By Steve Bucci
Published November 04, 2011
Dear Debt Adviser,
I have several items on my credit report that list a date to be removed. I thought after seven years negative items — except for government items such as student loans — are gone and no longer haunting. I spoke to someone at the law firm that received my debt. He said he couldn’t explain it to me but that even after seven years, while the debt might not be on my report, the company can still come after me for the debt through courts and garnishments. How does this work really? This one in particular is scheduled to expire this year, and I don’t want to struggle finding the money for it if it’ll be gone after that date. Any help would be greatly appreciated or at least point me in a direction where I can get the information. Thank you very much.
I can understand why you are confused. Believe me, you are not alone. What is going on here are three different threads all attached to the same debt. First, there is the reporting of the debt by the credit bureaus. Second, there is the debt itself you owe. And third, there is the statute of limitations in your state that limits the collection options a collector can use in pursuing you for the debt you owe. Here’s how it all works:
Garden-variety debts such as credit cards, mortgages or loans stay on your credit report for seven years, depending on the state. Debts to or guaranteed by the government, child support and bankruptcies stay on for 10 years to life. Many people mistakenly believe once a debt no longer appears on their credit reports, it is no longer owed. The truth is the debt is owed as long as it is unpaid or otherwise settled.
However, state laws prevent a collector from using the courts (to seek a judgment that can be used to garnish wages or bank accounts, or place liens on real property) if the debt has passed the statute of limitations time frame set by the state. The clock starts on the statute of limitations from the date of the last payment made on the account. You can determine the statute in your state by visiting the website of Nolo, a legal information company.
An important element to keep in mind with statute of limitations laws is that, in most states, any payment on a debt restarts the clock. For example, let’s say the statute of limitations in your state is four years, and you have not made a payment on your debt for five years. But, in a moment of weakness, after being harassed by a collector, you sent in a payment. In most circumstances, the statute of limitations clock is restarted by your payment, and the collector would be within their legal rights to use the courts to collect.
So, the bottom line is you may still receive calls and/or letters from collectors attempting to collect your old debts, even those that can no longer be reported to the credit bureaus and appear on your credit report. The only sure way to make old debts go away (those that you are certain you owe) is to pay them, settle them or have them dismissed in a bankruptcy.
In your case, I suggest you answer any correspondence from any collectors. Tell them the debt is past the statute of limitations in your state, and you don’t intend to pay anything. A collector who has been notified that a debt is unenforceable can be sued if they pursue it in court.