(Disclaimer: I am not an attorney. Do not accept this as legal advice.)
I do not know about you, but I have lived in three states since I obtained my first credit card. Since moving out of California three days after graduating from high school, I have lived in Oregon, Washington, back to Oregon, back to Washington, back to Oregon again and then finally to Idaho.
I imagine many of you have lived in multiple states during your adult life.
When you miss your first credit card payment (or any other debt), two things happen. First, when you reach thirty days late, the credit card issuer reports you as 30 days late to the credit bureau(s) it belongs to.
Second, the Statute of Limitations clock begins to run. The SOL in each state sets the time limit in which a court proceeding can be brought against someone in a criminal or a civil case.
If you never pay that credit card, then the issuer or the collection agency which takes the account over can sue you for the amount up until the end of the Staute of limitations timeframe. For example here in Idaho, a credit card account falls under the definition of a written contract, which has a five year SOL. So if I missed a payment which was due on June 4, 2016, I can be sued for it up to June 4, 2021.
But what if I move during back to Oregon? Oregon has a six year SOL for credit cards. Did I just hose myself for another year? If I was to be sued in Oregon during that sixth year, I would argue the SOL had expired under the Borrowing Statute.
Most states have a borrowing statute law on their books. The borrowing statute allows the court to “borrow” the statute of limitations law from the state where the debtor lived at the time of the debt being incurred. This is designed to prevent creditors and other plaintiffs from “shopping” states to file their lawsuits in the state with the most lenient SOL law.
Back to my scenario, the suit would be filed in Oregon because it has the longer SOL. I would argue in my defense that the debt was time-barred because I had
- Lived in Idaho when the debt occurred, and
- Oregon’s Borrowing Statute requires the Idaho SOL to prevail.
Of course the final decision would belong to the judge so this argument is not a guarantee! But if you ever find yourself in this situation, check to see if your state has a Borrowing Statute which can be argued in your favor. You just might avoid having a judgment issued against you.