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Know Your Rights: Understanding the Statute of Limitations on Credit Card Debt in Illinois

Think twice about paying old credit card debt and strategize about how your pay old credit card debt



Statute of limitations on Credit Card Debt

Something not commonly known is that creditors have a limited amount of time to sue debtors for credit card debt. This period is known as the statute of limitations. A statute of limitations is a legal rule that sets a specific time period during which legal action must be taken. After the expiration of the time period, the legal action is barred, and the right to sue or prosecute is lost. Statutes of limitations apply to various types of legal claims, including civil lawsuits, criminal charges, and administrative proceedings. The length of the time period varies depending on the jurisdiction and the type of claim.

Why are there a statute of limitations

The purpose of the statute of limitations is to encourage the timely resolution of legal disputes and to prevent the filing of stale claims based on faded memories and unreliable evidence. In Illinois, the statute of limitations for credit card debt is 5-years. This means that after 5 years, the creditor cannot sue the debtor for the unpaid debt. But, this rule has a very important trap for the unwary. If the debtor makes a payment, even one penny, the statute of limitations restarts from the date of the payment.

What happens if you make a payment on old credit card debt

When that happens, the debt is "refreshed" and even if the not much was collected, the value of the debt has gone up because the debt now appears to be collectible but more importantly to the creditor, the time frame in which it can be collected has been extended for another five years. But now you've thrown chum to the sharks. As a result of that small payment, the value of your debt has not gone up!

Why is making a small payment on old credit card debt a big deal

This is delving deep into inner workings of debt, but we all understand how an old debt decreases in value over time. If somebody owes you $1,000 and it's a "fresh" debt, you could sell that to a debt collector for a higher value now, than three years for now. This is because over time, people are more difficult to find, paperwork proving the debt is lost, witnesses are unknown, etc. But if you make a small payment- all of a sudden, the debt is "fresh" again and that add real value to the debt. For example, let's say the original debt was $1000. It was considered not collectible so after a charge off it was sold to a debt collector named "X" for $100. After they tried to collect for awhile and failed, they resold the account to another collector "Y" for $25. But, since you made a small payment, the likelihood of collection has increased. You just bought yourself another five years of collection. So, now that same account can be resold to collector "Z" for $100 and the harassment continues. For that reason, you'll commonly have aggressive debt collectors manipulating or intimidating you to make a "good-faith" payment, of even a tiny amount, to avoid more aggressive collection actions. Such as a threatened lawsuit. If they can get small payments on a portfolio of debt, it can be re-packaged and resold for a higher value. Isn't collections an amazing business!

Why it's important to know the statute of limitations

It is important to understand the statute of limitations on credit card debt because it can affect the debtor's rights and options. If a debt collector contacts a debtor about a debt that is beyond the statute of limitations, the debtor has the right to refuse to pay the debt. The debt collector cannot legally sue the debtor for the debt, and the debtor does not have to pay. So you hold the advantage. When dealing with debt collectors, it is important to know your rights and options. If a debt collector contacts you about a debt that is beyond the statute of limitations, you can confidently refuse knowing that they cannot sue you. If you do choose to pay a debt collector, be aware of the potential consequences and make sure that you understand the terms of the payment agreement under which you make that payment. You might be buying yourself into a problem.

Should you ever pay old credit card debt

There my be a reason that you would make a payment despite the consequences. For example, if you know you are going to file a bankruptcy, but are not quite ready for it, you can "stall a lawsuit" by perhaps making a small payment to buy time. You may wish to strategically delay a lawsuit because in some cases, once they have a judgment, wages can be garnished or property liened. In such a situation, it makes sense to make a payment.


In conclusion, the statute of limitations on credit card debt is an important concept for debtors to understand. Knowing the statute of limitations can help debtors protect their rights and make informed decisions when dealing with debt collectors. If you are dealing with credit card debt in Illinois, make sure to educate yourself on the statute of limitations and your options for dealing with debt collectors.

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