Statute of Limitations of CC Debt in AZ Questions

[Thomas2]

I've been under the impression that the SOL on credit card debt in Arizona was six years but I'm seeing information online that it is three years. I went into default on numerous accounts in 2016 & I still have JDB's filing lawsuits in civil court against me. 

Can someone first confirm for me whether it is indeed three or six years for the SOL in Arizona. If it is six years, how do I calculate the exact date for when the six years will be up? If it is three years & these are now all SOL, how do I deal with this? I presume that if contact by a JDB via mail with intent to collect is received that I can write them & state the debt is beyond the SOL & do not contact me further about the debt. If they just go straight to filing a case, how do I counter this? Would it be a Motion to Dismiss once served due to the SOL having passed? 

I appreciate the assistance. Thank you.  

[BV80]

45 minutes ago, Thomas2 said:

I've been under the impression that the SOL on credit card debt in Arizona was six years but I'm seeing information online that it is three years. I went into default on numerous accounts in 2016 & I still have JDB's filing lawsuits in civil court against me. 

Can someone first confirm for me whether it is indeed three or six years for the SOL in Arizona. If it is six years, how do I calculate the exact date for when the six years will be up? If it is three years & these are now all SOL, how do I deal with this? I presume that if contact by a JDB via mail with intent to collect is received that I can write them & state the debt is beyond the SOL & do not contact me further about the debt. If they just go straight to filing a case, how do I counter this? Would it be a Motion to Dismiss once served due to the SOL having passed? 

I appreciate the assistance. Thank you.  

The SOL in AZ for credit card debt is 6 years.  The law was amended in 2011 to include credit card debt.  Here is the relevant statute.  § 12-548(A)(2) 

12-548. Contract in writing for debt; six year limitation; choice of law

A. An action for debt shall be commenced and prosecuted within six years after the cause of action accrues, and not afterward, if the indebtedness is evidenced by or founded on either of the following:

1. A contract in writing that is executed in this state.

2. A credit card as defined in section 13-2101, paragraph 3, subdivision (a).

B. If there is a conflict between another jurisdiction and this state relating to the statute of limitations for a debt action as described in subsection A of this section, this section applies.

If the credit card agreement contains an optional acceleration clause, the SOL begins on the first missed payment.  Here is a ruling from the AZ Supeme Court.

https://scholar.google.com/scholar_case?case=7675331254710062101&q=“12-548(A)”+AND+“mertola”&hl=en&as_sdt=4,3

However, to be sure, contact an AZ consumer attorney for confirmation.  

[Thomas2]

Thanks BV80, that's what I was looking for. 

OK, with it being six years, if there is no optional acceleration clause, when does the SOL begin? Last payment made? 

And finally, if I am past this point in time which I will be this year, how do I address this if a civil suit is filed & served?  

 

 

[BV80]

6 hours ago, Thomas2 said:

Thanks BV80, that's what I was looking for. 

OK, with it being six years, if there is no optional acceleration clause, when does the SOL begin? Last payment made? 

And finally, if I am past this point in time which I will be this year, how do I address this if a civil suit is filed & served?  

 

 

The court didn’t mention when the SOL would begin otherwise.  That’s why it’s best to contact a consumer attorney just to ask.

[Thomas2]

Thanks I'll reach out to one. 

[Flyingifr]

On 1/11/2022 at 9:25 PM, Thomas2 said:

Thanks BV80, that's what I was looking for. 

OK, with it being six years, if there is no optional acceleration clause, when does the SOL begin? Last payment made? 

And finally, if I am past this point in time which I will be this year, how do I address this if a civil suit is filed & served?  

 

 

This clause: "within six years after the cause of action accrues" means when the first payment is missed and the account is never brought current again.

[Thomas2]

That's what I surmised.

Another question inline with this is that LVNV is showing up on my credit report as an "open account" (I presume that means collection account) with a start date over a year after the last payment was made to the original debtor. Is this a violation? Or is this just how these things appear when a JDB buys a debt? And I don't go off of this date, I go off of the "within six years after the cause of action accrues" which would be later this spring?  

Thanks. 

[BV80]

3 hours ago, Thomas2 said:

That's what I surmised.

Another question inline with this is that LVNV is showing up on my credit report as an "open account" (I presume that means collection account) with a start date over a year after the last payment was made to the original debtor. Is this a violation? Or is this just how these things appear when a JDB buys a debt? And I don't go off of this date, I go off of the "within six years after the cause of action accrues" which would be later this spring?  

Thanks. 

“Open account” is the type of account.  Credit cards are accounts which are left “open” to allow the consumer to make future charges and payments.

If by “start date”, you’re referring to the “date opened”, that is the date the account was opened in the collection agency’s files,  it is not the date the account itself was opened.  That is not a violation.  

The date of accrual in your state would be the date the account went into default and was never again made current.  As a result, the account was charged off.  For instance, if a minimum payment of $100.00 was required on 07/30/2016, but you didn’t make that payment, OR you only paid $50.00 instead of the required $100.00, then the date the account went into default would be either 7/30/2016 or 08/30/2016. You never again made any payments that could bring the account current, and it was charged off.

FYI:  Negative information remains on a credit report 7.5 yeas from the date of first delinquency (DOFD).  That’s the date an account went into default but was never again made current.  Making less than required payments that don’t bring an account back to a current status do not change the DOFD.  Again, that is because those payments do not make the account current.  It is still in default.

The only way a DOFD can be changed is if, after default, you bring the account back to a current status and THEN default again.

Note:  Timely payments in the required amounts do not create delinquencies.   It is defaults (lack of a timely payment or less than the required minimum) that create delinquencies.  It is those defaults that create a DOFD.

Once an account is closed or charged off, it can never again be current.  You can never use it again.  Paying it in full will not even make it current.  So, because the account can never again be current, it is actually permanently delinquent.  Nothing can change that fact.  Therefore, it cannot be changed by settling the debt.

Let’s say that, while the account was current, the next minimum payment due was $100.00 on 01/30/2018.  You missed that payment.  The account is now in default with a DOFD of 2/30/2018.  However, the account is still open and has not yet been charged off.  The creditor sends another billing statement listing a required minimum payment of $200.00 to be paid by 02/30/2018.  You make that exact payment by the due date. You have now made the account current (up to date and still open for use by you), and it is no longer in default.  The original DOFD of 02/30/2018 remains.

BUT, a few months later, you miss another payment. It was due on 07/30/2018, but no payment was made.  The account is in default again.  By missing that payment, you have created a new DOFD of around 7/30 or 8/30/2018.  This time, you never bring the account back to a current status.  You either make no more payments, or you only make small payments that are less than the required minimum payments.  Those small payments do not bring the account back to a current status, and it is charged off.  The new DOFD of 07/30 or 08/30/2018 is now set in stone.   Making payments after charge off or even settling the account in full will not change that DOFD.  The account will fall off your credit report approximately 7.5 years after that new DOFD.  

[Thomas2]

On 1/29/2022 at 6:23 AM, BV80 said:

“Open account” is the type of account.  Credit cards are accounts which are left “open” to allow the consumer to make future charges and payments.

Got you. 

On 1/29/2022 at 6:23 AM, BV80 said:

If by “start date”, you’re referring to the “date opened”, that is the date the account was opened in the collection agency’s files,  it is not the date the account itself was opened.  That is not a violation.

I figured that was the case but wanted to confirm. 

On 1/29/2022 at 6:23 AM, BV80 said:

The date of accrual in your state would be the date the account went into default and was never again made current.  As a result, the account was charged off.  For instance, if a minimum payment of $100.00 was required on 07/30/2016, but you didn’t make that payment, OR you only paid $50.00 instead of the required $100.00, then the date the account went into default would be either 7/30/2016 or 08/30/2016. You never again made any payments that could bring the account current, and it was charged off.

Perfect. That's what I needed to know. I don't have the exact dates on all the defaulted accounts. On sites like Credit Karma, I can only get the JDB information. Will a full credit report have the original information? Or will I need to do a DV for any mail contacts? What about if the JDB goes straight to court but I'm all but certain it is now past the SOL? 

I really appreciate all of this information. It is extremely helpful. Thanks. 

[BV80]

2 hours ago, Thomas2 said:

I don't have the exact dates on all the defaulted accounts. On sites like Credit Karma, I can only get the JDB information. Will a full credit report have the original information? Or will I need to do a DV for any mail contacts? What about if the JDB goes straight to court but I'm all but certain it is now past the SOL? 

I would order paper reports from each of the big 3 credit bureaus.  Those will contain more information.

I would also be trying to locate past cc statements and or bank statements that show payments in order to determine the last payment made while the account was current.  If you can’t locate your bank statements, your bank should have copies of them.  Just get copies of statements from around the time you believe you went into default.

If all else fails, and the JDB sues, in its complaint, it should state the last time you paid in the complaint.  In the event it doesn’t give that date, you can request it in discovery.  Once you have that date, you can then get the corresponding copy(s) of your bank statements, if necessary.  When answering the complaint, you could go ahead include the SOL as an affirmative defense.  If the account is truly past the SOL, you would also have an FDCPA counterclaim.

[Thomas2]

3 hours ago, BV80 said:

I would order paper reports from each of the big 3 credit bureaus.  Those will contain more information.

Doing that this morning. 

3 hours ago, BV80 said:

I would also be trying to locate past cc statements and or bank statements that show payments in order to determine the last payment made while the account was current.  If you can’t locate your bank statements, your bank should have copies of them.  Just get copies of statements from around the time you believe you went into default.

One issue I have is that one of the defaulted credit cards was from the bank I was using. They actually closed my main checking account as well simply citing "security concerns". I had to move to a different bank. So unless I can find hard copies, I don't have access to bank statements from that time period. 

3 hours ago, BV80 said:

If all else fails, and the JDB sues, in its complaint, it should state the last time you paid in the complaint.  In the event it doesn’t give that date, you can request it in discovery.  Once you have that date, you can then get the corresponding copy(s) of your bank statements, if necessary.  When answering the complaint, you could go ahead include the SOL as an affirmative defense.  If the account is truly past the SOL, you would also have an FDCPA counterclaim.

Good advice. With the bank statement issues, what can I use to confirm that the last time paid is accurate? Do I need to worry that they might "fudge" things? 

Thanks.

 

[BackFromTheDebt]

Banks are unlikely to fudge things.  
The penalties if they get caught are high; their reputation could be on the line as well as possible fines from the government.  
 

That being said, in one of my wife’s accounts a very well known card company did fudge things.  When I pointed this out to their lawyer he quickly agreed to a mutual dismissal of charges in JAMS.  
 

The probability of a JDB fudging things is higher.  Most won’t. If the data comes from the OC, it probably won’t be fudged.  

[Thomas2]

12 hours ago, BackFromTheDebt said:

Banks are unlikely to fudge things.  
The penalties if they get caught are high; their reputation could be on the line as well as possible fines from the government.  
 

That being said, in one of my wife’s accounts a very well known card company did fudge things.  When I pointed this out to their lawyer he quickly agreed to a mutual dismissal of charges in JAMS.  
 

The probability of a JDB fudging things is higher.  Most won’t. If the data comes from the OC, it probably won’t be fudged.  

Yeah, I'm not as concerned with the OC's but I've not had particularly good experiences with local collection attorneys or JDB's, so I'll do my best to deal with this as it unfolds.