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.
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.
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.
- If the collection agent cannot validate the debt, it cannot collect the debt.
- 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.
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.