Does Debt Expire?

Debts do not last forever. Even if a person signs a contract promising to pay back a debt in full and fails to do so, the creditor will not be allowed to pursue payment of this debt past a certain period of time. This is known as a statute of limitations on debt collection. In addition, a debt will only be listed on a person's credit report for a finite amount of time.

Debt

Not all debts are the same. In terms of the statute of limitations on collection, both the kind of debt that the debtor has incurred, as well as the person to whom the debtor owes the money, will affect the amount of time that it will take the debt to expire. For example, debts owed to government agencies will generally last longer than debts owed to private parties, while debts that stem from civil judgments will last longer than debts stemming from contracts.

Statute of Limitations

Each state makes its own laws regarding how long debts incurred within its borders can be legally collected. The exact amount of time that a creditor can attempt to get paid for an old debt depends on both the type of debt and state in which the debt was issued. For example, in Georgia, open accounts can be collected for four years, while in Illinois, debts from written contracts can be collected for 10.

Credit Report

When a person takes out a debt, it is commonly reported by the lender to a credit reporting company. If the debt goes delinquent, this is reported too. However, federal law places a limit on how long negative information can remain on a person's credit report. In most cases, a negative item can remain listed on a credit report for a maximum of seven years, although the companies may choose to strike it sooner.

Considerations

Sometimes, the statute of limitations on a debt will reset. This will happen if the status of the debt changes, such as if the person who took out the debt made a new payment on it. A civil court judge can often order the statute of limitations on the collection of civil judgments extended. Similarly, if a person makes a payment on a debt, it may reappear on his credit report even after seven years are up.