Statute of Limitations

• The statute of limitations is the time frame open to credit card companies, debt collectors and debt buyers for filing a lawsuit against you for defaulting on your credit card account. Depending on where you live, the statute of limitation varies from two years to 10 years from the date of your last payment. For example, if your state has a six-year statute of limitations for open or revolving accounts, and the last payment applied to your credit card account was in March 2008, the time-frame for filing a lawsuit ends in March 2014. Filing and winning a lawsuit is the first step credit card companies must take before they can potentially take your property.
  
  

Judgment

• Your local court issues a judgment against you if the credit card company wins the lawsuit. In many states, judgments are automatic liens against personal real estate, while other states require an additional court ruling for real property liens. Judgments can remain in effect for up to 20 years, depending on where you live and on whether your state offers the option of renewing the judgment. Consumers who fail to appear in court to defend themselves against a lawsuit receive a judgment against them by default.
  
  

Taking Your Property

• After the judge issues a judgment against you, the credit card company has the option to begin the necessary proceedings to take your property that is not exempt from seizure. The process to seize property varies by state, as do the exemptions. Homesteads, or a specified equity amount, are typically exempt. Other exemptions can include vehicles below a specified value, home furnishings that do not exceed a specific value and tools necessary for work. Jointly owned property also may be exempt if only one owner is subject to the judgment.
  
  

Protecting Your Property

• Consumers do have the option to protect their property from being subject to seizure as a result of a judgment. Assets, such as real estate and cars owned by a Limited Liability Company, are protected from the impact of a judgment against an individual. Be aware that transferring ownership of property to avoid the ramifications of a judgment is considered to be a fraudulent conveyance.