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The Texas statute of limitations for credit card debt is 4 years. This means that collection efforts for the debt cannot be pursued 4 years after your last payment. The Statute of Limitations does not cause your debt to go away after it expires. However, if the creditor files suit, you would have a defense. You would have to offer evidence to avoid a judgement. The evidence will consist of papers you would file to support your claim. As the creditor has sued you, and you will need to prove to the court that the Statute of Limitations expired, otherwise you will have a lost lawsuit and a judgment against you. Keep in mind, when collection agents call you demanding a payment on an old debt, making ANY payment, including a "token payment" can reset or restart the SoL clock and open the door for the collector to seek a judgment against you.
When the statute of limitations has expired, and you cannot pay the debt, consider sending collectors an "Expired SoL Letter" to inform them of your financial situation and that you are aware of the expired SoL defense and will use it as your defense if taken to court. Unless you inform the person trying to collect the debt that the statute of limitations has expired, or bring it up during a court appearance, the collector stands a good chance of winning a judgment against you. So, you must appear in court to raise the expired statute of limitations (SoL) defense. If you fail to appear in court, collectors stand an excellent chance of obtaining a default judgment. Reference
If a debt collector or creditor is trying to sue and you believe that you are judgment proof (have no assets to cover the judgement), you must respond to the lawsuit as such. Failure to appear and show the judge why you are judgment proof opens the door for the judge to grant the collector a "default judgment". Even though they cannot collect anything from you now, they can wait many years and try again. Also, the judgment show up on your credit report and costs you many points on your credit score. If you lose your "judgment proof" status because of a change in your financial status, creditors or collectors can seek a judgment and, if successful, also seek wage garnishment of up to 25% of your disposable income.
In short, if you have not made any payment toward the debt in 4 years, you are outside of the SoL and may use this as your absolute defense.
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