Have you ever had a debt get tossed from one collector to another over what seems like ages? At some point, the cycle has to stop, right?
Debts have sort of an expiration date known as the statute of limitationsthat keeps debt collectors, and even the original creditor, from pursuing it indefinitely. Before you agree to pay an old debt, first make sure the statute of limitations hasn’t expired. If the time limit has expired, you maydecide it's in your best interest not to pay.
Two Time Limits For Debts
Many people get the statute of limitations confused with the credit reporting time limit. While they’re both time limits related to debt, they have different effects, and they're triggered by different events in the debt's life cycle.
The credit reporting time limit is the maximum amount of time credit bureaus can includedelinquent debts on your credit report. For most types of accounts, it's seven years from the date of delinquency. However, bankruptcies are reported for ten years. The credit reporting time limit is dictated by the Fair Credit Reporting Act and does not influence the statute of limitations for collecting a debt.
The statute of limitationsfor debt, on the other hand, is the period of time that debt is legally enforceable. Meaning, the amount of timea creditor or collector can use the court to force you to pay for a debt. The time period starts on the account’s last date of the activity and varies by state.
Note
The last date of activity on an account may be different from the date your account was past due if you made any payment or payment arrangement after that time.
How to Use It to Your Advantage
Some debt collectors will continue to attempt to collect on an account even after the statute of limitations has expired. Consumers who aren't aware of the statute of limitations or who are intimidated by the collection agency may pay up to avoid worse action, like a lawsuit. If you're certain the statute of limitations has expired, that's your defense against paying an old debt.
Be careful not to restart the statute of limitations by taking any action on the account. Making a payment, making a promise of payment, entering a payment agreement, or making a charge with the account can restart the statute of limitations. When the clock restarts, it restarts at zero, no matter how much time had elapsed before the activity.
Crackdown on Collectors
After being sued by the FTC in 2012,Asset Acceptance, one of the largest debt buyers,agreed to notify consumerswhen their debts were past the statute of limitations by including in the debt collection notice "Given the age of the debt we will not sue you." It may also include, "and we will not report it to any reporting agency."
Not all collection agencies will include this disclosure, so the burden of proof remains on you.
How Does It Apply to My Debt?
The statute of limitations is usually between three and six years but is as high as 15 years in one state. Check out theComplete List of Statute of Limitations by State to learn the debt statute of limitations for your state.
Some debts don't have a statute of limitations. It includes federal student loans, child support in some states, and income taxes. You cannot use the statute of limitations as a defense in a lawsuit regarding any of these even if you haven't taken any action on the account in several years.
Note
If you recently moved, sneaky debt collectors might try to use your home state for the statute of limitations, especially if that time limit is longer than of the state you currently reside in. It would give a collector more time to collect on the debt.
What the Statute Of Limitations Does Not Do
Keep in mind when the statute of limitations expires, it only prevents a collector from winning a judgment against you when you can prove the statute of limitations has expired. It does not:
- Keep a collector from filing a lawsuit against you. It can keep them from winning if you use it against them in court.
- Erase the debt. If the debt is legitimately yours, you still owe it until it is canceled by the creditor or discharged in bankruptcy.
- Prevent the debt from being reported on your credit report. The debt can be reported as long as the credit reporting time limit allows.
FAQs
Can a Debt Collector Collect After 10 Years? In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.
How many years before a debt is uncollectible? ›
Statute of limitations on debt for all states
| State | Written | Oral |
|---|
| California | 4 years | 2 |
| Colorado | 6 years | 6 |
| Connecticut | 6 years | 3 |
| Delaware | 3 years | 3 |
46 more rowsJul 19, 2023
This contact can escalate to sending debt collection agents to your property, the ceasing of property and in the extreme legal action and court hearings. Contact from Lowell should be taken seriously and ignoring this contact can have consequences.
What is the statute of limitations on old debt collection? ›
Old (Time-Barred) Debts
In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.
Can I be chased for a 20 year old debt? ›
There's no time limit for the creditor to enforce the order. If the court order was made more than 6 years ago, the creditor has to get court permission before they can use bailiffs.
What is the 11 word phrase to stop debt collectors? ›
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
Can a debt collector restart the clock on my old debt? ›
Keep in mind that making a partial payment or acknowledging you owe an old debt, even after the statute of limitations expired, may restart the time period. It may also be affected by terms in the contract with the creditor or if you moved to a state where the laws differ.
What makes a debt uncollectible? ›
In finance, bad debt, occasionally called uncollectible accounts expense, is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going ...
Can you dispute a debt if it was sold to a collection agency? ›
Can you dispute a debt if it was sold to a collection agency? Your rights are the same as if you were dealing with the original creditor. If you do not believe you should pay the debt, for example, if a debt is stature barred or prescribed, then you can dispute the debt.
How to check if a debt is statute barred? ›
The best way to check if your debt is statute barred is to telephone your creditor. If it is still enforceable, you have the right to ask for proof in the form of a payment receipt or written acknowledgement that was sent from you within the limitation period and is dated accordingly.
However, if you don't make payments to your account and you don't tell us why, we may pass your account to our solicitors. At that point, they may begin legal proceedings that could result in a County Court Judgement (CCJ) being registered against you.
Who do Lowell pass debt on to? ›
Once your debt is purchased by Lowell, we don't add any interest or charges to the account. Any payment you make towards the debt goes towards clearing your balance. If we don't hear from you after repeatedly trying to get in touch, we may pass your account to a solicitor to begin legal proceedings.
How long until a debt is no longer valid? ›
The statute of limitations is a law that limits how long debt collectors can legally sue consumers for unpaid debt. The statute of limitations on debt varies by state and type of debt, ranging from three years to as long as 20 years.
Can a collection agency collect a debt from 20 years ago? ›
The law does not eliminate the debt, it merely limits the time frame that a creditor or collection agency has to take legal action to collect it. The time frame varies from state-to-state but is generally 3-6 years.
What happens if you never pay collections? ›
If you don't pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.
What happens after 10 years of not paying debt? ›
While a debt collector can't sue you for a debt that is older than your state's statute of limitations, they can still attempt to collect the debt. This means they can continue to call and send letters to get you to pay up.
Is debt written off after 10 years? ›
Can Old Debts be Written Off? Well, yes and no. After a period of six years after you miss a payment, the default is removed from your credit file and no longer acts negatively against you.
Can a credit card company sue you after 10 years? ›
Virtually all credit card agreements are written contracts. So, you and the credit card company put the terms of the agreement in writing. Often, you agree to the contract terms listed on the credit card application when you sign it. In California, the statute of limitations for a written contract is four years.
Does unpaid debt ever go away? ›
Although the unpaid debt will go on your credit report and have a negative impact on your score, the good news is that it won't last forever. After seven years, unpaid credit card debt falls off your credit report. The debt doesn't vanish completely, but it'll no longer impact your credit score.
