(Disclaimer: I am not a lawyer. Please do not accept this as legal advice.)
I don’t know about you, but I’ve lived in three states since I got my first credit card. Since I moved from California three days after graduating from high school, I have lived in Oregon, Washington, back to Oregon, back to Washington, back to Oregon again, and finally to Idaho.
I imagine that many of you have lived in various states during your adult life.
When you miss your first credit card payment (or any other debt), two things happen. First, when you are thirty days late, the credit card issuer reports that you are 30 days late to the credit bureaus to which it belongs.
Second, the Statute of Limitations clock starts ticking. The SOL in each state sets the time limit in which legal proceedings can be brought against someone in a criminal or civil case.
If you never pay off that credit card, then the issuer or collection agency that takes over the account can sue you for the amount up to the end of the statute of limitations. For example, here in Idaho, a credit card account falls under the definition of a written contract, which has a five-year SOL. So if I missed a payment that was due June 4, 2016, I can be sued until June 4, 2021.
But what if I move during the return to Oregon? Oregon has a six years SOL for credit cards. Did I wash for another year? If I were to be sued in Oregon during that sixth year, I would argue that the SOL had expired under the Indebtedness status.
Most states have a statutory loan law on their books. The loan statute allows the court to “borrow” the statute of limitations from the state where the debtor lived at the time the debt was incurred. This is designed to prevent creditors and other claimants from “buying” states to file their claims in the state with the more lenient SOL law.
Going back to my scenario, the lawsuit would be filed in Oregon because it has the longest SOL. I would argue in my defense that the debt was time-barred because I had
- You lived in Idaho when the debt occurred, and
- The Oregon Loan Statute requires the Idaho SOL to prevail.
Of course, the final decision would belong to the judge, so this argument is not a guarantee! But if you ever find yourself in this situation, check to see if your state has a Loan Statute that can be argued in your favor. It may prevent a judgment from being entered against you.
