What is North Carolina’s Statute of Limitations on Collecting Credit Card Debt?
Updated: Apr 1
Perhaps the most common type of lawsuit filed against consumers in North Carolina is for defaulted credit cards. Debt collectors and debt buyers these file credit-card lawsuits en masse. What is the statute of limitations on a credit card lawsuit in North Carolina? This post answers that question.
A credit card is essentially a contract between the card issuer and the consumer. The credit card issuer agrees to give credit, and the consumer agrees to make payments as required under the cardholder agreement. The statute of limitations on credit card debt, under North Carolina law, is three years. The statute setting this term is G.S. § 1-52, which states that “[t]he periods prescribed for commencement of actions … are set forth [as follows]”:
Within three years an action ... Upon a contract, obligation or liability arising out of a contract, express or implied ....
It is important to note, however, that this does not apply to all contracts. If the contract is for the sale of goods, the statute of limitations is four years, and if the contract is under seal, the statute of limitations can be up to 10 years. These other time periods are not applicable to most credit cards, though the best person to tell you the statute of limitations on any particular account is a licensed attorney.
When does the three-year statute of limitations begin to run? It typically begins running when the consumer defaults on his or her payments. For example, if your due date is the 1st day of the month, and your last payment was January 1, 2020, the statute of limitations probably began to run on February 1, 2020, the date on which you first failed to make a payment.
Though the first date of non-payment is usually the date of default, your cardholder agreement may define default differently. For example, your cardholder agreement could say that you are in default only after the credit card company makes a demand for payment, or tells you that you are late. Though default is usually the same across agreements, it is always possible to define it differently.
Generally, though, as one court explained, “the statute [of limitations] begins to run on the date the promise [to pay] is broken.” Kornegay v. Aspen Asset Grp., LLC, 204 N.C. App. 213, 233, 693 S.E.2d 723, 738 (2010). Thus, if you promise to pay on a certain date, but you fail to do so, that is most likely when the statute of limitations will begin running.
Not all credit cards are subject to the North Carolina statute of limitations, however. The parties to a contract are also permitted to choose which state’s law governs the agreement. Many credit card agreements use the law of other states.
The Consumer Financial Protection Bureau has a Credit Card Agreement Database, so if you don’t have a copy of the one that was sent to you, you should be able to find it online. Many Bank of America credit cards do use North Carolina law. That is not surprising, as that is where Bank of America is headquartered. Capital One, on the other hand, uses Virginia law for some of its cardholder agreements. It makes a difference because Virginia as a six-year statute of limitations, giving Capital One twice as much time to file a debt collection lawsuit to collect defaulted accounts.
The only thing affected by expiration of the statute of limitations is whether a lawsuit can be filed against you in court. Non-judicial collection (such as phone calls or collection letters) is permitted regardless of whether or not it has expired. This means that it is permissible for debt collectors to keep asking for payment, but it is not permissible for them to sue you in court.
If a debt collector does sue you after the statute of limitations expires, it is probably a violation of the Fair Debt Collection Practices Act or the North Carolina Debt Collection Act. This may entitle you to dismissal of the collection lawsuit or money damages.
How can you be sure of when the statute of limitations began to run? If you don’t know, the best place to check is on your credit reports. Your credit reports usually say when the last date of payment was, so you can usually assume that the statute of limitations started running about one month after that date. Again, However, this will always be determined by the cardholder agreement, so you should consult in licensed attorney for a definitive answer.
If you are in North Carolina and you have questions about debt collection, the statute of limitations, or credit card lawsuits, contact us at Culik Law PC to see how we can help. We are a Charlotte-based law firm that has litigated against credit card companies and hundreds debt collectors at all levels of the court system -- and we have achieved many favorable results for our clients.