Managing Debt

What Happens If I Never Pay an Old Debt?

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Maybe you can’t pay. Or maybe you won’t pay. Either way you have an old debt hanging out there. What if you just decide to let it go, and do nothing about it? That’s what reader Dave, who says he can’t afford to pay off the old debts he owes, asks:

My credit card debt is roughly $12,000. I consulted a bankruptcy attorney. He said filing bankruptcy should not be my first option since the amount is quite low. And the collectors have stopped calling. In California, is there a 3 or 4 years of limit by which the collection agency can file lawsuit? After that time, they can’t sue? Then what happens? Can they still collect but not sue? Debt still stays on credit files. If they can’t sue me since it’s about 4 years since [it] went into collection and the attorney said filing may not be good idea for such small amount, then what?

Dave’s question is hardly unusual. Plenty of people wonder what will happen if they simply do nothing about an old debt.

“There is no law saying that they cannot try to collect after the statute of limitations has expired,” says Southern California consumer law attorney Robert Brennan. At least not in California, where he practices, and in most states it’s the same – though if you’re considering this move, you’ll want to consult an attorney who knows your state’s rules. “In California, on written contracts the statute is four years from the date of breach which, in most cases, will probably be the same as date of first delinquency.”

He goes on to explain that “under the Fair Debt Collection Practices Act, debt collectors may not make false representations in connection with collecting debts, and may not take or threaten to take legal action that cannot be taken.  So, if a debt collector threatens to sue the consumer past the statute of limitations, this may well be a FDCPA violation, and I would argue that it is. If a debt collector tells a consumer that it can sue the consumer five years past the date of first delinquency, this is a false representation made in connection with debt collecting, and is also actionable under FDCPA.”

In other words, if a debt collector threatens to take you to court after the statute of limitations has expired, you can actually sue them, in which case, they may end up owing you money.

Does any of this mean Dave won’t hear anything more about these debts? Probably not. “If a collector makes routine debt collection phone calls and does not otherwise violate the  FDCPA or mislead the consumer, the debt collector may continue to attempt to collect the debt,” says Brennan. Nevertheless, consumers always have the right to tell a debt collector not to contact them, and if the debt collector continues to call, they again may be in violation of the FDCPA.

The statute of limitations varies from state to state, and may be different for various types of consumer debts. In many states, they often range from four to six years, calculated from the last payment on the debt.

Collections & Your Credit

As far as Dave’s credit reports are concerned, these debts can’t be reported forever. Collection accounts may be reported for seven years plus 180 days from the original date of delinquency – the date he first fell behind with the original creditor. So if he missed a payment to his credit card company on Jan. 1, 2000, and it was later sent to collections, Jan. 1, 2000, is the original date of delinquency.

After that 7 1/2-year time period elapses all collection accounts related to that particular debt can no longer be reported, regardless of whether they are paid or not. There is the risk, however, that one of the current collectors sells the account to another collection agency and that creates a new collection account.

Starting Over

In addition to wondering about his old debt, Dave wonders what to do about his credit going forward:

Would you suggest I apply of secure card (can I?) even though I’ve debts in collection? And would a NEW secure card improve my FICO even though my old debts are showing up in my files?

A secured card, which requires the cardholder to place a security deposit with the issuer, is often an excellent option for rebuilding credit, and the applicant generally need not have good credit to get one of these cards since the line of credit is fully backed up by the deposit, at least initially.

When it comes to rebuilding credit, it’s usually best to start as soon as possible. It takes time to build positive credit references. One of the factors used to calculate credit scores is the age of accounts.

At the same time, however, Dave should also be thinking about ways to shore up his finances so he’ll have adequate emergency savings in case he runs into difficult times in the future. He can review his credit reports for free once a year and monitor his credit score monthly for free at sites like, where he will also get an action plan for improving his credit over time. As these unpaid accounts become older and his new account is paid on time, he should see his credit scores continue to get stronger.

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  • WSAY

    What is all this”may” stuff? If the consumer advises, in writing, a creditor, or debt collector, or attorney trying to collect the debt, that he or she wishes the person to stop contacting them, under the law, they’re required to stop contacting them. PERIOD. If they do contact you after that, They absolutely violated the FDCPA. And you should sue them. Your attorney fees and costs will be paid by the debt collector. You will not have to pay them at all.

    As for the credit report, while it is true that it can be reported on your credit for seven years plus 31 days, (not 7 1/2 years as reported here) once you sue the debt collector under the FDCPA you can usually negotiate it away from your credit report.

    • Gerri Detweiler

      If you ask the debt collector to stop contacting you they are required to stop. If they don’t they have broken the law.

      The reason the word “may” is in there is because they are allowed to contact you about legal action they are taking to collect the debt. We didn’t get into that in detail in this article, though we have written many other articles about collection that include other aspects of the issue.

      As for the time period that collection accounts may be reported the FCRA says:

      (c) Running of reporting period.

      (1) In general. The 7-year period referred to in paragraphs (4) and (6)2 of subsection
      (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

  • Gerri Detweiler

    Good points – thanks for weighing in!

  • Chris M.

    If you send a C&D letter to the collection agency, they are indeed allowed one final communication with you. Said communication has to either be (paraphrasing) “We are ceasing all further collection efforts” or “We’ll see you in court.” The latter only applies if the debt is still within the SOL of course.

    There’s also some case law about this type of letter and having the words “this is an attempt to collect a debt” printed on the front of the page being a violation, but it’s complicated and easily defeated. (Example: “We are ceasing all collection efforts”, and the “this is an attempt to collect a debt” being pre-printed at the bottom of the page. They’ll likely win from bona fide error.)

    As for your second paragraph, I can only assume you mean FCRA instead of FDCPA. The FDCPA does not apply to creditors, period. It only applies to 3rd party debt collectors (including “attorneys” who regularly attempt to collect debts for others). Disputing with the CRA and/or creditor has nothing to do with the FDCPA. You can technically make an FCRA case out of it (section 623) but you have to take steps in a very specific order or the consumer has no private right of action under that part of the act.

  • papasan173

    What is the statute of limitations on a debt that was gotten in CA, once the debtor moves to AZ? The SOL in CA is 4 years, and the SOL in AZ is 6 years.

    • Gerri Detweiler

      It depends on where the creditor or collector files suit. Under the Fair Debt Collection Practices Act the collector may file suit in the state where you signed the contract or in the area where the consumer currently resides. In addition, judgments ,may be transferred to your current jurisdiction. That doesn’t mean they will take this route, only that it’s a possibility. If you’re worried about a lawsuit I suggest you read this article: Seven Ways To Defend a Debt Collection Lawsuit

  • Michael Bovee

    The best explanation as to how what happened was possible, or if it what happened should not have, would likely come from an experienced debt collection defense attorney in your state. You can find one through

  • Magnum454

    Once 4 plus years has gone by these debt collectors are trying to collect a zombie debt and if you are foolish enough to listen to them then you have been scammed by that collector, its that simple. And this stuff about selling the debt is how it becomes a zombie debt in the first place, its dead and it is not going to come back to life…

    • Gerri Detweiler

      The statute of limitations varies by state. It can be much longer than four years on some states.

  • Gerri Detweiler

    What type of bills were they? How did they change on your credit reports? How old were they? Generally paying off debt won’t hurt your scores though sometimes strange things do happen: The Bad Stuff Is Off My Credit Reports – So Why Didn’t My Scores Go Up?

  • Gerri Detweiler

    Yes that’s correct.Thanks for pointing that out.

  • Gerri Detweiler

    The first issue is identifying the collection agency. If the credit report does not list full contact information, contact the credit reporting agency, By law they must supply that information.

    Then as far as the dates go, it sounds like they may be reporting it longer than it legally should be reported. You can file a complaint with the Consumer Financial Protection Bureau or contact a consumer law attorney.

    Let us know how this goes and if you run into further problems!

  • Gerri Detweiler

    The first issue is identifying the collection agency. If the credit report does not list full contact information, contact the credit reporting agency, By law they must supply that information.

    Then as far as the dates go, it sounds like they may be reporting it longer than it legally should be reported. You can file a complaint with the Consumer Financial Protection Bureau or contact a consumer law attorney.

    Let us know how this goes and if you run into further problems!

  • Gerri Detweiler

    I am sorry that wasn’t clear. Any collection agency that reports the debt is is supposed to report the original date of delinquency – the date the consumer first fell behind with the original creditor. Collection accounts may be reported for up to 7 years plus 180 days from that date. Provided it is reported correctly, a debt that is older than that time period should not appear on the consumer’s credit reports. In other words, no collection accounts may be reported after that time period regardless of when the collection agency picked up the debt. Make sense?

    • Gerri Detweiler

      The original date of delinquency is the date the consumer defaulted leading up to the account being placed for collection. So if the phone company was correct and your husband didn’t pay a bill in, let’s say October 2007, then that’s when the time period starts. It runs for seven years plus 180 days from that date (essentially 7.5 years).

      The statute of limitations is a different time period, and my understanding is that in Michigan it is six years.

      If you want to find an attorney who handles credit damage/ debt collection cases I suggest you visit the website of the National Association of Consumer Advocates. Another option would be to file a complaint with the Consumer Financial Protection Agency.

      I’d like to hear what happens!

  • Gerri Detweiler

    So sorry to hear this. You should at least talk with a bankruptcy attorney. Sounds like you really need legal advice.

  • Gerri Detweiler

    In this situation, I would really recommend you talk with a consumer law attorney. Since this is a business debt and not a consumer debt, the normal consumer protection laws do not all apply here. However, it sounds questionable as to whether you should have been held responsible in the first place (if the employer gave you the card and you never signed anything), and secondly it sounds as though the statute of limitations may have expired. But you’ll want to check with an attorney who understands this area of law to make sure. Visit the National Association of Consumer Advocates website if you need a referral.

  • Alvin

    Marcie said “… if they sell the debt to another collection agency the statute could conceivably never run out…”

    This is incorrect. Selling a debt sites not restart or revive the statute of limitations period.

    Marcie said “Once someone has a judgment you’re never off the hook, as judgments can be renewed if they’re not satisfied before they run out…”

    This is generally incorrect. Most judgments, like judgments for credit card debt, cannot be renewed forever and eventually will expire. Notable exceptions are criminal restitution and child support judgments, which never expire.

    Marcie said “In the end you’re far better off either making a payment arrangement with the original creditir (sic) if you’re having a problem ir (sic) even with the first collection agency if it’s already gone that far. Telling them to stop will only make the problem worse andyou won’t even have the benefit of advance warning… Your best move is to communicate with the creditor to make the best arrangement you can as soon as possible then stick to the agreement, get receipts, and a paid in full letter when it’s done.”

    This is bad “advice” as a blanket statement because each debt situation is different. For example, some debtors may be collection proof because they don’t own many assets and only have exempt income, like social security income. For those folks, a letter telling the debt collectors to cease communications might be their best move. Or, some debtors might have multiple creditors and be unable to get them all to agree on an affordable payment plan. For those debtors, bankruptcy might be the smart course of action. A payment plan might work for some, but it’s not a one-suite-fits-all solution.

    Marcie said ” …I can tell you it’s only gotten worse for debtors in the past few years.”

    Really? How has it gotten worse for debtors? Please be specific. Because as a consumer bankruptcy attorney, I see honest but unfortunate debtors getting relief from their overwhelming debts everyday.

    Marcie said “I was a collection attorney many years ago…”

    Bottom line: I don’t think it is wise for debtors to take “advice” from a former collections attorney.

  • Kali Geldis

    Hi JM —

    A debt can continue to linger through a number of ways. Since part of the debt is from a car loan, you could risk car repossession if you have defaulted on the car loan, which is likely after 2 years of non-payment. The credit cards have most likely been charged off by the issuer, which means that the debts may have been sold to a debt collector who can come after you for the amount owed or you may receive a 1099-C in the mail, which essentially adds the amount that was charged off to your income for the year and could increase your tax bill. There are lots of possibilities, but the easiest way to track down your debts and where they stand is to pull your credit reports to see where the debts stand. Any collection accounts will appear on those reports if they’re being reported to the major credit bureaus. You can get your free annual credit reports once a year at under federal law.

  • Gerri Detweiler

    Doesn’t sound right to me. My suggestion is you do two things. First, read the article below about disputing an old 1099-C. Then contact the Texas Consumer Complaint Center to see if they can help.

    The Little-Known Form for Avoiding a Big Tax Bill

  • Patricia

    I live in arizona, I had a small debt of 200 dollars on my credit report It’s over 10 years old, it was removed after the 7 or so years passed, but this year it was back on my report. There is not any information to contact the creditor. Is that legal. How do I get it removed again. Thankyou

  • Gerri Detweiler

    I assume your last payments to these creditors were prior to May 2009 – is that correct? That’s just over six years ago. My understanding is the statute of limitations for Texas (four years) and New Mexico (six years if they can produce a signed credit card agreement) would have expired by now. I am not a consumer law attorney, however, so please don’t take that as legal advice. If the statute of limitations has expired then when any collectors contact you, you can simply tell them you know the debt is time-barred and ask them to stop contacting you. It doesn’t mean you’ll never hear anything from anyone again, but you do have the right to request they stop contacting you.

    This article may help:
    Does Your Old Debt Have an Expiration Date?

  • blaaaahblahblah

    I received a call from a debt collector, they claimed that their client has filed a claim for $3800 which I owed back in June 2009. Now they saying they are trying to collect 9800 from me which has included attorney fee and etc. It sounded to me that they are going to sue me. They did offered me an option to settle the debt by paying 2000. I really could use some advice. Can they really sue me? Can they collect 9800 from me? In case you are wondering, I live in California and my account was opened in California.

    • Michael Bovee

      So there is no judgment against you for this debt already?

      The SOL that limits how long a debt collector can file a legitimate collection lawsuit is 4 years in CA. They would not be able to use the courts successfully against someone paying attention, like you are, this many years after you made any payment.

      This could be a debt collection scam. Read more about why I think that, and what you may want to consider doing now:

      • blaaaahblahblah

        I looked through public record of myself, there’s no judgement filed. I do not know any other method to see if there’s a judgement. My credit report from 3 bureau is clean.The collector is Rose and Associates LLC aka Acceptance Associates LLC. Both share same address. They rushed me into settlement when I refused to admit to the debt. But they said they have judgement filed and going to garnish my bank and wages. and I have to settle right away otherwise, their lawyers will start the claim immediately and I will be responsible for their attorney fees as well. I didn’t know any of the terms – ‘judgement’ or ‘garnish’ by the time they had me on the phone. I panicked and gave them my credit card info to pay up $200 first, then $1000 twice to settle the debt. After the conversation, I started doing some research… Now I feel I was conned. I cancelled my credit card and disputing $200 that they charged me. Is this going to reset the statue of limitations?

        • Michael Bovee

          I think you did the right thing.

          If it is a scam, and what you have shared lends to that impression, the SOL does not reset.

          A legitimate debt collector would not have threatened you that way. This could be a collector willing to push the legal limits of your collection rights as a consumer, but that is something I would like you to talk to an experienced consumer attorney about. You can locate one with FDCPA experience at

  • Marc tee

    I’m in California, Job loss in 2010 created huge money problems. I worked with as many creditors as I could and settled on several cards and older bad debts, 3 out of 4 judgements also, we have one remaining judgment held by a collection company that will not settle for anything less that what they demand. (2012 judgement amount at 10% – what they want is more than that and I was looking to reach a settlement) so I do not plan on paying them. What can they do and will the judgement ever expire?
    The other issue I have is a time share, Unit is paid for, I can not afford it or the annual maintenance fees and have not paid any of the billed maintenance fees in 5 years, I asked them to take the unit back (deed and all but they did not respond). Several collection companies have contacted us over the past few years on this, but now a new collection company is o it and wants $7,700. No statement or any idea what years it covers or what additional fees – just the demand letters and stern warnings. So far I have not responded to them. I dealt with this company before and they are @#$! and will attempt to get a judgement. How does California SOL laws work with this type of debt and can they sue and get a judgement? Is it now uncollectable?

    • Gerri Detweiler

      My understanding is that in California judgments expire in 10 years if they are not renewed. As to what they can do to collect, that depends on state law and what property is exempt. The best person to answer those specific questions is a bankruptcy attorney. The California courts website actually provides some useful information on collecting judgments that may help you understand what they may try to do.

      As for the timeshare, I am afraid I don’t know enough of the specifics of California law to advise you. Generally, the creditor would try to get a judgment (as you expect) and then will be able to try to collect in the same way mentioned above.

      • Marc tee

        What type of debt is the HOA dues/annual maintenance fees considered? What effect does California 4 year statute of limitations have that type of debt?
        I have not made any of the maintenance or association fee payments on the unit in over 5 years.

        • Gerri Detweiler

          I don’t know specifically what California law says about them, but HOA dues are often a different matter. The HOA can usually get a lien against your property and the lien will have to be satisfied when you sell the property. Please read:

          Could Your HOA Dues Ruin Your Credit?

  • Samuel Pong

    thank you for that

  • mike

    Hi Gerri,

    I have a debt of $223 dollars. I’m currently a college student and I’m kinda new to this credit thing. I was wonder what i should do with this debt and if I pay it off will it completely be removed from my credit report? or will it stay on my file for a couple years?

    • Credit Experts

      Are you late with this debt? Is it in collections? Paying off a debt doesn’t remove it from your credit report, and paying your debts on time can help your credit score. Here’s more:
      How Long Does Negative Info Stay on My Credit Report?

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