Collections On 12-Year-Old Debt

We Receive Collection Calls On 12-Year-Old Debt. Can They Still Collect on Debt This Old?

My husband purchased a truck in 1995 and turned it in less than one month later. The account was turned over to several collection agencies. We obtained a home loan in 2003 and at that time, that delinquency was no longer on his credit report. We have had his credit checked several times since then and it remained off of his credit. Today, we received a bill from another collection agency on the outstanding balance from 1995. I thought that something only stayed on your credit report for 7-10 years. This thing still haunts us. Can they still make collection calls on 12-year-old debt?

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Highlights


  • The passing of a statute of limitations does not mean the creditor is barred from collecting the debt in most states.
  • The statute of limitations does not prevent the filing of a lawsuit in most states.
  • Validate all debt, and especially 12-year-old debt.

It’s frustrating to receive collection calls on 12-year-old debt. Are collection calls on 12-year-old debt even legal?

How does a statute of limitations work regarding a debt that’s really old? Can 12-year-old debt appear on my credit report? Can a debt not appearing on your credit report be collected?

Read on, and we’ll answer your questions about collection calls on 12-year-old debt.

The Basics About Old Debt

Old debt never dies, except in two states. An original creditor, the original lender such as a credit card issuer, or a collection agent have the legal right to pester you about an old, unpaid debt forever. The exceptions are in Wisconsin and Mississippi. In those two states, a debt stops being collectible when the statute of limitations on the debt runs out.

Whether a debt appears on your credit report has no influence on a debt’s collectibility. An original creditor or collection agent is allowed to try to collect an old debt that does not appear on your credit report.

Let’s look at these rules a little more closely.

Statute of Limitations & 12-Year-Old Debt

Each state has its own statute of limitations rules. When it comes to debt collection, the rules that usually apply are for written contracts and open accounts. (See the Bills.com resource Statute of Limitations Laws by State to learn your state’s laws.) Some states, like the Carolinas, have short statutes of limitations for written contracts — 3 years. Other states, like the states that begin with the letter “I”, have long statutes of limitations — 10 years.

As mentioned, an original creditor or collection agent can contact you and ask for payment on a debt that’s of any age (excepting Wisconsin and Mississippi residents). So what’s a statute of limitations good for?

A statute of limitations is a defense you can use if an original creditor or collection agent files a lawsuit against you. Let’s say the statute of limitations that applies to your debt is 4 years. The original creditor files a lawsuit against you 4 years plus one day after the date you missed your last payment. You would answer the lawsuit with a motion reading something like, “Even if everything the creditor says is true, they filed their lawsuit after this state’s statute of limitations expired. Therefore, the lawsuit is time-barred, and I ask the court to dismiss this case.” If the court believes the facts in your motion, it will dismiss the case.

In many cases, the statute of limitations rules are easy to apply. Statute of limitations issues get tricky when the creditor and consumer reside in states with different statutes of limitations rules. See the Bills.com article How to Tell Which Statute of Limitations Applies to Your Situation to learn the five key questions lawyers ask when analyzing a statute of limitations issue.

t is a violation of the FDCPA for a collection agent to pursue a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Some collection agents still sue in hopes the consumer will not know this rule.

Credit Report Rules and Old Debt

In the credit report world, negative items on credit reports are called derogatories. Most derogatories can appear on your credit reports for up to 7½ years. The starting point is the date of first delinquency. In other words, the date of the first missed payment starts the clock. Making a payment or settling an account does not restart the 7-year clock.

Equifax, Experian, and TransUnion are the biggest publishers of credit reports. Each are independent, and each may publish different information in your credit reports. Equifax, Experian, and TransUnion must follow the federal Fair Credit Reporting Act (FCRA).

The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule. The FCRA 7-year rule is completely separate from state statutes of limitations for debt issues.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c). Equifax, Experian, and TransUnion report chapter 13s for 7 years
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer. Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.

The start of the 7-year period begins at the date of first delinquency. If no payments are made on the debt, the 7-year period begins when the first payment was due. Review your credit report carefully to make certain the dates of first delinquency are reported correctly. Unscrupulous collection agents reset the date of first delinquency to stretch out how long a derogatory account appears on consumer’s credit report. This is called "re-aging a debt" and is illegal under the FCRA.

Just because a debt does not appear on a credit report does not mean the statute of limitations for the debt passed. The opposite is also true: The passing of a state statute of limitations on a debt does not mean the debt may not appear on a credit report. The federal FCRA and state statutes of limitations are separate and independent of each other.

Whether a debt appears on a credit report does not establish legal liability for the debt. The opposite is also true: You may have legal liability for a debt not reported to the credit reporting agencies. Credit reports are not legal records of every debt a person owes.

isconsin and Mississippi outlaw lawsuits against consumers in cases where those state statutes of limitation have passed. Wisconsin and Mississippi are the only exceptions to the “lawsuits are allowed for original creditors even if the statute of limitations expired” rule.

Your Question: Collection Calls on 12-Year-Old Debt

When you receive collection calls on 12-year-old-debt, validate the debt. Follow the hyperlink just mentioned to learn quick and easy steps to validate debt. It’s worth your while to take this step for two reasons.

  1. If the collection agent cannot validate the debt, it cannot collect the debt.
  2. The older the debt the more unlikely it is the collection agent can validate the debt, according to the FTC. It is unlikely the original creditor will be able to give the collection agent any information to validate a 12-year-old debt.

You mentioned your state’s statute of limitations and this debt’s appearance on a credit report. As we mention above, just because a debt does not appear on a credit report does not mean your state’s statute of limitations clock has run out. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.

If you have problems paying your credit card debts, consult with a Bills.com debt resolution partner who can discuss your options.

Don't pay a debt simply because a collection agency contacts you. Do not make any payment on the debt before reviewing the situation carefully. Making a payment could reset the statute of limitations clock back to zero. If the clock is reset, the creditor may be tempted to take legal action against you without concern about a statute of limitations defense you offer.

A collection agency’s contacting you does not necessarily mean you are legally obligated to pay the debt. It also does not mean this 12-year-old account will reappear on your spouse’s credit report.

Since the deficiency balance on your spouse’s vehicle is more than 12 years old, it should no longer be appearing on his credit reports. If your husband is sued for this debt, he very likely can use the statute of limitations as an affirmative defense to dismiss the case. That makes a lawsuit possible legally, but unlikely.

Under the FCRA, the debt should not appear on his credit reports. Consider sending a cease communication letter to the collector, which will stop the phone calls.

A new company purchasing your account cannot lengthen the time the account appears on your credit report. Be careful, though, because unscrupulous collection agents change the date of last activity on old accounts so they appear on your credit report for longer than 7 years.

Pull your credit report and review the accounts in question to make sure you see no unauthorized changes. If you find any incorrect or suspicious information on your credit report, such as  this 12-year-old debt reappearing on your credit report under a different name, dispute the listings with the credit bureaus.

Visit the Bills.com credit resources page to learn more about credit, credit scoring, and credit reports.

For further information regarding options available to consumers struggling with debt, I invite you to visit the Bills.com Debt Help page.

I hope the information I provided will help you Find. Learn. Save.

Best,

Bill

Bills.com

45 Comments

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  • JJ
    Apr, 2012
    John
    My husband had a judgment against him dated Feb. 20, 2001, by Missouri law it should be expired as of Feb. 20, 2011. However it is still showing up on his credit report but it is showing up as a collection debt rather than a judgment under the public record section and they have changed the date so many times it's hard to keep track but it looks like they have something on the credit report dated 2008. They have also changed their name on it 3x (at first we thought it was being sold but it isn't we called and verified this, they have just changed the name). Now we're trying to buy a home and even thought it's been 10 yrs and the judgment is not renewed so it is legally expired it is still showing up and that one thing is keeping us from getting approved. He wrote to the credit bureaus and disputed it but all they've responded with is that it is his debt. We are aware that it was his debt but it should no longer be on there. Does anyone know what paperwork we'll need to provide to
    1. Get it off his credit report, and
    2. Have documentation a lender will accept to show this is no longer a valid debt while waiting on the credit bureau to update his report?

    We'd love to be able to move forward with purchasing this home, but without proper documentation we can't. Any ideas/advice is appreciated!! Thank you!

    0 Votes

    • BA
      Apr, 2012
      Bill
      Start with a copy of the judgment, or a related document showing the date of the judgment being Feb 1, 2001. Then also include a photocopy of the Missouri statute that spells out the lifetime of a Missouri judgment. Take this to a Missouri lawyer who has experience in civil litigation. Ask him or her to write a letter to the legal departments at the big three credit reporting agencies (Equifax, Experian, and TransUnion), explaining that if the judgment and related derogatories are not removed immediately, you will file an action against them under the FCRA, and your state's libel laws.
      0 Votes

  • AT
    Apr, 2012
    Annie
    In Tennessee, my husband just received a phone call today from a debt collection agency that just received the account on 3-20-12 from the bank where the debt was originally owed stating he owes $4,870.75. It is for a repossession on a truck from back in 2001. He no longer has the paperwork showing payments made to the bank after the truck was repossessed. This was not paid in full to his knowledge since the paperwork is no longer in his possession. Since this has been 11 years and this debt has not come to his attention until now, does he still owe this debt according to the Tennessee repo law? What should be done to ensure this is taken care of before they wipe out my bank account? If he does owe this and has to make payments? What amount would suffice to make monthly payments on, or do they settle in this case? Our knowledge has been with hospital bills so I am unsure as to handle this repo debt(secure loan from 11 years ago). We are having a wedding in June so I am afraid of this financial burden hindering us at this time. Thanks for your time.
    0 Votes

    • BA
      Apr, 2012
      Bill
      You may feel your spouse owes the deficiency balance out of a sense of moral conviction, but he may not owe the debt as a matter of law. If the collection agent telephones you again, do not tell the caller you owe the debt or will agree to pay the debt. Instead, validate the debt. Follow the hyperlink I just mentioned to learn how to validate a debt. Debt validation is a consumer's best friend because a debt that cannot be validated may not be collected. If your spouse does not have any records of this debt, chances are the original creditor does not either.
      0 Votes

  • KH
    Apr, 2012
    Karen
    I applied for a mortgage 2-1/2 months ago and my credit was excellent (around 800). TODAY I got a letter from a collection agency telling me I owe an $88 payment to an eye-care company from DECEMBER 2004, which is just about 7-1/2 years ago. Number 1, I pay medical companies (like my dentist, etc.) with a credit card so I have a record; this also means that there is no way I should have any outstanding debt. Unfortunately I don't have my credit card records from 7 years ago (who would keep them that long?!). I will be sending this company a cease-and-desist letter and disputing the charge, and from everything I have read they cannot contact me again or report this to credit bureaus, but I am furious and very exasperated by the timing. Could this $88.00 debt that I have never heard of before today show up on my credit reports when my lender re-pulls them just before closing? I am SO careful, I can't believe this has happened! Also I just looked at my Experian report and it shows absolutely nothing negative, so at least as of today with that bureau, nothing derogatory has shown up. Oh, I'm in New Hampshire (have lived here for 10 years).
    0 Votes

    • KH
      Apr, 2012
      Karen
      Any answers? Please?
      0 Votes

    • BA
      Apr, 2012
      Bill
      It is unlikely one derogatory from nearly 7½ years ago will have much of an impact on a person with an 800 FICO score, so it is unlikely this one item will scuttle your home loan application. In the unlikely event that your loan will not be approved unless you can prove you paid it, you may have to either pay it in full or work out a settlement with the creditor.
      0 Votes

  • RL
    Apr, 2012
    Rick
    I received a letter from a debt collector in Houston TX. It regards an electric bill that was run up in my name, at an address in Ohio I never lived at. I remember about seven years ago getting a call from the electric utility in Ohio when I moved, and they said I had this bill in my record. I said I had never lived at the address. I was told to send them proof, so I sent them stuff with my address on it from the time period of the bill. The electric utility dropped the issue. Now, what do I do that this debt collector has purchased this old discharged debt? I am going to send a debt validation letter, but if all they need is a computer printout stating I owe the old debt, what can I do? Funny thing, I just bought a house, litterally three weeks before this, and there was nothing in my credit. In fact, I get my report annually, and this has never been there.
    0 Votes

    • BA
      Apr, 2012
      Bill
      A consumer's best friend in a situation like you described is a debt validation. Validate the debt immediately following the instructions on the page I just mentioned. A debt that cannot be validated cannot be collected.
      0 Votes

  • AG
    Feb, 2012
    al
    I am receiving a notice from a creditor that evidently purchased debt from the city of Houston. They are claiming that I parked my old car in a tow away zone in January 2007. It is now February 2012. The creditor is in Milwaukee, Wisconsin. The Statue of Limitations is 4 years in Texas. The last notice I received was "final notice-credit bureau Listing" claiming that they will report the debt to my Credit Bureau. Can this effect my credit? Are they allowed to report the debt to my credit bureau now that the SOL of limitations has passed? I am contemplating buying a house soon and don't want this come back and haunt me :) Thanks!
    0 Votes

    • BA
      Feb, 2012
      Bill
      State statute of limitations laws have nothing to do with the federal law (the FCRA) regulating what appears on a credit report. Yes, a new derogatory appearing on your credit report may have a negative impact on your credit score. If your credit score is on the border of qualifying you for a home loan, a new derogatory can push your score into the "no qualify" category. My advice? Clean up the mess before it appears on your credit score.
      0 Votes

    • AG
      Feb, 2012
      al
      So the creditor from Wisconsin that bought the debt from the city of houston can now put this new negative report on my credit? despite it being from 2007? Thank you for your help :)
      0 Votes

    • BA
      Feb, 2012
      Bill
      Yes, if the derogatory item is less than 7½ years old, and the information is otherwise accurate, the collection agent may add the derogatory to a consumer's credit report. See the Bills.com article Fair Credit Reporting Act to learn more.
      0 Votes