Credit Card Debt Statute of Limitations – What Law It Applies
You are being threatened with a lawsuit on an old credit card debt. How do you determine if the claim against you is barred by the credit card debt statute of limitations? Does federal or state law apply? If state law, which state’s law will apply? Is it the state you live in or some other state’s law?
There is no federal statute of limitations for credit card debt. Thus, you need to look to state law for an answer. But wait a minute. You might not want to look at the law for the state you live in. That is because most, if not all, credit card agreements have a “choice of law” provision which specifies the state’s law which will be applicable in the event of a dispute between you and the credit card company. You should take time to read your credit card agreement as well as other documents you received when you received your card.
A lot of companies opt for the law of the State of Delaware. However, some, like American Express, choose Utah for at least one of its cards. Courts will generally enforce choice of law provisions unless court determine that the provision violates some well established principle of your home state. For instant in a case involving American Express in which the choice of law provision named Utah which allows for the waiver of the consumer’s rights to file a class action lawsuit against the credit company. The Third Circuit Court of Appeals found that provision unenforceable because it violated New Jersey law (the state where the consumer lives) which values such lawsuits because individual claims tend to be rather small.
Unfortunately, several other federal appeal districts have upheld similar provisions so the matter is not universally settled. Nevertheless, a good rule of thumb is that such contract provisions will be enforced unless the state law chosen would disallow some protected federal right or some well established principle of the state in which you live.