How to avoid resetting the clock on old debt
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It’s true that some types of debt will “expire” after three to six years — meaning a debt collector can no longer sue you for them. However, there are some things you can do that restart the clock on old debt, making it live longer than it needs to. If you’re dealing with old debt, make sure you’re taking the right steps to avoid starting over.
How does old debt work?
Old debt will likely affect your credit reports for seven years after it was first marked delinquent. Most states have a statute of limitations that sets the time a debt collector has to take action against you — like suing you — for an old debt you haven’t repaid. The statute of limitations depends on the type of debt and where you live, but for most states, it’s typically three to six years.
While a debt collector can’t sue you for a debt that is older than your state’s statute of limitations, they can still make an attempt to collect the debt. This means they can continue to call and send letters to get you to pay up. Having old debt on your record can also impact your other finances, including your ability to qualify for credit cards and loans.
As long as you don’t take action on your debts, the statute of limitations will continue to run. Within that time frame, creditors and debt collectors can reach out to you to recoup old debt and even attempt to collect by suing you. If the debt is time-barred (meaning the statute of limitations window is closed), creditors won’t be able to sue you for it, but they may still try to collect on it.
What can restart the clock on your old debt?
Restarting the statute of limitations can happen in a few ways, including:
- Making a payment: Making a payment on an old debt, whether in full or part, revives it, essentially restarting the clock on old debt.
- Agreeing to pay: If you acknowledge that the debt is yours and agree to pay, the statute of limitations on your debt will start over.
- Making a charge: If you have old credit card or revolving debt and you make a charge to your account, the clock on your old debt will restart.
Having a discharge in bankruptcy revoked: When you discharge debt through bankruptcy without objections from creditors, they can no longer collect on the debt through legal means. However, in some cases, the discharge can be revoked if the court finds that your debt was discharged fraudulently.
Remember that when the statute of limitations on debt restarts, it starts from the beginning. So if your statute of limitations is seven years and you make a charge to the account after six years of being dormant, it will be an additional seven years before the statute of limitations runs out.
3 ways to avoid restarting the clock on old debt
If you’ve decided to wait for the statute of limitations to expire on your debt, you can take a few steps to avoid restarting your debt’s clock.
Record the start date
The statute of limitations begins when the debt was first reported as delinquent. To learn this exact date, pull your credit report from AnnualCreditReport.com. The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.
Don’t admit to it
If debt collectors contact you trying to get you to pay up, be mindful of your language. Ask about the original creditor, the date or time period of when the old debt took place and any other identifiable information. But try not to admit that it’s yours. Even if it is, you can pay on your own time once the debt is time-barred instead of restarting the statute of limitations.
Check your state laws
Since time-barred debt laws vary by state, you should make sure you know what your state laws are before taking action (or inaction) on old debt.
What should I do about time-barred debt?
If you have time-barred debt, deciding what to do about it is a personal choice. Here are a few options to decide from:
Ignore the debt
One choice is to ignore the debt. If your debt is past your state’s statute of limitations, the creditor can no longer sue you to recover the debt, though they can still take steps to try and collect it. While creditors may still reach out to collect the debt, it’s against the law for them to mislead, harass or abuse you.
Repay it in full
One other option is to simply repay the debt in full. If you have the financial means to fully repay the debt, this can be an attractive option. The debt will then show on your credit score as completely paid in full, which can help your credit score.
Acknowledge it and set up a payment plan
If you don’t want to ignore the debt and can’t or don’t want to repay it in full, you can acknowledge the debt and set up a payment plan with the creditor. This might include making required monthly payments until the debt is paid in full, or trying to settle your debt for less than the full amount.
What rights are involved with old debt?
Before you choose which route to take, it’s best to know what rights you have when debt collectors reach out to you to collect the expired debt:
- The Fair Debt Collection Practices Act (FDCPA) protects you from debt collectors who engage in this unlawful behavior.
- The FDCPA gives you the right to verify your debt so you can confirm it’s yours before deciding what steps to take.
- The FDCPA requires a collector to send you a written notice containing the name of the original creditor, the amount you owe, a statement saying you have 30 days to dispute the debt and information on how to dispute the debt collection. After receiving the validation letter, you have the right to dispute the debt if the information is incorrect. That way, you can have the negative information removed from your credit report.
- You can request in writing that the debt collector refrains from contacting you.
If you encounter a debt collector who violates your rights when attempting to collect time-barred debt, you can take the following actions:
- File a report with your state’s attorney general office.
- File a complaint with the Consumer Financial Protection Bureau.
- Sue the creditor in federal or state court.
The bottom line
The time creditors and debt collectors have to get you to pay up has an expiration date. If you can’t pay up or don’t want to, old debt will eventually fall off your credit report and creditors won’t always be able to sue you to collect debts.
Make sure you understand the statute of limitations on debt in your state, since it’s not the same for everyone. Even if a debt is yours, avoid taking ownership of it until you can prove the debt is yours. If you can afford to pay it, it won’t hurt you. But if you make a partial payment or even acknowledge that the debt is yours, the clock restarts.
Frequently asked questions
Can a debt collector restart the clock on my old debt?
Debt collectors can restart the clock on old debt if you:
- Admit the debt is yours.
- Make a partial payment.
- Agree to make a payment (even if you can’t) or accept a settlement.
Charge something to the account (if it’s a credit card or another type of revolving account).
Does disputing a debt restart the clock?
Disputing the debt doesn’t restart the clock unless you admit that the debt is yours. You can get a validation letter in an effort to dispute the debt to prove that the debt is either not yours or is time-barred.
Is it better to pay old debt or let it fall off?
Old debt that you haven’t paid off in many years means that at some point it probably went into default. Defaulted debt can crush your credit score and hurt your chances of borrowing money in the future, whether it’s applying for a mortgage, car loan or credit card.
If you have the means to pay off old debt, it will help your overall credit — both your score and your report. Remember that even if debt is time-barred, creditors and debt collectors can still reach out in an effort to collect debts.
Will time-barred debt affect my credit score?
Time-barred debt can have a negative impact on your credit score if it’s still listed on your credit report as past due and you choose not to make a payment. Even if your debt meets the statute of limitation requirements in your state, the credit reporting agencies won’t remove the negative item for seven years.