Debt Settlement: Credit Card Lawsuits

Credit card debt settlement laws dictate what actions the credit card companies or third party debt collectors can use to attempt to collect the outstanding balance. States have different laws with regards to credit card debt collection including the statute of limitations for collection as well as debt negotiation or debt settlement programs.

Credit Card Collection Law

The number of lawsuits by credit card companies and third party debt collectors continues to increase each year. All credit card debt collections are covered by the Fair Debt Collection Practices Act which is a federal law. However, in some states, local laws will take precedence over the federal law. These cases often deal with the statute of limitations for the creditor to file a lawsuit to recover an outstanding debt. Within the United States, each state sets its own limit on when the legal action must occur for the courts to hear the case. This can range from three years to more than seven years with the start date documented as the day the customer signed for or agreed to the purchase.

Time-barred Debt

In some lawsuits a consumer may be able to prove that the action by the credit card company or third party debt collector is on a time-barred debt. This is a debt that has existed past the statute of limitations for collection. By proving the debt is time-barred the case is dismissed through the courts.

It is important to note that the creditor or debt collection agency can still attempt to collect a time-barred debt, but they cannot do it through the court system. Consumers need to be aware of the difference between a lawsuit and a demand for payment that is outside of the legal time frame for recovery through the court.

Seek Legal Advice

Understanding credit card debt settlement laws is the first step in knowing your rights as a consumer. Speaking with an experienced debt settlement attorney before entering into an agreement with a debt negotiation company, credit counseling agency or making an offer of settlement with the creditor is essential. The attorney can evaluate your case, provide information on options and help you understand the best choices for your financial future.