Just as there are different kinds of debts, there are different statutes of limitations for those debts. The debt might be an open account, which is the category that credit cards fall under; a promissory note; or an oral or written contract. In addition, different states have different statutes of limitations for those debts, as well. Although a debt has exceeded the statute of limitations, it may still show up on a credit report.
Expired statute
Once a debt passes beyond the statute of limitations, a debt collector can no longer sue to have the debt paid off. Under the Fair Debt Collection Practices Act, if a debt collector attempts to have the debt repaid after the statute of limitations has expired, he is in violation of the law.
Debt clock
The debt clock can be restarted if any action is taken on an account before the statute of limitations expires. A debt might be days away from having the statute of limitations run out, but if the person who owes the debt makes a payment or even checks with the collection agency to verify the debt, the statute of limitations begins from the date of activity on the account.
Federal and State
The Internal Revenue Service has a 10-year statute of limitations on money that is owed, but the countdown begins from when the taxes have been assessed and not when the taxes were owed. So, if taxes that were owed in 2003 were not identified until 2008, the 10-year statute would begin after the assessment in 2008. In addition, each state has its own individual statute of limitations for taxes owed to the state.
Credit bureau
After a debt has reached the statute of limitations, it can remain on a credit report for up to seven years. Just because the debt can no longer be collected upon does not mean that it is going disappear from the credit history. Bankruptcies can remain on a credit report for up to 10 years and tax liens that have not been paid can remain on a credit report indefinitely.
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