debt you owe for a lesser amount, you should be able to make an account settlement for a significantly lower cost by settling with a collection agency.