What is the Statute of Limitations for a Debt Lawsuit?

The statute of limitations (deadline to file a lawsuit) for a creditor or debt buyer to file suit on a debt generally fall under the four year statute of limitations.  The larger question is when does the statute of limitations begin to run?

Debt cases are typically filed as a breach of contract or account stated cause of action.  For breach of contract, the statute of limitations begins to run from the date of the breach.  For credit cards, the date of breach is often unclear, since a cardholder is permitted to make late payments by paying additional fees and interest and quickly curing anything that would trigger a default.  It is only after payments have not been made for an extended period of time before the creditor ultimately closes the account.  Because of the confusion over when the breach actually occurs, courts in Texas are split on the date they choose to use as the date of breach.  The majority of courts in Texas will use the last payment date as the date of breach.  However, there are some courts that will permit a creditor to use the charge-off date (generally 6 months after the date of last payment) as the date of breach.

For account stated causes of action, the date of breach is also unclear because the limitations period begins to run when the parties’ business dealings cease.  As with a breach of contract cause of action, Texas court are split but will generally either look to the date of last payment or the charge-off date when determining the date of breach and statute of limitations time frames.