Old Debt Laws

An old debt that you forgot about years ago--maybe even from your college days--can pop up on your credit report at the most inopportune time. You may be coasting along with a great credit score in the 700s as you prepare to buy a new house. Then the old delinquent debt pops up and sinks your score. The only way to avoid situations like that is to pay your old debts, because legally debt collectors can chase delinquent debts for as long as it takes to collect.

Statue of Limitations

Negative entries on your credit report can remain for a minimum of seven years, and statue of limitation guidelines determine how long debt collectors have to sue you in court. But that doesn't make the debt go away, even if the statue of limitations for legal action has expired. In many states the statue of limitation for legal action is six years, and after that the debt collectors lose the right to sue you for your delinquent debt. They can still file suit, but it will be dismissed by the judge if you appear and point out that the statue of limitations has expired.

Validation

You can force debt collectors to prove that an old debt is valid by responding in writing after the debt collector first contacts you. The Fair Credit Debt Collection Practices Act, a federal law, requires the debt collector to send you a letter stating the amount of the debt and the original creditor. The law also gives you the right to respond with a letter of your own, in which you should ask the debt collector to prove that the debt is valid by sending you acceptable documentation, such as a copy of the promissory note that you signed, or a copy of the final statement from the original creditor before the account was charged off. The debt collector does not have a legal right to collect from you if he cannot prove that the debt is valid.

Continued Collection Efforts

You're virtually certain to be subjected to continued collection efforts once the debt collector validates the debt. If the statue of limitations has expired--eliminating the possibility of a successful lawsuit against you--you could continue to ignore the debt although it will remain on your credit report. Better yet, you could offer to pay the debt in exchange for the debt collector removing the negative entry from your credit report. That would put the issue behind you and get your credit scores moving in the right direction again.