IN CALIFORNIA HOW LONG IS THE STATUTE OF LIMITATION ON A DEBT?
That simple question has a rather simple answer: 4 years on a claim for breach of a written contract. That's plainly stated in California's Code of Civil Procedure § 337(1).
Unfortunately, that is just the beginning of the question practically speaking. For example, what starts that 4 years rolling in the first place? What can interrupt it? Once it expires, what can restart that 4 year-period all over again? And when does California's 4-year statute of limitations apply at all instead of some other state's different length of time?
WHAT STARTS THE STATUTE OF LIMITATIONS CLOCK?
With credit cards it starts from the date of the last payment or the last charge on the account.
WHAT CAN STOP THAT STATUTE OF LIMITATIONS CLOCK FROM RUNNING?
Under California law many kinds of event can "toll"—or stop—the statute of limitations clock, including (among others):
- If you are absent from the state (Code of Civil Procedure (CCP) § 351)
- During the time you are in bankruptcy (assuming the debt is not discharged during the bankruptcy case) (CCP § 356)
- If the parties voluntarily agree, by a written and signed document (CCP § 360.5)
- Various equitable tolling circumstances, including impossibility due to circumstances, interference, fraud and such
WHAT CAN REVIVE A STATUTE OF LIMITATIONS ON A CREDIT CARD DEBT?
You need to be very cautious about what you tell a debt collector who is collecting on a debt, especially one that may be beyond the statute of limitations. However, under California law reviving the statute of limitations—so that the 4-year period starts anew—generally takes a written agreement. Still, don't say anything orally or certainly in writing that could be construed as an acknowledgment that you owe the debt or intend to pay it.
DOES THE 4-YEAR STATUTE OF LIMITATIONS APPLY IN THE FIRST PLACE?
Most credit card agreements stipulate that the laws of a specified state govern the terms of the contract. So even if you live in California, the statute of limitations laws of the state in the contract may apply instead of California's 4-year one.
For example, Bank of America, Chase, and Discover credit cards tend to specify that the laws of Delaware apply. Wells Fargo and Citibank seem to refer to the laws of South Dakota, and Capital One to Virginia. The statutes of limitations for these three states on credit cards vary from 3 to 6 years.
Whether these state-specific contractual provisions are enforceable depends on each situation and so is beyond the scope of this article.
STATUTE OF LIMITATIONS ARE MORE COMPLEX THAN MAY APPEAR
As must be clear by now, a statute of limitation may get you out of paying a debt, but only if you are attentive and assertive enough to raise the defense very quickly after being sued. And determining whether the statute of limitation period has indeed expired involves quite a number of potential issues. That includes even whether the California 4-year statute applies in the first place.
So, it is very likely prudent to meet with an attorney if you owe a debt or debts that you believe may be beyond the statute of limitations. And that is especially true if you have been sued for such a debt.
Besides learning whether you have a statute of limitations defense, meeting with an attorney would give you the opportunity to have him or her review your overall debt picture. There may be other alternatives available, such as a Chapter 7 "straight bankruptcy" or a Chapter 13 "adjustment of debts," or other possibilities. A competent and ethical attorney will lay out the options for you, and never pressure you to take any particular direction because that is always up to you. To learn what you need to do if the statute of limitations has expired go to:How Does the Statute of Limitations Work for Debt?