TIMING OUT—ARIZONA’S CHANGES TO THE STATUTE OF LIMITATION ON CREDIT CARD DEBT

The consumers’ battle against the credit card industry just got tougher because of recent changes to one of Arizona’s statute of limitations.   The change will negatively affect consumers because it increases the time period for which a credit card company can sue upon on a bad debt, from three years to six years.  However, the change creates more certainty for all involved as Arizona’s former law was applied unevenly. 

Photo by Michelle Meiklejohn http://www.freedigitalphotos.net/images/view_photog.php?photogid=901

A “statute of limitation” is the legal time limit for suing on the matter.  The purpose of a statute of limitation is to create finality and certainty for all parties to a dispute. Prior to April 12, 2011, Arizona’s statute of limitation on credit card debt was unclear; therefore, it was applied unevenly.  Some judges applied Arizona Revised Statute § 12-543 to credit card debt, which states that plaintiffs suing upon a “stated or open” account have three years from the default to bring the action.  On the other hand, some courts applied Arizona Revised Statute § 12-548 which gives six years to sue for contracts made in writing.  The uneven application of the law was problematic for judges, creditors, consumers, and attorneys. 

The law was applied unevenly because the definition of “stated or open” account was undefined.  Some judges and attorneys believe that a “stated or open” account is synonymous with “credit card.”  Other judges and lawyers believe that credit cards should be viewed as only a contract made in writing, thus the six year statute of limitation under § 12-548 would apply.  The new legislation has the effect of clarifying the rule by specifically defining what a credit card is and granting the credit card companies six years from the date of first default to bring a cause of action. 

How will this affect the average consumer? The change means that the credit card companies will have six years (rather than three) to sue the defaulted debtor; however, it also means that the average consumer will have more certainty as the law will be applied evenly to all consumers. 

If you have been sued on a credit card that is six years in default, I do not recommend that you attempt the defense on your own.  You should contact a qualified attorney who can help you dismiss the action in your favor.