What Is the Statute of Limitations on Debt?

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Dear Experian,

What is the statute of limitations on debt? I have an account on my report that was sold to a collection agency. Does the statute of limitations apply to the date of the original debt or the date of sale to the new agency? What can I do to correct this?

- JWM

Dear JWM,

The statute of limitations on how long a debt can be collected is different than the amount of time a debt can remain on your credit report and they are set by different laws.

Statute of Limitations on Debt and Your Credit Report

The statute of limitations on debt refers to the amount of time a creditor or collection agency can try to collect the money owed. At the federal level, it is governed by the Fair Debt Collections Practices Act (FDCPA), and state laws may also apply. As a result, the statute of limitations for collecting a debt can vary by state.

The FDCPA and state laws do not affect how long the account will remain on your credit report. The Fair Credit Reporting Act (FCRA) governs how long information can remain in a credit report.

In some states, the statute of limitations on collecting the debt may be longer than the amount of time it can remain on the report. Because of this, you may find that the creditor is still trying to collect the debt even after it has purged from your credit reports.

How Long Negative Accounts Stay on Your Report

Negative accounts remain on your credit report for seven years from the original delinquency date. The original delinquency date is the date the account first became late and after which was no longer brought current.

If an account becomes seriously delinquent, the debt may be sold to a collection agency. Because your credit report is a credit history, the original account and the collection agency account will likely both appear on your credit report. Since the debt is now owed to the collection agency, the original account will no longer show a balance, but it will still show the history of the account.

The date the account was sold to the collection agency does not affect the date the debt will be removed. Both the collection agency account and the original account will be removed at the same time, seven years from the original delinquency date.

Paying Off Outstanding Debt

If you wish to resolve the debt, you should contact the collection company in order to arrange payment. Once the account is paid in full, the creditor will update the account to show that it is a paid collection.

Although still negative, most creditors view a paid collection more positively than they do an outstanding collection account.

Thanks for asking,

Jennifer White, Consumer Education Specialist

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