What is the Statute of Limitations on Credit Card Debts in Massachusetts?
Debt collectors operating in Massachusetts often file lawsuits against consumers to collect on defaulted credit cards. The statute of limitations on credit card debt in Massachusetts is 6 years. However, the Delaware statute of limitations – which is used in many credit card holder agreements – is only 3 years. Which of these is applicable to lawsuits filed in Massachusetts?
Although the Massachusetts Supreme Judicial Court has not yet ruled on this issue, there is a good argument that the statute of limitations is only 3 years. A decision from the SJC holds that the Massachusetts 6-year statute of limitations should apply unless Massachusetts has no substantial interest in the claim, and the other state has a more significant relationship to the claims.
Applying the above test, in cases of consumers being sued for credit cards, there is a good argument that the 3-year Delaware statute of limitations applies. First, Massachusetts does not have any particular interest in having out-of-state companies sue its residents. The companies do not have offices in Massachusetts, and the funds they receive would not be held in Massachusetts.
And second, the cardholder agreements usually say that the parties agree Delaware law should govern. Based on the plain language of the agreement, Delaware credit card companies cannot suddenly claim that Massachusetts law should now govern.
Accordingly, only the 3-year Delaware statute of limitations should apply. This means that for creditors who sue in Massachusetts after 3 years, but before 6 years from the last payment, there is a legal basis for holding that such claims are unlawful. This means that those companies may have violated the Fair Debt Collection Practices Act or the Massachusetts Consumer Protection Act, G.L. c. 93A.
The main case applying this test is Nierman v. Hyatt Corporation, 59 Mass. App. Ct. 844 (2003). Although the case does not deal with credit card debt, the principles are applicable to cases involving debt collection.
If you are a Massachusetts resident who has been sued or dunned by out-of-state debt collectors, contact Culik Law to see if we can help. We have represented Massachusetts consumers for years in both individual and class actions against some of the largest financial services corporations in the world, and we would be glad to provide a no-cost case evaluation.