Old Consumer Debt: When Is It Too Old To Collect?
Debt collectors often buy old consumer debt and aggressively try to collect it. Sometimes the debt collector will threaten to sue, or threaten to put the debt on your credit report. How valid is that warning? How do you know when debt is too old to collect?
Liz Weston's article in MSN Money explains that there are two limitations periods you should know about:
First, the statute of limitations restricts the time in which a creditor can sue on a debt. In California, creditors must sue within four years to collect on promissory notes, contracts and credit card debt. If a debt is older than that, you are entitled to ask the judge to dismiss the collection lawsuit. Even threatening to sue you after a statute of limitations has run out violates the Fair Debt Collection Practices Act.
Second, the Fair Credit Reporting Act restricts the time the credit bureaus can report problems on your credit report. The trigger is the date the account first goes delinquent--in other words, when you miss your first payment on the account. Seven years and 180 days after that, with a few exceptions, the creditor is no longer allowed to report consumer debt on your credit report. Importantly, debt collectors are prohibited from restarting the seven-year clock by "re-aging" the debt--assigning it a new delinquency date--or by selling it to a different debt collector.
Sometimes creditors try to coerce consumers into making payments on old debt by telling them it will improve their credit score. The problem with that is making a payment on an old debt or agreeing to a new repayment plan might extend the statute of limitations or restart the clock altogether.
If you are sued--or someone threatens to sue you--and you know your debt is too old to collect, you should write the debt collector certified mail, return receipt collected. Tell them to stop bothering you and explain why your debt is too old.
If you have problems or need further information, we may be able to help you.
