Laws on Civil Suits for Unsecured Debt in North Carolina

Because a credit card agreement is a contract, your creditor can sue you when you breach the contract by making repeated late payments, not paying or otherwise violating the agreement. In North Carolina, creditors can sue you for up to three years after your last payment was made. If you make a payment on an old debt, you'll restart the statute of limitations.

To sue you for your debt, the creditor has to file a complaint in court and properly serve you with the complaint. Every state establishes its own laws for service of process, and North Carolina limits your creditor's options for service. The creditor must serve you, your agent or an adult at your home in person. It's not sufficient to leave notice on your porch or at your business. Creditors can also serve via mail, return receipt requested, but service is only proper if you sign the return receipt. If you're not properly served with the suit, it can't proceed until you are.

Creditors can't repossess anything you've purchased with a credit card because the debt is unsecured. North Carolina-based creditors can only garnish wages for child support, alimony, taxes, student loan debt, overpayment of unemployment benefits and some ambulance services. Out-of-state creditors -- which might include your credit card company -- can seek a garnishment, but the garnishment cannot exceed 25 percent of your wages, and some employers refuse to honor out-of-state garnishments.

North Carolina's Debt Collection Act affords debtors similar protections to the federal Fair Debt Collection Practices act, with one key difference. Under the DCA, all creditors -- not just third-party debt collectors -- are prohibited from engaging in unfair practices. Your creditor must verify the debt upon your request, stop calling if you make a request in writing, avoid making threats or using profane language and avoid calling excessively. Under both state and federal law, you can sue creditors who violate debt collection laws. You can also use the court system to sue over a debt you don't owe. For example, if a creditor claims you owe money, you can sue to obtain a judgment that you do not owe the money.