If you have some negative debt reflected on your credit reports, you may be wondering how long debt collectors can try to collect on that debt, and how long that debt can affect your credit. The simple answer is, it depends. The full answer requires some explanation…let’s start with collections.
How Long Can Old Debts Be Collected?
Each state has a law referred to as a “statute of limitations,” which spells out the time period during which creditors or collectors may sue borrowers to collect debts. In most states, they run between 4-6 years after the last payment was made on the debt.
A debt that is outside the statute of limitations is called a “time-barred” debt.
In some states, collectors cannot try to collect at all once a debt is past the statute of limitations (learn more about your debt collection rights here). In other states, they cannot sue you but they may still try to collect the debt. There is a way to stop the calls that we’ll share in a moment.
Does that mean that once the statute of limitations has expired you won’t be sued for a debt? Not necessarily. Some debt buyers — companies that buy and try to collect very old debts — still go after borrowers and even take them to court. They know that most borrowers who are sued for old debts won’t show up in court and the judge will issue a “default judgement,” which may give them additional collection powers such as access to the money a debtor has in his or her bank account, or the ability to garnish wages to collect the judgment. To prevent this, all a borrower has to do is appear in court at the appointed time and explain that the debt is time barred. If that is correct, the lawsuit will be dismissed.
If you are contacted by a collection agency about a very old debt:
- Ask the debt collector to send you written notice of the debt. This is required under the federal Fair Debt Collection Practices Act, even if you don’t ask. But by keeping the initial phone conversation to a minimum, you may avoid saying or doing something that could hurt you later on. (Scammers will say they aren’t allowed to do that, or will offer to email you something. Don’t accept that answer.)
- Once you receive written notice of the debt, you have 30 days to request validation of the debt. Mail your request to the collector with a certified letter and simply ask them to validate the debt. You don’t have to give a reason for your request. You can simply say, I dispute this debt, please validate it.
- While you are waiting for the response from the bill collector, contact a consumer law attorney or your state attorney general’s office to confirm the statute of limitations for the debt. (Consumer law attorneys who regularly represent consumers in cases against debt collectors often provide a free consultation.)
- If you confirm the debt is too old, you have one of three choices. You can:
- Pay it. If you know you owe the debt and you now have the ability to pay it, you can do so. Make sure you keep written records of the amount due and your payment. Sometimes these old debts get sold to multiple collection agencies and if you get another call about this debt you want to have proof you have paid it.
- Settle it. If you know you owe the debt and want to try to make good on it but you can’t pay the full amount (or if the debt has been inflated by fees), then you may want to negotiate to settle it for less than the full amount due. This is tricky, though, because once you start negotiating you could reset the statute of limitations. You could wind up being sued for the entire debt. If you really want to go this route, your best bet is to talk with an attorney first.
- Send the collector a letter telling them to leave you alone. You have the right to ask a debt collector to stop contacting you. Once you do that, they are only allowed to contact you to tell you if they are taking legal action against you. If you know the debt is outside the statute of limitations, state that in your letter and tell them not to contact you again. Don’t be surprised if they sell the debt to someone else, but they shouldn’t bother you again.
How Long Do Collections Affect My Credit?
Don’t confuse the statute of limitations with the amount of time that collection accounts can appear on credit reports. They are two separate issues.
The length of time that collection accounts may remain on credit reports is seven years and 180 days from the date the consumer first falls behind on the original account. This requirement is found in the Fair Credit Reporting Act, a federal law. One of our forum moderators who goes by sanama51 describes it this way:
The CRTP (Credit Reporting Time Period) for collections is up to 7.5 years from the DoFD (Date of First Delinquency) on the OC (Original Creditor) account that led to the collection. The DoFD is the first date that someone gets behind on payments and never again gets caught up.
Even if one of these bills remains unpaid, it cannot be reported after that 7.5 years is up. The date an account was placed for collections is irrelevant here, so don’t let that confuse you. Here are some guidelines for removing collection accounts from your credit reports.
The only scenario where an old collection account can affect your credit is if you are sued and the collector gets a judgment against you. That new judgment would have its own 7-year reporting period. You can get your free annual credit reports to see if you’re facing a judgment. You can also see the impact that judgment is having on your credit scores for free on Credit.com.
If you have a debt collector trying to collect a debt from you that you think is too old for them to legally collect, it’s important to find out the statute of limitations in your state. If it turns out the debt is not time-barred, then paying or settling it may protect you from being sued. But if it is too old, then you can choose to either pay it or send the collection agency a cease contact letter.