One of the most frustrating questions I receive from people is about how long a debt will follow them. There are so many numbers out there about time limits on credit and negative information in our credit report, so what is the real answer? There are a few.
First let’s look at how long negative debt information can stay on a credit report. If it is a judgment or bankruptcy it may remain on your credit report for 10 years from the date the case was filed. Other items like credit card debt, collection accounts, repossessions, etc. can only be on the report for seven years after the account became delinquent. It does not matter if the account is sold to several different collection agencies – the seven year clock does not start over.
However, there are things you can do to restart the clock. Those include making a payment on the account and sometimes, just acknowledging that you owe the debt. Talking to an expert in debt management can be very beneficial when you begin working on improving your credit report.
Another time limit important in managing debt is how long a creditor has to take legal action against you if you do not pay. The statute of limitations varies from state to state, but in general there are three types of contracts: written, oral and promissory notes. The statutes can be different between the types. If you don’t know how long a creditor has to sue you to enforce payment, contact your state’s attorney general’s office or an attorney. Once the statute has expired, a creditor can still contact you and try to get you to pay, but they cannot use the court system to force you to pay.
A final time frame to remember is about positive information in your credit report. Positive information can stay on your report forever. And, even if the account is closed, it can benefit you.
So, what should you do if someone calls to collect a debt that is past the point of legal enforcement? It is your decision. If you feel a sense of obligation to repay the debt, you can offer to make payment arrangements or pay the debt in full. This action will not add the debt back onto your credit report. Other people choose to leave the debt alone and focus on ensuring all of their current bills stay current.
If your debts are not past the statute of limitations for legal or for negatively reflecting on your credit report, contacting a certified credit counselor may be your best bet. A credit counselor can help you review your credit report, look at debt repayment options and build a budget that helps you improve your current financial situation.
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