Can a Debt Collector Sue After Seven Years?

If you become delinquent on a debt, the owner of the debt automatically has certain rights and can try multiple strategies to collect the amount in arrears. The creditor can also choose to "charge off" the debt as a tax loss and sell it to a debt collection company. Typically, the account has been delinquent for around 180 days before a creditor will convert it to charge-off status. There are also certain protections for debtors to ensure that collectors don't abuse their authority.

Statute of Limitations

One type of protection is a statute of limitations. In general, a creditor may report an account to a credit bureau up to seven years past the date of delinquency. Exceptions include bankruptcies, which usually remain on your report for 10 years, and unpaid tax liens, which can remain indefinitely. There is also a separate statute of limitations that applies to the amount of time a creditor has to sue to collect a debt.

Lawsuits

The statute of limitations for lawsuits varies in each state and for different types of debts, so verify the laws for limitations in your state. The typical time frame averages around seven years depending on your state. For example, the statute of limitations to sue for unpaid credit card accounts is three years in California, six years in New Jersey and 10 years in Rhode Island. Even if the age of the debt exceeds the statute of limitations, the creditor can still sue you.

Response

If the debt collector files a lawsuit after the statute of limitations expires, you must appear in court in order to use the statute of limitations as a defense. The lawsuit will be dismissed. If you fail to respond or attend court, you will automatically lose the lawsuit regardless of whether the statute of limitations has passed. If you lose the lawsuit, you are responsible for all costs, including the debt collector's legal fees, and you will have to repay the balance. If you can't work out payment arrangements with the collector, that company can garnishee your wages, seize your bank accounts and/or attach liens to your property until the debt is satisfied.

Re-aging

Unscrupulous debt collection agencies attempt in some instances to "re-age" accounts. This typically happens when they buy the account and report the date they purchased it as the first date of delinquency instead of the original date of delinquency. This means such a collection agency can purchase a debt even after the statute of limitations has expired, re-age it and be able to sue the debtor. This practice is illegal, and you may dispute any re-aged accounts on your credit report. If you end up in court over a re-aged account, the lawsuit should be dismissed as long as you can provide proof of the original debt and the date it first became delinquent. If you make even a partial payment on a re-aged debt, it validates the debt and extends the statute of limitations, so carefully investigate any debt claims for old accounts before deciding how to proceed.