What's the statute of limitations on Virginia credit card debt?

Plain-English summary

Delegate Janis asked the AG to settle a dispute that had been flaring in lower courts: when a credit card company sues to collect a stale debt, does Virginia's five-year statute of limitations for written contracts apply, or does the three-year limit for unwritten contracts apply? Some out-of-state courts applying Virginia law had been treating credit card debts as unwritten, cutting the collection window in half.

The AG concluded that the five-year written-contract limit governs in the typical credit card scenario, with two requirements:

• At least one of the documents that make up the agreement must be signed by the cardholder (an application, a transaction slip, or the back of the card itself).
• The collection of writings together must contain all the essential terms of the deal (interest rate, repayment terms, payment due dates, and so on).

Under § 8.01-246(2), an action on a contract "in writing and signed by the party to be charged" runs for five years. Under § 8.01-246(4), an action on any unwritten contract runs for three years.

The Supreme Court of Virginia has held that for a contract to be "written" for statute of limitations purposes, the writing must "show on its face a complete and concluded agreement between the parties." If a writing leaves essential terms open, it is unwritten and gets the three-year period.

The AG rejected the argument that a written contract must live in a single document. Section 8.01-246 has no single-writing requirement, and Virginia courts routinely enforce contracts assembled from multiple documents created at different times. The AG pointed to a federal bankruptcy decision from the Eastern District of Virginia treating a line-of-credit agreement, evidenced by signed loan request forms plus ledger accounts plus spreadsheet summaries, as a single written agreement that left nothing open for future negotiation.

Applied to the standard credit card scenario:

• Contract formation. The cardholder accepts the issuer's offer by performing, that is, by using the card.
• Signature. The application, the back of the card (which states that use of the card constitutes agreement), and individual transaction slips together carry the cardholder's signature.
• Essential terms. The cardholder agreement plus periodic billing statements supply interest rates, repayment terms, and due dates.

The carve-out: if a court concludes that one or more essential terms is missing from the writings, or that parol evidence is needed to fill a gap, the three-year unwritten-contract period applies.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Subsequent Virginia case law and federal consumer protection developments may have shifted how courts apply the "complete and concluded agreement" test to electronic credit card agreements, click-through assents, and chip-and-PIN signatures. Anyone facing a current credit card debt collection case in Virginia should look at the current text of § 8.01-246 and recent Virginia Supreme Court and Court of Appeals decisions on credit card limitations periods.

Common questions

What is the practical difference between three and five years?

Two years of additional collection runway for the lender, or two years of extra exposure for the borrower depending on which side of the suit you sit on. The clock starts at the cause of action, which for a defaulted account is the first missed payment that gives rise to a right to sue.

What happened in the foreign courts the AG referred to?

Some out-of-state collection courts applying Virginia law treated the cardholder relationship as oral because no single piece of paper had all the terms and a cardholder signature. The AG's opinion is the official Virginia position rejecting that framing.

Does this opinion bind a court?

No. AG opinions are persuasive, not precedential. A Virginia court could still hold that a specific credit card collection action is unwritten if the lender cannot produce signed documents that, taken together, contain every essential term.

What if the lender lost the original application?

That is where the analysis gets risky for the lender. The AG built the five-year position on the assumption that the lender can connect at least one signed writing (application, transaction slips, or signed back-of-card) to the customer agreement and billing statements. Without a signed writing, the lender may be stuck with the three-year limit, mirroring the cases the AG cited from other states.

Is the answer different for charge cards or store cards?

The opinion did not draw distinctions among card types. The same framework should apply to any card-based credit arrangement that follows the standard pattern of application, customer agreement, signature on the card or transaction slips, and periodic billing statements.

Background and statutory framework

The legal anchor:

• Va. Code § 8.01-246(2). Five-year limit on actions on contracts "in writing and signed by the party to be charged."
• Va. Code § 8.01-246(4). Three-year limit on actions on unwritten contracts.

The Supreme Court of Virginia rule, as the opinion states it:

• A written contract for statute of limitations purposes must "show on its face a complete and concluded agreement between the parties. Nothing must be left open for future negotiation and agreement." If a written agreement is missing one or more essential terms, it is unwritten for limitations purposes and subject to the three-year period.

Multi-document contracts:

• The opinion notes that Virginia courts routinely enforce contracts that comprise multiple writings created at different times, and § 8.01-246 contains no single-writing requirement.
• The opinion's lead example is a decision of the United States Bankruptcy Court for the Eastern District of Virginia: a line of credit evidenced by signed loan request forms, ledger accounts, and spreadsheet summaries was treated as a written agreement that evidenced "a complete and concluded agreement that leaves nothing open for future negotiation."

The unifying logic: the longer limitations period for written contracts exists because "lost evidence, faded memories, and missing witnesses" are less of a concern when the deal is on paper. The AG concluded that in the typical credit card scenario, enough is on paper to satisfy that rationale.

Citations

• Va. Code § 2.2-505
• Va. Code § 8.01-246
• Va. Code § 8.01-246(2)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2011/10-128-Janis.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

February 7, 2011

The Honorable Bill Janis
Member, House of Delegates
Post Office Box 3703
Glen Allen, Virginia 23058-3703

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

Dear Delegate Janis:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether credit card agreements governed by the laws of Virginia are written contracts for statute of limitations purposes under § 8.01-246, even though the terms of the contract are found in a series of documents, at least one of which is signed by the cardholder.

Response

It is my opinion that the statute of limitations for written contracts applies to credit card agreements in the situation where the agreement consists of a series of documents, provided that at least one of the documents referencing and incorporating the others is signed by the cardholder, and also provided that the written documents evidencing the agreement contain all essential terms of the agreement.

Background

You relate that lower courts of at least one jurisdiction have held, during the course of credit card debt collections, that credit card agreements are unwritten contracts for purposes of Virginia's statutes of limitations. You state that such rulings were made in spite of the following unrebutted evidence:

(1) The cardholder applies for, receives, and uses a credit card, and in so doing, signs (either physically or electronically) an application requesting the credit card, the back of the card, and/or charge slips documenting transactions made with the card;

(2) After a card issuer receives, reviews, and approves an application, it opens an account and sends the customer an unactivated credit card, and a written customer agreement;

(3) The customer agreement, along with other account documents or writings incorporated by reference into it (e.g., the credit card, the cardholder's signed application, and periodic billing statements reflecting transactions made on the credit card account), contain all of the essential terms of a credit card agreement;

(4) The back of the credit card contains language near the required signature line stating that use of the card constitutes agreement to be bound by the written customer agreement; and

(5) The cardholder does, in fact, use the credit card and thereafter receives periodic billing statements showing the cardholder's transaction activity and payments and the terms governing repayment of any outstanding debt.

Applicable Law and Discussion

Section 8.01-246 provides, in relevant part:

[A]ctions founded upon a contract, other than actions on a judgment or decree, shall be brought within the following number of years next after the cause of action shall have accrued:

2. In actions on any contract which is not otherwise specified and which is in writing and signed by the party to be charged thereby, or by his agent, within five years whether such writing be under seal or not;

4. In actions upon any unwritten contract, express or implied, within three years.

The rationale for a longer statute of limitations for written contracts than for unwritten contracts has been explained as follows:

When a contract is written, it is the language of the contract itself which governs, and the effect of lost evidence, faded memories, and missing witnesses is less prejudicial to the adjudication of the claim than where parol evidence, memories, and witnesses will be relied upon to determine the actual terms of an oral contract.

The Supreme Court of Virginia has held that for an agreement to be deemed a written contract for statute of limitation purposes, it must "show on its face a complete and concluded agreement between the parties. Nothing must be left open for future negotiation and agreement . . . ." Consequently, if a written agreement is missing one or more essential terms, it is an unwritten contract for statute of limitations purposes, and is subject to a three-year limitations period.

Virginia law does not require that a written contract be contained within a single writing to satisfy § 8.01-246(2). Virginia courts routinely enforce contracts that comprise multiple writings created at different times, and § 8.01-246 contains no requirement of a single writing for the five year limitations period to apply. Rather, it provides only that such an agreement be "in writing and signed by the party to be charged." I presume the "legislature chose, with care, the words it used when it enacted the relevant statute, and [courts] are bound by those words as [courts] interpret the statute." At the time of its passage, the General Assembly had the opportunity to insert a single written document requirement, but chose not to do so.

In addition, in a case concerning a matter analogous to your credit card scenario, the United States Bankruptcy Court for the Eastern District of Virginia considered whether to apply the five-year limitations period to a line of credit agreement, the terms of which were found across several different documents and business records. There was no single written line of credit agreement entered into between the parties; instead the agreement was evidenced by signed loan request forms, ledger accounts maintained by the lender, and spreadsheet summaries of the accounts maintained by the lender. In applying the five-year statute of limitations period to the line of credit agreement, the Court stated:

[E]ach loan request form issued by [the borrower] . . . states a sum specific and is signed by the companies' chief financial officer . . . or an employee under his control. [The lender] recorded all intercompany transfers as receivables in the due from [the borrower] account, and the majority of these cash transfers were designated as loans . . . Finally these loans were recorded on a spreadsheet that showed interest was applied in a consistent manner. The present writings found in the business records of [the lender] and [the borrower] evidence a complete and concluded agreement that leaves nothing open for future negotiation.

Therefore, I conclude that § 8.01-246(2) does not require a written contract to be reduced to a single writing to qualify for the five-year limitations period. Under the facts you present, the requirements of § 8.01-246(2) are satisfied. First, a valid contract is formed between the consumer and the credit card company when the cardholder accepts the credit card company's offer of credit by performing on the contract (e.g., by using the credit card). Also, the signature requirement is met by the consumer's electronic or physical signature on the credit card application, on purchase transaction slips and on the back of a credit card containing reference to the credit card agreement. Finally, together the writings, which are connected by internal references to each other and the credit card agreement, provide all of the essential terms (e.g., interest rate, repayment terms, payment due dates) of the parties' agreement. Thus, because there is written evidence of a complete agreement between the parties, there is no concern that "lost evidence, faded memories or missing witnesses" will prejudice the claim.

Conclusion

Accordingly, it is my opinion that the statute of limitations for written contracts applies to credit card agreements in the situation where the agreement consists of a series of documents, provided that at least one of the documents referencing and incorporating the others is signed by the cardholder, and also provided that the written documents evidencing the agreement contain all essential terms of the agreement.

With kindest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General