What Is Statute of Limitations and How to Validate Debts


There are many misconceptions about how long a debt is valid and what the statute of limitations are for collecting debts. It is very important for all consumers to understand debt collection rules and regulations so that they can properly manage their finances.

What Is The Statute Of Limitations For Collecting On A Debt?

When you have incurred a debt, there are no limitations for how long a debt collector can actively seek payment on that debt. Contrary to popular belief, debts never go away. However, there are some things that you should realize about old debts.

• Seven years after the last date of activity on the bad debt, the collection company can no longer report the debt to the credit bureaus. Even though the debt is still valid, it is illegal for it to remain on your credit report.
• If you make contact with any debt collector about a debt, the date of activity is renewed to reflect that date. So, if you call about a twenty year old debt, you may find it posted on your credit report the following month.
• Legal actions and bankruptcy cannot remain on your credit report for more than ten years.
• Debts forgiven in a bankruptcy can never be collected on, even if the bankruptcy has been removed from your file.
In the credit collection industry, old debts are often referred to as zombie debt. They are in effect dead, but they just won’t go away. Most collection agencies know that they are uncollectable, but it does not stop them from trying.

What If A Zombie Debt Collector Threatens Action?

Most debt collectors remain within the guidelines of their profession. This means that they will not insult you, make threats, or imply that they are going to seek legal action against you if it is not a plausible solution.

There are, however, some that cross the line. Under the Fair Credit Collections Act passed by Congress, consumers have the right to legal action if a credit collector becomes rude or threatening. If you have a collector that is relentlessly harassing you, you should seek the advice of an attorney.

So, In Reality, Debts Never Go Away?

The sad news is once you have acquired a debt, it is yours for life. Once the statute of limitations for reporting has passed, the debt will no longer affect your credit report, but it is still possible that you will be contacted by collectors.

It is very important that you review your credit report on a regular basis. Reviewing your report will ensure that debts are not posted on there that are too old to be reported. It is also a way to effectively manage your credit and watch for identity theft.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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