The Statute of Limitations on debts is very important information for anyone that has had debts for a long time and wants to clear their credit report.Â It is akin to an expiration date for debt and, if the statute of limitations has expired in your case it means that you donâ€™t have to pay back the debt no matter what a collection agency tells you.Â (Remember that they tend to lie and break the rules quite a bit.)
What this means is that you need to know the exact rules, which are different in every state, before you agree to anything that the debt collection agency wants you to agree to. Read below to find out more about this vital info.
First, there is a big difference between the statute of limitations (SOL) and the credit reporting time limit. The SOL is the time period that a collection agency has to force you to repay a debt and starts on the last day of activity for any account. (If you have several accounts you will have several SOL dates.)Â
The credit report time limit is basically the maximum amount of time that a credit bureau (like Equifax) can report delinquent credit on your credit report. In most cases itâ€™s 7 years but in the case of bankruptcy can be 10 and with tax liens 15. The Fair Credit Reporting Act dictates these time limits but does not influence the SOL time limits.
Knowing the time limits in your state and the exact dates that were the last dates of activity on your account is vital. Any credit report will tell you this important info so get one if you donâ€™t already know it.
Some debt collectors will still try and get you to pay even if the SOL has expired. This is illegal but still happens all the time so knowing the exact dates and rules for your state is important. If you have the dates and facts you can stop them from harassing you and even take them to court if they donâ€™t.
This is very important. You can actually restart the SOL if you make a payment, promise to make a payment, enter into an agreement to make a payment or make a charge using an overdue credit account. If you do any of these things the clock starts again at zero so be careful not to or you may find yourself in a bit of a pickle.