The statute of limitations on debt collection is the amount of time a creditor has to take legal action against a debtor to sue them to collect for debts owed. Recently on our bankruptcy forum a debtor asked, “If I owe $10,000 to a credit card company in Texas how long does the lender have to sue me to collect the debt?”
Statute of Limitations in Texas for debt collection
Unlike other states such as Wyoming and Montana which allow creditors to continue debt collection efforts for seven or more years, the state of Texas has a consumer friendly statute of limitations for debt collection. In the state of Texas creditors may continue debt collection efforts for four years from the date of last activity. Debts with a four year statute of limitations include oral agreements, written contracts for car loans, promissory notes, and open accounts including credit card accounts.
Keep in mind, however, the statute of limitations clock for debt collection starts on the day the last payment on the account is made. This is called the DLA or date of last activity. If you make periodic payments over a lengthy period of time the date of last activity is constantly resetting.
For example, if you owe $10,000 on a credit card and you made your last payment on January 1, 2009, the date for legal action by the creditor would be January 1, 2013. But if you decide to make a payment for the debt on December 25, 2012, the state of limitations would restart.
Verifying date of last activity for Credit Card Debts
If you are not sure how long it has been since you made a debt payment or whether or not the debt is about to expire you have several ways to find out the date of last activity. First, you can check the consumer credit report. Next, you can call the debt collection agency or send a certified letter requesting this information. Finally, you can review your bank account for information about the last time you made a payment.
If you believe a creditor has attempted to file suit against you after the statute of limitations for debt collection or the debt has expired you should contact a consumer lawyer. Although you may be required to respond to the lawsuit, if you can prove they have violated the Texas Statute of Limitations you will not be liable for the debt.
Judgment issued for credit card debt
If a judgment is brought against you within the specified time period and the creditor wins their case the statute of limitations is no longer relevant. Unfortunately, the lender is essentially granted unlimited time in which to collect the amount owed.
In Texas, however, the consumer is offered a few protections. For instance, in the state of Texas creditors are not allowed to garnish your wages for most debts. Exceptions exist, however, for unpaid income taxes, court ordered alimony and child support, and defaulted student loans.
This does not mean, however, that they cannot seize certain assets. It simply means your wages will be protected.
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