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Dr. Don Taylor, CFA, Bankrate.com advice columnistStatute of limitations on a judgment

Dear Dr. Don,
I just received a letter from an attorney saying that I owe $2,000 from a Wells Fargo Visa account. I don't have the letter in front of me but it says that they got a judgment against me in September of 1999 and that I need to repay this debt or they will report it to a collection agency.

I live in California and I think that the statute of limitations is six, maybe seven years in this state. This collection does not appear on my credit report. I was told that since the statute is up or coming up that they might be making a last attempt to collect money from me. I just paid all my debt and have rebuilt my credit to a good standing and don't want to have to pay off a debt that is I think is seven years old. What should I do?
-- Kim Conundrum

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Dear Kim,
It's possible that the judgment was removed from your credit report even though the statute of limitations hasn't expired on the judgment, although it's not supposed to happen that way. Here's what the Fair Credit Reporting Act says in Section 605, requirements relating to information contained in consumer reports, about when the item should be removed from your credit report:

When the item should be removed from your credit report:

You need to get a better handle on the timing of events before you decide what to do in this situation. If the creditor went to court and won a judgment against you for the outstanding debt, the judgment has its own statute of limitations separate from the statute of limitations applicable to the credit card agreement. A Bankrate feature, "State statutes of limitations for old debts," shows the statute of limitations by state for written contracts, oral contracts, promissory notes and open accounts, but not for judgments.

The relevant statute of limitations is for the state where the judgment was awarded, which may or may not be your home state of California. Find out where the judgment was awarded and you can find out the relevant statute of limitations by contacting the attorney general's office for that state. The attorney's letter may provide that information.

The attorney's intent to report you to a collection agency is different from reporting the debt to a consumer reporting agency (credit bureau). Credit bureaus have to follow the rules of the Fair Credit Reporting Act, while debt collectors have to follow the Fair Debt Collection Practices Act. The FTC Facts for Consumer guide, "Fair Debt Collection," spells out those rules. 

It's very possible that the attorney is making a last run at collecting from you before the state of limitations runs out on the judgment. If the state of limitations has expired then you aren't obligated to repay the judgment. If you can't get comfortable with where you stand in this matter you should consult with an attorney.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "financing a home," "saving & investing" or "money."

Bankrate.com's corrections policy -- Posted: Sept. 13, 2006
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