The Arizona legislature just sucker punched the Arizona consumer.

Arizona is an extremely friendly place for debt collectors to do business – most of whom have their operations outside of the state of Arizona. Recently, the law in Arizona as it relates to civil judgments on credit card debt, medical bills, old car loans, etc. was radically changed in favor of debt collectors.

The business model of most debt collectors and junk debt buyers (i.e. Portfolio Recovery Associates, Midland Funding, Cavalry SPV, CACH, etc.) is to sue the Arizona consumer, obtain a judgment, and then garnish their wages, take money out of their bank accounts, or lien their home.

The judgment is key to the debt collector. Without a judgment, they have no real power to garnish, levy, lien, or take anything from you.

The Old Law on Debt Collection Judgments in Arizona

Previously, Arizona law provided that if a debt collector obtained a judgment against you it would be valid for five (5) years and then could be renewed for five years, and then again in five years, and so on. Many of these judgments would go uncollected and the debt collector would not renew. However, the debt collector had a full five years to determine what, if anything, they would do to try and collect.

Under the old law, if the debt collector didn’t renew the judgment after five years then the judgment was no longer collectible. This law made sense because it allowed sufficient time for the debt collector to try and collect and also gave the debtor the opportunity to move on with life if the debt collector chose not to renew it.

The old law even made it possible for a debt collector to keep renewing it every five years if they felt that it would be productive for them do so.

However, the Arizona legislature, in their infinite wisdom, determined that the old law was not creditor-friendly enough.

So they changed it.

Now, instead of five years, the debt collector’s judgment will be good for twice as long – a full ten years – and then can subsequently be renewed for ten additional years until the consumer files for bankruptcy or dies.

The New Debtor’s Prison

The new law as it relates to judgments on credit card debt, medical bills, and other civil judgments doubles the amount of time that the judgment remains valid. For example, a judgment entered on a credit card debt in August 2018 will be valid and enforceable until August 2028. The debt collector could then renew it and it would be valid until August 2038. And this can continue until the debt is paid or the consumer files for bankruptcy or dies.

There are some who believe that the doubling of the time a credit card judgment remains valid is really much ado about nothing. After all, a debt collector wants to get paid so they wouldn’t want to just sit on a judgment and not try and collect, right?


As referenced above, most credit card debt collection is done by junk debt buyers who purchase tens of thousands of charged off credit card accounts for pennies on the dollar. They then file lawsuits, obtain judgments (usually default judgments), and then in many cases, those judgments sit for years accumulating interest at rates as high as 29%.

The Arizona Supreme Court recognized the lack of incentive debt collectors have to actually collect on their debts:

“The court of appeals here found ‘no reason to think that, given the economic realities, a lender would decide to put off pursuing a claim against a cardholder simply to allow interest to continue to accrue.’ But, for at least two reasons, a credit-card company has less incentive than a closed-account creditor to accelerate a debt. First, upon default, the interest rate charged increases, in this case to 23.99%. When a credit-card company delays acceleration, the compounding of default interest substantially increases the total amount owed. Selling the debt to a third-party debt collector like [junk debt buyer] Mertola is likely more profitable than attempting to immediately collect from a defaulted debtor who is already unable or unwilling to pay.”1)Mertola, LLC v. Santos, CV-17-0109-PR (AZ Supreme Court, 7-27-18

Statute of Limitations + 10 Year Renewal Period = Debtor’s Prison

Ok. So no one is actually going to prison for not paying their credit card debt. But this new law makes it nearly impossible for Arizonans to overcome financial mistakes of the past.

Often, when I meet with consumers on issues like debt collection lawsuits there is a misunderstanding as to how the statute of limitations applies to their case. The statute of limitations is the amount of time a debt collector has to file a collection lawsuit against you.

In Arizona, credit cards have a six (6) year statute of limitations. This means that the debt collector has six (6) years to file a lawsuit against you from the time that you failed “to make a full, agreed-to minimum monthly payment.”2)Id. at paragraph 21. If they don’t file a lawsuit within that six (6) year period the debt collector can never file a lawsuit against you on that account.

However, if they do file a debt collection lawsuit against you within the six (6) year statute of limitation period, then that is no longer a defense to the case. The statute of limitations is also different from the ten (10) year renewal period referenced above.

If a debt collector files a lawsuit and obtains a judgment against you, the judgment is then good for an additional ten (10) years.

Based upon my substantial experience in defending consumers from junk debt buyers and other debt collectors, many of them wait until approximately five years after the account goes into default before they will file a lawsuit. This means that if a debt collector waited until right before the statute of limitations expired to file its lawsuit, and then obtained a default judgment3)Over 90% of debt collection lawsuits end in a default judgment. (or any type of judgment), the debt collector essentially has power over the consumer for at least sixteen (16) years with the potential to hold an old credit card debt over their heads for literally the rest of their lives.

In passing this law the Arizona legislature did no favors the citizens of this state. The fact is the overwhelming majority of all debt collection lawsuits are filed by junk debt buyers who are not based in Arizona. These foreign companies come into Arizona, clog our court system with their lawsuits, and now have been granted twice as much time to burden Arizona consumers.


Your Next Step

The key to avoiding this long-term debtor’s sentence is to fight back if you are being sued by a debt collector or junk debt buyer. These companies purchase these accounts for pennies on the dollar and often don’t have the witnesses or evidence needed to prove their case in court. By fighting back against their lawsuit you put yourself in a situation to avoid a judgment, negotiate a settlement, or even get the lawsuit thrown out entirely.

If you are in the state of Arizona and need help with your debt collection lawsuit I offer free consultations on those cases where the amount you are being sued for is $4,000 or higher. You can set up a consultation by clicking HERE or giving me a call at (480) 420-4028.

What If I Am Not in Arizona?

If you do not live in Arizona or the lawsuit you are being sued with is for less than $4,000 I offer online tutorials that will walk you through the process of filing an Answer to the lawsuit and every step of the way through trial. You can access these tutorials, templates, and forms by clicking HERE.


Schedule a Free Consultation!

John Skiba, Esq. John Skiba, Esq.

We offer a free consultation to discuss your debt problem and help you put together a game plan to eliminate your debt once and for all. Give us a call at (480) 420-4028

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References   [ + ]

1. Mertola, LLC v. Santos, CV-17-0109-PR (AZ Supreme Court, 7-27-18
2. Id. at paragraph 21.
3. Over 90% of debt collection lawsuits end in a default judgment.