Contact by Debt Collector Over Old Credit Card Debt

[ghalibiat]

My question involves collection proceedings in the State of: Texas and Ohio

I had a credit card that I made last payment in March 2006 in Ohio. In late 2010, I permanently moved to Texas. Recently, out of nowhere, I received a letter from a collector demanding payment of a huge amount on that credit card. My questions are:

1. Has the statue of limitations run out on this debt in both Texas (3 years) and Ohio (6 years)?

2. Can the collector file a lawsuit and win a judgment against me on this debt? Do I have any defense?

3. Can the collector file the lawsuit in Ohio even though the collector is aware that I am in Texas and, therefore, has sent me the collection letter in Texas?

4. In case the collector files the lawsuit in Ohio, how will I know that I have been sued in another state?

5. If lawsuit is filed in Texas, will the SOL of Texas be applicable on the debt or that of Ohio?

6. Should I try to negotiate the payment settlement? I am worried that it will reset the SOL clock once again.


The collection letter has given me 30 days to dispute the validity of the debt. (By the way, the original credit card bank was also bought by another bank in 2006.)

Thanks for your help.

[Mr. Knowitall]

Did you want somebody to research the statute of limitations for you?

If you are sued, you would raise the statute of limitations as a defense, along with whatever other defenses may exist. You haven't told us about any other defenses. You will raise the local statute of limitations or research the state's borrowing statute to determine if the other state's limitations period would apply (if shorter).

The collector can file wherever the collector believes the court has jurisdiction. If the collector has your current address, I would expect them to sue where you are presently located.

You will know that you have been sued when you are served. I cannot promise you that a lawsuit filed in another state will involve personal service - that will depend on what happens after the suit is filed and what other form of service the court might authorize.

If you believe the debt is expired, but choose to negotiate a payment plan that may allow the debt to again be pursued in court, that's your choice to make. You should assume that a signed document acknowledging the debt and promising to pay will make your debt viable or, if the debt is not expired, potentially restart the statute of limitations.

[adjusterjack]

1. Has the statue of limitations run out on this debt in both Texas (3 years) and Ohio (6 years)?

The Ohio 6 year SOL is for "contracts not in writing" per Section 2305.07.

http://law.justia.com/codes/ohio/201...ection2305-07/

The Ohio SOL for a "contract in writing" (your credit cardmember agreement) is 15 years.

http://law.justia.com/codes/ohio/201...ection2305-06/

The two exceptions don't apply to you.

Worse, even if you insist that a credit card is not a written contract, the SOL stopped running once you left Ohio and the time away from Ohio is not computed in the SOL.

http://law.justia.com/codes/ohio/201...ection2305-15/

One way or another the collection agency is still well within the Ohio SOL.

2. Can the collector file a lawsuit and win a judgment against me on this debt?

Very likely yes.

Do I have any defense?

You owe the money, right?. So, no defense.

3. Can the collector file the lawsuit in Ohio even though the collector is aware that I am in Texas and, therefore, has sent me the collection letter in Texas?

Yes, the lawsuit can be filed in Ohio. All states have long arm statutes that allow that. However, since the judgment would have to be domesticated in Texas to be enforced, it's likely that you'll be sued in Texas if it comes to that.

4. In case the collector files the lawsuit in Ohio, how will I know that I have been sued in another state?

You'll be served the summons and complaint by a process server. However, if you end up with a judgment against you where you weren't served you can have the judgment set aside and make the creditor start all over.

5. If lawsuit is filed in Texas, will the SOL of Texas be applicable on the debt or that of Ohio?

Good question. Section 16.067 of the Texas SOL touches on that and it's not clear to me whether Texas honors Ohio's limitation or not. I imagine that's been clarified by case decisions but you'll have to talk to a lawyer and find out.

http://law.justia.com/codes/texas/20...-b/chapter-16/

6. Should I try to negotiate the payment settlement? I am worried that it will reset the SOL clock once again.

An acknowledgment will reset the clock if it is made in writing. See Section 16.065 (same Texas link as above). That's a common provision of statutes of limitations so it's likely that Ohio has the same provision.

Negotiating a payment settlement is up to you. Just be careful what you put in writing or have an attorney do the negotiating for you. Negotiating a payment settlement could work if you have 60% to 80% of the debt in cash right now. If you don't, or you are looking for a payment plan, it's not likely that the creditor will give you the time of day.

the original credit card bank was also bought by another bank in 2006.

Irrelevant.

Now, after all the bad news I gave you, there's a couple of things in your favor.

Texas does not allow wage garnishment (it's in the Texas Constitution). Collection agencies prefer to rely on fear to get people to pay rather than front money for lawsuits. It's possible that the letter is a bluff.

Might not be, though, and then you have the option of filing bankruptcy if you lose a lawsuit.

[Mr. Knowitall]

Justia's not a bad site, but it scrapes statutes from the official sites and thus can lag significantly behind the current versions of the code. Ohio recently reduced its limitations period:

Except as provided in sections 126.301 and 1302.98 of the Revised Code, an action upon a specialty or an agreement, contract, or promise in writing shall be brought within eight years after the cause of action accrued.

That period has not quite run, but it's closer than 15 years. The tolling provision, as interpreted by the Ohio courts, would apparently allow a lawsuit if the defendant returns to Ohio.

Texas doesn't have a classic borrowing statute, but Civil Practice and Remedies Code, Sec. 160.67 raises a potential defense to a lawsuit if claim accrued before the defendant relocated to Texas and the claim is time-barred in the state from which the defendant came. The statute has an unusual provision, effectively giving a plaintiff up to one year to sue a defendant who has relocated to Texas if a debt is time-barred in Texas but not yet time-barred in the state in which it accrued. In this context, as the debtor moved to Texas more than a year ago, Texas would apply its own statute of limitations to a lawsuit to enforce the debt.

(a) A person may not bring an action to recover a claim against a person who has moved to this state if the claim is barred by the law of limitations of the state or country from which the person came. (b) A person may not bring an action to recover money from a person who has moved to this state and who was released from its payment by the bankruptcy or insolvency laws of the state or country from which the person came. (c) A demand that is against a person who has moved to this state and was incurred prior to his arrival in this state is not barred by the law of limitations until the person has lived in this state for 12 months. This subsection does not affect the application of Subsections (a) and (b).

[ghalibiat]

Mr. Knowitall,
Thanks for your detailed and helpful reply. I really appreciate your time to read and answer my post. English is not my first language and, on top of that, I am not used to reading the legal verbiage. So I had to read your post multiple times but I am still not sure if I understood everything correctly.

1. I did not know the SOL in Ohio and Texas and wanted to know what it was. Based on your reply, it appears that it is 8 years for the written contracts. So the debt is still within SOL.

2. "The tolling provision, as interpreted by the Ohio courts, would apparently allow a lawsuit if the defendant returns to Ohio." Does this means that until I return to Ohio, the creditor can not bring a lawsuit?

3. "In this context, as the debtor moved to Texas more than a year ago, Texas would apply its own statute of limitations to a lawsuit to enforce the debt." Does this mean that the creditor has lost its opportunity to bring the lawsuit in Texas now since one year has limit has long passed?

4. "You will know that you have been sued when you are served. I cannot promise you that a lawsuit filed in another state will involve personal service - that will depend on what happens after the suit is filed and what other form of service the court might authorize." Since the creditor knows that I am in Texas, does it need to tell the Ohio court this fact or can it use my previous address in Ohio in the lawsuit? I am worried about the latter part and that I would never receive any papers in that case.

Thanks again.

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Adjusterjack,

Thanks for your detailed reply to my questions. Very kind of you.

Do you agree with Mr. Knowitall about the 8 years limit for the written contracts?

Thanks again.

[Lehk]

Keep that letter they sent you, debt collectors are often sleazy and may try to get a default judgement by intentionally serving you at an old address, that letter is evidence they know your current address and will be useful if you have to move for a default judgement to be set aside for improper service.

[Mr. Knowitall]

The Texas limitations period is four years, and applies to lawsuits filed in Texas except as outlined in the statute quoted above.

There is no mechanism for telling a court in which no case is pending that, should a case be filed, you live in Texas.

[ghalibiat]

Lehk. Thanks for a good suggestion. I will keep the letter as evidence.

- - - Updated - - -

Mr. Knowitall. Thanks a lot for your reply. Based on yours and other forum members replies, I think:

a) There is little chance for the collector to win a judgment in Texas as SOL has run out here and I have been living here for more than a year:

b) Collector can still file a lawsuit in Ohio and win it since I may never know of its filing (e.g. if they use a prior address). I may, however, have a chance for an appeal on the ground that the collector knew I was living in Texas but did not inform the court of this fact.

Please let me know if I am wrong. Thanks a lot again for your help.