What Is the Statute of Limitations for Credit Card Debts in Texas?

 Posted on December 16, 2022 in Credit Card Debt

The laws put in place by different states have time limits that determine when a law may be enforced. The time limit for a certain law is known as the "statute of limitations." In cases where people have debts that are owed, the statute of limitations that has been defined in the laws of their state determines when creditors can take legal action to collect these debts. For people who live in Texas, it is important to understand what statute of limitations may apply and when they may be able to avoid paying debts or seek debt relief through bankruptcy.

What Is the Statute of Limitations in Texas?

In Texas, the statute of limitations for credit card debts is four years. This time limit begins on the date that the last payment was made toward a debt. This means that if four years have passed since a debtor made any payments toward the balance on their credit card, the creditor can no longer sue them to seek repayment.

In 2019, Texas also passed a law that was meant to help prevent "zombie debts." Prior to the passage of this law, some creditors or debt collection agencies had been able to take actions that would restart the statute of limitations on a debt that was owed. By contacting people and asking them to affirm a debt or make a payment, this would allow them to continue to attempt to collect debts even after four years had passed. However, with the passage of the new law, debtors have more protections against creditors attempting to collect debts after the statute of limitations has passed.

What Does it Mean When the Statute of Limitations Expires?

When the statute of limitations expires, creditors can no longer legally pursue collection action against a debtor. That is, a creditor cannot initiate a new lawsuit to attempt to collect the amount owed. However, if a creditor had filed a lawsuit within four years after the last payment was made on a debt, they will still be able to attempt to receive a judgment allowing them to collect the debt.

It is also important to understand that even if a creditor cannot take legal action to collect a debt, the debt will still exist. Unpaid debts will remain on a person's credit report, and a creditor may continue to contact the debtor and attempt to collect the debt. However, since the creditor will be barred from filing a lawsuit, they will not be able to enforce the debt by freezing the debtor's bank accounts, garnishing their wages, or placing a lien against their property.

Contact Our San Antonio Bankruptcy Lawyer for Credit Card Debts

While the statute of limitations may expire in some cases, ensuring that debtors will be protected from legal action by creditors, most creditors are aware of the applicable time limits, and they will take whatever steps they can to pursue repayment of what is owed while they have the legal ability to do so. 

If a creditor has filed a lawsuit against you, or if you are facing other consequences related to your inability to make payments on the debts you owe, you may be considering filing for bankruptcy. When you file a bankruptcy petition, an automatic stay will apply to all of your creditors, requiring them to cease all collection actions and prohibiting them from contacting you in any way. In some cases, you may also want to file for bankruptcy after the statute of limitations has passed so that debts can be cleared from your credit report. At the Law Offices of Chance M. McGhee, we can advise you of your options for receiving debt relief through bankruptcy, and we will make sure you will be able to clear your financial record and receive the fresh start you need. To set up a free consultation, please contact our Kerrville bankruptcy attorney at 210-342-3400.

Sources:

https://statutes.capitol.texas.gov/Docs/CP/htm/CP.16.htm#16.004

https://statutes.capitol.texas.gov/Docs/FI/htm/FI.392.htm#392.307

https://cbsaustin.com/news/local/new-state-law-will-soon-stop-debt-collectors-from-harassing-you-over-old-debts