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Collections On 12-Year-Old Debt

Collections On 12-Year-Old Debt
Mark Cappel
UpdatedDec 7, 2022
Key Takeaways:
  • 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.
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?

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.

It 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.

Wisconsin 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

Dealing with debt

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Auto loan debt was $1.50 trillion and credit card was $0.89 trillion.

According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1.739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Collection and delinquency rates vary by state. For example, in Massachusetts, 18% have student loan debt. Of those holding student loan debt, 5% are in default. Auto/retail loan delinquency rate is 2%.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.

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10 Comments

AAdvice, Aug, 2022
A car was repossessed 11 years ago is it legal for a collection agency to call you and demand you pay the money and if you say you can’t afford it they say you can pay half of it within two months or will take you to court they took off half of it or they will garnish wages
AAdvice, Aug, 2022
My son has a car repossessed 11 years ago a debit collector is calling now and wanting at half of what is owed on the car immediately taking out every week of his check are they will garnish his wages and he cannot afford either one Is it legal to be able to do that after this many years they have threatened to take him to court garnish his wages scare tactics if he doesn’t pay half fast he will owe all when taken to court is this legal
JJosh, Aug, 2022
Please, do not take my answer to be legal advice as I am not an attorney. Only attorneys can offer legal advice.  When a vehicle is repossessed, the lender will usually sell the vehicle at auction, than apply the money received at auction to the balance owed on your auto loan. Here's the key, if the lender received less money at the auction than your still owe on the vehicle, the difference is called deficiency balance. Which means you will probably still owe money to the creditor even through you no longer have the vehicle. You bring up a good point about the timing. In general states and jurisdictions within a state have a statue of limitations on the collecting of types of debt. This is a type of debt and depending on you residence or where you lived at the time of the repossession the collector may still be in there right to collect on the debt. Action plan: I would review the terms with the bank who lend the money. Generally they disclose all aspects of the life of a loan including deficiency balance and the logistics on how they will collect the debt. I would also confirm your state and jurisdiction to determine the statue of limitations regarding repossessions. Last but not least, I would reach out to an attorney so they can give you authoritative advise on your situation. Let me know if there is anything else I can assist you with?
CCoralSea Mercintile, May, 2014
I think, morally we should pay our debt, It it protects our country from falling into a recession, so we should definitely pay our debt.
BBill, May, 2014
A person can choose to pay a debt for moral reasons, even if the legal obligation has passed. There may be competing moral reasons not to pay a debt, too. Each person can make that choice, if faced with it.

I don't see the link to recession that you referenced. Usually, the default rate on personal loans is a result of macro-economic forces, and not the other way around.
KKeKe Maples, Apr, 2014
A GA company is calling for my mom about a loan from a bank in 2002. The loan wasn't from 2002, but earlier. She has been disabled since 1996 and hasn't worked since. She can't pay it back. What can I do to make them leave her alone? It's more than 12 years old.
BBill, Apr, 2014
Find the name of the company calling. See if it sent any written correspondence. Help your mom send it a cease communication letter. If they continue to call, consult with an attorney who specializes in Fair Debt Collection Practices Act (FDCPA) violations. Make sure she does not send a penny to the collector, as it could bring a debt that has passed the statute of limitations for debt to come back to life.
kkeonia maples, Apr, 2014
A company called AGA in California. They called all my family looking for her but have not called me? Seeing that I've been her care taker since 96. I've had the same phone number for ever. When I called he didn't even make sure he was talking to the right person. .He just gave out her personal information. How do i get them to stop calling my family?
BBill, Apr, 2014
I would assume the "her" you refer to is your mother or someone who you have power of attorney to handle their financial matters.

It would be helpful to know in which state the person in question resides, the type of debt AGA is collecting, and when the last payment was made on that account.

If the collection account is older than the statute of limitations in her state, then send the collection agent a cease communications notice.