Recently we were asked a question on Avvo about whether a debt collector can collect on an overdraft checking account after seven years. This person ran up overdraft charges and USAA bank was holding him accountable on a checking account from 1998, 1999, and 2006.
He asked if there was a consumer law that held him accountable after such a long period of time. Interestingly, this presents two different questions.
- The first question is how long the bank can go after him with collections under the statute of limitations.
- The second question is if he can get a second checking account.
Kentucky’s 60-Year Statute of Limitations for Debt Collection
The statute of limitations in Kentucky for a written contract is 15 years. Refer to Ky. Rev. Stat. § 413.090. If someone sues within those 15 years, the plaintiff normally obtains a judgment. AT that point, a judgment can collect for another 15 years, be renewed for another 15, and yet another 15 years. Refer to Ky. Rev. Stat. § 413.090. And, that’s how you get a 60-year statute of limitations!
This 60-year statute of limitations for debt collection is why bankruptcy is so important as an option. In most states, if they file a judgment lien against your property you have to file a bankruptcy to strip the lien or pay it if you wish to sell the property. An oral contract only has a 5-year statute of limitations. Refer to Ky. Rev. Stat. § 430.120(1) However, there are very few oral contracts.
Interestingly, a statute of limitations can be as short as three years, depending on the state. When a debt is generally not dischargeable in bankruptcy (such as a private student loan) it can be a reason for moving to another state. These statutes of limitations are different for written and oral contracts.
You must look at the law in your state to know the statutes of limitations. For instance, in Indiana, the statute of limitations is ten years for a written contract.
Again, some debts such as federal student loans have no statute of limitations.
What if a Creditor Continues to Attempt to Collect Debts after the Statute of Limitations?
If a collector attempts to collect a debt after the statute of limitations expires you almost always have an FDCPA case against the collector. However, an FDCPA case requires that you file a lawsuit against a bill collector. Not surprisingly, original creditors often still attempt to collect the debt years after the SOL (Statute of Limitations) expires.
Therefore, it’s imperative that you continue to do your research, read our manual, and consult with a bankruptcy attorney. This will arm you against violators of the FDCPA.
How Can You Get a Checking Account After Overdrafts on a Prior Account?
Banks have a special reporting service and generally will not give you another account until you have paid the overdrafts on a prior account with another bank. However, after seven years you should be able to get another account with another bank.
In addition, there are second chance checking accounts that you can get before the seven-year lockout period. So, there are ways around this.
With the exception of some very minor theft cases, there is no statute of limitations in Kentucky for criminal acts.
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If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.