I have been a certified court mediator in Florida for more than 10 years. In recent years, I have seen more and more cases of creditors and debt collectors suing people who have not made the minimum payments on their credit cards.
If you have outstanding credit card debts and have failed to make your minimum payments, this could happen to you. The card issuer, or a debt collector it has hired or sold the debt to, has the right to take you to court to try to collect on your outstanding debt.
However, creditors only have a certain period of time in which to take legal action to collect. Every state has a statute of limitations on credit card debt. Typically, it's somewhere between three and seven years. The limitation period begins on the date of your last payment. In California, it is four years, according to creditcards.com.
It is crucial to understand, however, that if you make any payment on an expired debt, the clock resets on the statute of limitations, and you are again legally obligated to repay the outstanding balance.
If a creditor or debt collector contacts you after the statute of limitations has expired, you should inform them in writing that the statute of limitations has expired. If they persist, you may follow the advice of Bill Bartmann, an expert on debt collection (see more information at billbartmann.com), who recommends that you notify the Federal Trade Commission, the Better Business Bureau, the consumer protection division of your state's attorney general's office and the new U.S. Consumer Financial Protection Bureau. In some cases, especially if the collection agents are using deceptive and/or illegal tactics, it might make sense to hire an attorney who would be willing to file suit on a contingency basis.
Unfortunately, debt collectors often use clever means to get debtors back on the hook for expired debt. According to The Wall Street Journal, certain debt collectors offer credit cards to people in exchange for making payments on their expired debts - often without a clear explanation that the person is not obligated to repay the debt.
Some individuals, troubled by poor credit ratings and the inability to get a conventional credit card, accept the deal.
This is very foolish. There are better options. For example, rather than start repaying expired debt, it makes more sense to save a little money and use the savings to get a secured credit card. Once a person has established a reliable payment history on the secured credit card, he should find it easier to obtain a nonsecured credit card.
If you are unable to maintain payments on an outstanding debt, make sure you understand your legal rights. And if you receive any offer that is contingent on restarting payments on an expired debt, you should definitely not accept it without legal advice.