What Is the Statute of Limitation on a Collection Case?

What Is the Statute of Limitation on a Collection Case?

Last updated: January 2011

The following questions were submitted to John Roska, an attorney/writer whose weekly newspaper column, "Q&A: The Law," runs in the St. Louis Post-Dispatch (Illinois Edition) and the Champaign News Gazette. This article was published on January 4, 2011.

Question:

How do you measure the statute of limitation on a collection case? It’s been years since I’ve used a credit card that I just got sued on. What’s the limit on those kinds of suits?

Answer:

The statute of limitation on a credit card debt isn’t always easy to figure out. Under Illinois law, it could be 5 or 10 years. But credit cards often import another state’s law into your case. You’d then have to figure out whose law applies, and that state’s statute of limitation.

A statute of limitation sets a deadline for filing a court case. In the broadest sense, it’s designed to avoid stale claims, before evidence and witness’s memories have faded or disappeared. If you snooze, you lose your right to sue.

Different kinds of court cases have different statutes of limitation, ranging from 1 to 75 years. The deadlines for filing cases with administrative agencies—rather than in court—are different still, and can be very short. Some local agencies, for example, give you just 90 days to file complaints about illegal discrimination.

For collection cases in court, the clock that a statute of limitation creates starts ticking on the date of “default.” Usually, that’s the last payment.

For written contracts, the Illinois statute of limitation is 10 years. A creditor therefore has 10 years from when you defaulted on a written contract to file a collection case against you.

For unwritten contracts, the Illinois statute of limitation is 5 years. If nothing was ever in writing—like an informal, oral IOU—it’s obviously an unwritten contract. But even if there was a written contract, and nobody produces it in court, it could still be treated like an unwritten contract.

Some Illinois court cases, for example, have said that if there’s no proof of a written credit card contract, then it’s a 5 year statute of limitation. One case said that a signed credit card application is just a request for credit, and not a credit contract, and that monthly statements are just demands for payment, and not proof that any written contract exists.

In many credit card collection cases, there’s never any sign of a written contract. In those cases, there should be a 5 year statute of limitation.

The statute of limitation could be even shorter if another state’s law applies. Consumer contracts often have a “choice of law” clause buried somewhere, by which you “agree” for another state’s law to govern any dispute that may arise.

Capital One agreements, for example, often choose Virginia law. It turns out that Virginia’s statute of limitation on “revolving credit” agreements, like credit cards, is 3 years.

In those cases, even though Capital One sues in Illinois, it’s Virginia’s short statute of limitation that applies. If they file more than 3 years from your last payment, the case should be dismissed.

That’s how a statute of limitation works. It’s a defense, that you must raise. If you don’t, an otherwise stale case can proceed against you.

Statutes of limitation therefore don’t stop cases from being filed. They can, however, be a defense that gets the case dismissed.
 

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