Credit Card Debt Laws You Must Know - Just When You Think You Stop the Collector in Time

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Out of nowhere a collector comes knocking at your door, demanding payment on an old credit card you barely remember. He is very insistent and hints of taking you to court. Although tight on cash, you're very calm ...

Yes! You know your credit card debt laws. The Statute of Limitations in your state for unsecured debt is 4 years. That old card balance is way past that. You calmly point out to the collector.

Looking defeated, he pleas for you to help him out with a token sum of payment. He needs to show the boss that he has done his best or he may be fired. Out of sympathy, you relent, thinking it does no harm since the debt has expired.

That is when the nightmare begins ...

You are hauled into court for the old credit card debt. The judge throws out your statute of limitations defense and rules against you. Now, you're burdened with another huge amount of debt on top of your existing ones.

What just happened?

You have unwittingly "tolled" the limitations with your token sum of payment.

The term "toll" means to "postpone or suspend" in this context. To toll a statute of limitations is to postpone the running of the time period it specifies. Credit card is a good example of this. Your payment each month postpones and restarts the debt collection time clock. It is a tool of the law to adjust the validity of the debt expiry period in the spirit of fairness.

Just about every state has its own rules and provisions on the running and tolling of the statutory period of limitations. When you make an actual payment on an expired credit card debt, you may reset the time limitation under certain circumstances. Sometimes, even a promise to pay, regardless verbal or written, may toll the statute.

Now do you know what to do when a debt collector next comes knocking at the door?

Do not agree to anything! Validate the debt. Check the statute of limitations. Even when you are sure the debt has expired, never promise to make any token payment. Seek legal advice when in doubt.

Knowing a bit more of credit card debt laws will save you a great deal of time, money and headache.

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Source by Troy Todd