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New Case! Statute of Limitations on Arizona Credit Card Debt

New Case! Statute of Limitations on Arizona Credit Card Debt


Credit card Arizona- Hey from the arizona Consumer Law Group. In today's video I wanted to talk about a brand new arizona Supreme Court decision that came out today, July 27th of 2018 that clarifies when the statute of limitations starts on credit card cases. Now because of the just a huge volume of credit card cases, one would think that this was, been clarified generations ago (laughs) but this has been an area of the law that has been very murky and up until now, there's been a lot of different interpretations of when the statute of limitations starts so I wanted to talk about this new case.

The title of it is Mertola LLC versus Santos. Now if you watch a lot of my videos, this may sound a little bit familiar cause about a year ago, the court of appeals issued a decision in this Mertola case that was just terrible for consumers.

Basically it said that the statute of limitations didn't start basically until the debt collector or the credit card company said it did, until they accelerated the amount owed on it. Which had the practical effect of meaning that the credit card company decided when the statute of limitations started and it eventually could be just never ending, you know, they could not receive payments for years and years and years and then accelerate it at that point and then there'd be an additional six years beyond that.

So, let me back up just a little bit and talk to you about the statute of limitations on credit card debt in arizona. Now in arizona there's a six year statute of limitations on credit card accounts. What this means is that the debt collector has six years from the time that you go into default to actually file a lawsuit against you.

One of the most misunderstood things that I run into when I meet with clients is they believe that once the lawsuit is filed, that the statute of limitations still continues on and that they had better get it taken care of pretty quickly. That's not what that means. Statute of limitations is the amount of time from default on the credit card until they file the lawsuit. In arizona, the creditor has six years to file a lawsuit. If they don't file the lawsuit within that six year period, then they're forever barred from doing it and the case is done.

They can't collect on it through the court system any further.

They can just ask you to make voluntary payments on it. Well what the court clarified today in the Mertola/Santos case is when the clock starts ticking on the statute of limitations because there's always a lot of gray area. If you saw or talked to debt collectors, creditors, junk debt buyers and their attorneys, they always would allege to the court that the statute of limitations would start at charge-off. Now charge-off occurs when there's been approximately six months of missed payments.

That's when they alleged the clock started ticking on that six year time period. Well the arizona Supreme Court clarified today that that's not the case. They specifically held that the clock starts ticking the very first time that a person falls behind and doesn't make the full required payment under the credit card. So if you have a credit card and there's this monthly minimum, it says it right there in your statement, and you don't make it, technically you are in default at that point because they could sue you.

Well the arizona Supreme Court now says that's when the six years starts ticking, when you fall behind.

New Case! Statute of Limitations on <strong><u>arizona</u></strong> <strong><u>credit card</u></strong> Debt

They make a point of saying you can, you know, fix that situation, you can pull the account out of default by getting caught up on all the past due payments but something else that was very important that they brought up today is they said that partial repayments, however, do not cure the default or reset the limitations period. And the reason why that's important is because there were so many people that were worried that their last payment was five and a half years ago and then they got some debt collector to get them to make a $20 payment, you know, over the phone five and a half years into it and they now reset that six year limitations period.

The Supreme Court in arizona has said that's not the case. That in order to reset the limitations period, to make that six years start completely over, you would have to bring current all of the past due payments that you hadn't made up to that time period. So you can see that this can be a real game changer in debt collection litigation because many of these accounts are sold to junk debt buyers and it's years from the time when the last payment was made until they actually file suit.

Now I think you can look back through the monthly statements, determine when the first time occurred when you didn't make the regular monthly payment that was required, then determine if you ever brought that current. If you didn't, then the statute of limitations starts that first month when you actually fell behind. And even if you made a partial payment later on, if it didn't bring everything current, then the statute of limitations continued to run and so that's what you need to look at with that six year time period now. This is a huge decision in arizona and I'm excited for two reasons. One- it brings a lot of clarity to the issue of statute of limitations which a lot of people had concerns about.

Two- it reverses this Court of Appeals which gave just an awful decision as it relates to, you know, for consumers. I mean basically it gave the creditor complete control of when this actually started to run which was never the intention of the statute. So, I will put a link to the opinion in the show notes to this if you want to check it out and read it for yourself if you're really interested in the statute of limitations in arizona.

For the consumers that are dealing with serious debt problems, we can help you. The arizona Consumer Law Group is the leader in arizona when it comes to representing consumers and defending lawsuits brought by junk debt buyers and debt collectors.

We'd be happy to help you. You can head on over to ConsumerWarrior.com, that's my website, ConsumerWarrior.com and we'd be happy to see how we could help you out.


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