How Long Can Creditors Try to Collect on a Debt?

The Fair Debt Collection Practices Act regulates what debt collectors can and cannot do as they attempt to collect from you. Although the federal law protects you in many ways, it does not include provisions for making debts disappear or expire. That means a debt collector could pursue you for the rest of your life for a debt that you legally owe.

Misconceptions

Delinquent debts such as old credit card accounts can be listed on your credit report for seven years. The Fair Credit Reporting Act, another federal law, requires the information to be removed from your report after seven years. However, the removal of the information from your credit report has nothing to do with your liability. You still owe the debt, even though it's no longer being listed on your credit.

Expert Insight

"The New York Times" reports that it is common for debt collectors to pursue old debts for years, with the debts frequently assigned or sold to different agencies. In a story dated July 30, 2010, "The Times" reported that one major bank had offered to sell an $8 million portfolio of defaulted credit card accounts that were written off by the bank in 2003. The asking price for the old debt was just $16,000, or two-tenths of a cent on every dollar. Debt collectors purchasing old debt in bulk have the right to legally pursue full payment from people who defaulted on the accounts.

Time Frame

State statute of limitation laws prohibit debt collectors from successfully pursuing really old debts in court, and that's important because the threat of a lawsuit is usually the debt collector's most powerful weapon. Statute of limitation laws vary by the state, but generally range from three to 10 years according to "The Times." After that, the debt becomes "time-barred," meaning the debt collector cannot successfully sue. However, that does not stop the debt collector from attempting to collect from you in other ways, such as by mail.

Considerations

Some people choose to ignore debts that are time-barred by state statute of limitations and also are too old to appear on credit reports. The debt loses much of its significance once the threat of a lawsuit has been stripped away and it cannot be listed as a negative on your credit report.

Warning

"The Times" reports that making a payment on an old debt could reset the statute of limitations from the beginning. According to "The Times," that's a common tactic debt collectors use to regain the threat of a a lawsuit and to place a negative entry on your credit report.