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Key takeaways
- Debt collectors can pursue old debts with the threat of lawsuit until the statute of limitations expires. The statute of limitation varies by state and debt type.
- Once the statute of limitations expires, debt collectors can no longer threaten to sue you but can still contact you for payment until you send a cease-and-desist letter.
- Accepting responsibility for an expired debt can restart the clock on the statute of limitations.
Though debt collectors can pursue old debts even after they expire, each state has a statute of limitations, which puts a limit on the time debt collectors have to sue a borrower for nonpayment.
The statute of limitations can range from two to 20 years based on the state. Once it expires, the debt is said to be “time-barred,” meaning debt collectors lose the legal right to take you to court. In addition, you can formally request that they stop contacting you about the expired debt.
Unfortunately, expired debts may still negatively impact your credit score. Understanding your consumer rights, the statute of limitations and the credit score impact of expired debts can help you make informed decisions about handling debt collectors.
How long can a creditor come after you?
A creditor can pursue debts from two to 20 years based on the state’s statute of limitations. The statute of limitations’ timeline starts the date you made the last payment.
Be aware that creditors may argue in court that the laws from the debt’s state of origin should apply instead of the state you currently live in. This pertains to the “choice of law” clause. Courts may adhere to creditors if the state has a reasonable connection to the contract and if the clause does not conflict with the public policies of the borrower’s current state of residence.
Statute of limitations according to state
Disclaimer: Case law and state regulations on statutes of limitation are always evolving and often have more nuance than can be displayed in a single table. Aways consult with an attorney in your state to understand which statutes of limitation, if any, apply to your situation.
Types of debt under the statute of limitations
There are four different types of debt that fall under the statute of limitations:
- Written contracts are debts associated with agreements made in writing (including informal agreements scribbled on scraps of paper).
- Oral contracts are debts for which no written contract was created, but verbal promises of repayment were made.
- Promissory notes are financial instruments that define the number of payments to be made, the timing of those payments and the applicable interest rates (common for mortgages, student loans, personal loans and other formal debt arrangements).
- Open-ended accounts are revolving lines of credit. This means you can borrow against the limit, repay the amount plus interest and borrow from the same account again (as with credit cards or HELOCs).
What to do when collectors still contact you
Reasons to avoid payment and accepting responsibility
- The debt collector could be mistaken about the amount or timing of your debt, especially if the debt has passed from one collection agency to another.
- In some cases, claiming the debt can reset the statute of limitations, making it legal again for debt collectors to sue for the amount owed.
- The person contacting you could be a debt collection scammer. You could be speaking to a fake debt collector, attempting to make you pay money you don’t owe.
Even though the statute of limitations has expired, a debt collector can still contact you to resolve the unpaid bill because you still owe the debt. It has not been erased once the statute of limitations expires, so you may still get calls or letters from a debt collector.
If a debt collector still contacts you, refrain from immediately claiming responsibility for what they say you owe. Negotiating with the collector or making any payment on the debt in question, can only make your situation worse.
Instead of engaging with debt collectors, the Federal Trade Commission (FTC) recommends informing them you won’t discuss any debts until you receive your written validation notice, which includes the following:
Debt collectors are required to provide you with this written notice within five days of first contacting you. Upon receiving the validation notice, you can review the information about the debt for accuracy and decide how to proceed.
Keeping debt collectors civil and at bay
Debt collectors are limited in how they communicate with you under the FDCPA. There are limits on where and how a debt collector can try to communicate with you. For instance, the law prohibits the use of abusive, unfair or deceptive tactics in their communications to try and collect the debt. If you have a lawyer, they are required to communicate through your attorney and not contact you personally.
They also may not post your debt publicly on social media, nor can they harass you over the phone. For instance, they are not allowed to call you after 9 p.m. or before 8 a.m. and are not allowed to call your workplace if you have told them verbally or in writing that your employer does not allow such calls.
Options for handling valid time-barred debt
If the old debt a collector contacts you about is valid, you have a few options:
- Dispute the debt if there are errors: If you find inaccuracies in the validation notice, you have the right to dispute the debt in writing within 30 days. The collector must then verify the debt before continuing collection efforts.
- Refuse to pay: If the debt is beyond the statute of limitations in your state, you are not legally obligated to pay. You can send the debt collector a cease-and-desist letter, saying you do not intend to pay the debt. This doesn’t erase the debt or remove it from your credit report (where it can remain for seven years), but it can stop further communication under the FDCPA.
- Pay the debt in full or negotiate a settlement: If you have the means and want to clear the debt, you can choose to pay it off. Alternatively, you can negotiate a reduced lump-sum settlement. Neither payment nor settlement guarantees your credit score will increase.
- If you’re being sued over a debt outside its statute of limitations, you may need to appear in court and prove that the debt is too old to collect: Failure to appear in court to defend your case could cause a judge to rule in favor of the debt collector.
When in doubt, get expert advice
If you’re unsure about your rights as a consumer or the potential impact of each option on your credit score and finances, consider consulting with a financial advisor or a consumer attorney. They can help you navigate the situation without unintentionally resetting the statute of limitations.
How statute of limitations affects your credit report and history
The statute of limitations does not impact how long an unpaid debt can remain on your credit history or how much unpaid debt impacts your credit score. The statute of limitations simply governs how long a creditor or debt collector can pursue the debt and that timeline varies from state to state.
The length of time delinquent debt remains on your credit report must adhere to a separate law, known as the Fair Credit Reporting Act (FCRA). Under the FCRA, delinquent debt stays on your credit history for seven years, a timeline that’s not impacted in any way by the statute of limitations.
Bottom line
Debt collectors can pursue old debt even after the statute of limitations has expired, but they can no longer threaten legal action. However, once the statute of limitations has expired, you can send a cease-and-desist letter to the debt collector to order them to stop contacting you.
If a debt collector contacts you, take the time to confirm the debt is yours, the amount due is correct, the debt collector is legitimate and the relevant statute of limitations has not expired. Understanding your rights within the debt collection process, including when, where and how frequently debt collectors can contact you, can help you decide how best to resolve old debts.
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