- In New York, a plaintiff has 6 years to take action on a contract.
I have an unpaid utility bill in New York from 7 years ago that just appeared on my credit report. Is that legal?
I live in NY, can a gas company report an unpaid bill from the year 2003 (7 yrs later) for the amount of $116 dollars that I did not know that I owed, to the credit agency (TransUnion, Equifax and Experian)? When I initially started my new service with the gas company in 2009, I was never told that there was an old balance owed.
According to the Laws of New York CVP Article 2 § 213, a plaintiff has 6 years to take action on a contractual obligation or liability.
However, CVP Article 2 § 213 concerns using the courts of New York to get a legal remedy for a debt. Parties are not bound privately by CVP Article 2 § 213. By that I mean, the utility may be time-barred from asking a New York court for a judgment regarding your $116 unpaid bill, but it is not barred from collecting the debt privately. The utility is within its rights in New York to refuse to do business with a former customer who has an outstanding balance on their account. (This is not the case in all states, however.)
Therefore, even though the statute of limitations has passed, it is within the utility’s right to condition doing business with you on your making your account current.
To learn more, read New York's Debtor and Creditor state statutes.
Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. 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.
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)
- 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
The FCRA 7-year rule is separate from state statutes of limitations for debt issues.
Here, the unpaid bill can appear on your credit report from the month in 2003 that the account became delinquent plus 7 years. The date that you paid the balance due is irrelevant to the 7-year rule. Monitor your credit report to be certain this derogatory entry is deleted at the appropriate time.
See the Bills.com resource Collections Agencies, Collections Laws and Your State’s Statute of Limitations to learn more about the nuances of collections, and what the statute of limitations does and does not mean.
I hope this information helps you Find. Learn & Save.
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 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 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 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Arkansas, 35% have any kind of debt in collections and the median debt in collections is $1553. Medical debt is common and 18% have that in collections. The median medical debt in collections is $561.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.