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Statute of Limitations; What State's Law Governs

Question: One creditor was harassing me for payment on an old debt. I filed a complaint with the Attorney General and in it stated that the statute of limitations had expired. The creditor's reply stated that the credit agreement stated that the laws of Utah apply and the statute of limitations there was six years. Is this correct?

Answer: No. Illinois courts treat the statute of limitations as procedural, and not affected by a choice of law clause. The Illinois limitations period for a bank credit card is 5 years, measured from default (missed payment). It is restarted by any later payments. The only exception in Illinois is the "borrowing statute," which provides that if a debt goes into default while you are in another state, and that state's limitations period is shorter, it will be applied to bar the claim.

Some other states will apply another state's limitations period because of a choice of law clause (e.g., Florida), or because the creditor is located in that state (e.g., New York).

Filing suit on a time-barred debt is a violation of the Fair Debt Collection Practices Act. Demanding payment on a time-barred debt often is a violation.