When you are past due on a credit card debt, it’s easy to believe that the creditor gets only a certain amount of time to begin legal proceedings. That’s called the statute of limitations, and each state has a different one.
The question, however, is how long the creditor has to sue you. Most people assume it’s based on the statute of limitations in your home state. Those people are wrong.
In the recent case of Capital One Bank USA, NA v Gregorich, one court in Florida has hit the nail on the head by saying that the statute of limitations is governed by the Cardmember Agreement between the consumer and the credit card company.
In the Gregorich case, Capital One began a lawsuit about 3 1/2 years after the date of default. The Customer Agreement (Capital One’s term for Cardmember Agreement) specifically stated that it would be governed by Federal and Virginia law. The relevant statute of limitations in Virginia was deemed to be 3 years because the Agreement did not qualify as a “written contract” governed by the 5 year Virginia Statute of Limitations.
End result? Capital One loses.
Your lesson? Always check the Cardmember Agreement to determine the appropriate statute of limitations.
A copy of the court decision can be found here.
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