Old debts: the statute of limitations vs. the 7-year rule

Two different clocks apply to old debts. Here is the difference, and what to watch out for.

Two different clocks

The credit reporting limit is set by federal law: most negative items come off seven years after the date of first delinquency. The statute of limitations is set by each state and limits how long a creditor can sue you, often three to six years.

Time-barred debts

When the statute of limitations has passed, the debt is "time-barred." Debt collectors may not sue you or threaten to sue you over a time-barred debt.

Be careful with payments

In some states, making a payment or signing an agreement on an old debt can restart the statute of limitations. Reporting time does not restart, but the lawsuit clock might. Know your state’s rules before you pay.

If you are sued

Do not ignore a court summons, even on an old debt. Respond by the deadline and consider talking to a consumer attorney or legal aid office.