questions & answers

Question: What is the statute of limitations in AZ for credit card debt? What date does the statute of limitations start? Is it date of first delinquency or date of last action? I have old credit card debt I show last payment I made to original creditor in Oct. 2002, a debt collector is now saying the debt is from July 2003. They are also threatening legal action and wage garnishment. Can they take me to court?

Answer:

The statute of limitations on a credit card claim begins to run when the creditor can sue you. That is generally your first default, or the first time you miss a payment and do not subsequently catch up. There is no clear statute regarding limitations for a lawsuit to collect a credit card debt in Arizona. At least two relevant statutes may be applicable in this state: One for “open accounts” (three years from default) and one for “written contracts” (six years from default). In addition, some argue that a credit card debt will be based on the governing law for the transaction as set forth in the cardholder agreement. For example, if the cardholder agreement says that Virginia law applies, the Virginia statute of limitations and not the Arizona statute of limitations will apply. Very few cardholder agreements actually apply Arizona law. Since there are no appellate decisions in Arizona, it may come down to what the judge believes is the correct statute, if you are taken to court.

Because this is not a well settled area of the law, you may want to talk to an attorney. However, at least under Arizona law, the complaint would be barred if your last payment was made in October of 2002 (making your first default in November of 2002) and you were sued in 2009. However, that does not mean that they won’t attempt to sue you, and you may want to seek counsel to assert your statute of limitations defense. If you fail to do so, the creditor can get a judgment against you and garnish your wages. Banks are required by the Federal Government to charge-off an account after six months of no payments being made. From the facts you provided, it sounds like the debt collector is using the “charge-off date”, which is an accounting term, and has no legal connection to the statute of limitations. Debt Collectors (Agencies and Collection Law Firms) must follow the Fair Debt Collection Practices Act.

It is a violation of the FDCPA to file a lawsuit beyond the statute of limitations. You may want to review the "You and the Law: Fair Debt Collection" article on this site. From the facts provided, you might have a claim for a FDCPA violation, and may want to seek legal counsel.