How Long Until Debt Clears?

Debt is seldom a good thing, because it reduces the amount of disposable income you have for financial emergencies and makes you less financially stable. However, proper debt management, along with state regulations, usually help your debt clear. How long it takes for this to happen varies according to your state, the type of debt, the debt management techniques you use and the amount of the debt.

General Guide

Regulations regarding how long you can be sued for a debt vary based on your state as well as the type of debt. It is possible for a creditor to sue you for a debt that is up to 15 years old in some cases. However, most debt clears in three to six years.

Statute of Limitations Versus Credit History

The statute of limitations on debt -- that is, the time after which a creditor can't file a lawsuit to recover debt -- varies by state and on the type of debt. However, the statute of limitations is separate from your credit history. Even though a creditor may lose his right to sue you to recover debt in as little as two years in some cases, negative reports from a creditor can remain on your credit report for up to seven years. This means your ability to obtain new financing and lines of credit might be affected even after a creditor stops pursuing the debt.

Judgment

Creditors who have obtained a judgment against you sometimes can renew the judgment, depending on the regulations in your state. The time that must elapse before a judgment can be renewed varies. However, creditors often can renew as many times as they like. As a result, you could owe a debt for the rest of your life.

Considerations

Having an uncleared debt does not mean you cannot qualify for financing or lines of credit. However, obtaining credit may be difficult as a result of a higher debt-to-income ratio and the adverse effects on your credit rating. Creditors and credit bureaus may drop negative items associated with debt from your credit report before the seven-year mark if they believe the negative item no longer is relevant. Even if there are negative items on your credit report, you can help your situation by paying the debt off with consistent payments, closing the account and requesting the creditor indicate the account was closed at your request. Refinancing, debt consolidation and other debt management methods also affect how long it will take to eliminate your debt and repair your credit.