Disclaimer: Pacific Debt, Inc. is not a law firm and this article should not be construed as legal advice. Only a licensed attorney in your state can provide legal advice.
Seven years seems to be a magical number for financial considerations. Seven years can clear some data off your credit report. Seven years is how long you usually need to keep tax information. However, seven years does not automatically clear away what you may owe from your credit report. Events like Chapter 7 bankruptcy can stick around much longer. And your state may have a different statute of limitations for credit card and other debt. And sometimes old debt doesn’t just go away. Let’s look at some of the background first.
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal act that protects information that is collected by a consumer reporting agency like a credit bureau. It states that the information can not be provided to anyone without a specific purpose as detailed in the FRCA. Companies that provide the information must also investigate any disputed information. There are also provisions to ensure accuracy and to mitigate damages done by identity theft.
The FRCA protects consumers from unethical or illegal actions on the part of creditors and on how information is used.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) is a federal law that prevents abusive, deceptive, and unfair debt collection practices. There are many unethical debt collectors out there!
In general, debt collectors can not:
- Charge more than 10% interest
- Garnish more than 25% of wages
- Use/threaten physical force or criminal tactics to harm you, your property, or your reputation
- Accuse you of committing a crime for not paying the debt
- Make/threaten to make defamatory statements to someone else
- Threaten arrest, to seize assets, or garnish wages, unless actually planning to take such action
- Use obscene or profane language
- Cause you to spend money you wouldn’t otherwise have spent (ie long-distance telephone calls)
- Call you repeatedly or let your phone ring repeatedly
- Call frequently
- Contact your employer, except to verify employment or health insurance status, garnish wages or locate you
- Reveal information about your debt to anyone except your spouse or your parents if a minor.
- Publicly publish your name for failing to pay
- Send a postcard or letter with revealing information on the envelope
- Claim to be someone other than a debt collector, including a governmental official
- Use stationery that appears to be from a law firm
- Charge you collection or attorney’s fees unless legally allowable
- Threaten to report you to a credit reporting agency if they have no intention of doing so
- Send a letter claiming to come from a claim, credit, audit, or legal department unless it actually is
Debt collectors must:
- Disclose caller identification
- May contact your family to locate you
- Must serve you with notice of a lawsuit if suing you
Many states have an FDCPA that addresses several other debt issues. If you live in Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, or Wisconsin, click on your state for more information on your state’s Fair Debt Collection Practices Act.
Statutes of Limitation
Each state has a statute of limitation that covers certain types of debt. These include oral agreements, written contracts, promissory notes, credit cards, and other revolving loans. These may range from 3 years to never.
By following the state link above, you will also see the specific statutes of limitation for that state. These were current at the time of writing. In addition, the statute of limitations may be enforced in the state you lived in while incurring the debt, not where you live now.
**Since we are not lawyers or accountants, we highly recommend you check with a professional for your specific situation.**
Does Old Debt Go Away?
This is the tricky part and the reason why we went over the FRCA, the FDCPA, and the statutes of limitation.
If you get threatened by a debt collector for debt that is older than the statute of limitation or the collector tells you that it is legal to sue over old debt, it could be a violation of the FDCPA. You may want to consult an attorney who specializes in these cases.
If you tell a debt collector that you will pay or send a payment, be aware that this may reset the statute of limitations clock.
Old Debt and Your Credit Report
Old debt collection accounts may be reported for seven years plus 180 days from the date of first delinquency. Let’s say your debt became delinquent on June 1, 2010, the debt should have fallen off your credit report by January 1, 2018.
At that point, the debt can no longer be reported to the credit agencies. However, the debt may be sold to another collection agency that may create a new collection account. You may receive new phone calls or new data on your credit report.
It pays to check your credit report annually and correct any errors you might find.
What Happens to Credit Card Debt When You Die?
If you die with credit card (or other) debt, what happens afterward depends on your situation.
- In a community property state (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin), the surviving spouse is usually responsible for the debt, regardless of who is listed on the account.
- Cosigners on the debt or joint card holders may be responsible for the debt.
- If you have an estate or will, the executor must notify the creditor. The creditor then has a specific amount of time to make a claim or the debt is relieved. Secured (house or car loans, etc) debt is paid first out. Unsecured debt (credit cards) must wait to see if anything is left over.
- If you die intestate (without a will), outstanding debts are paid before any assets are distributed as is detailed above.
**Again, we are not lawyers or accountants. Always consult a professional for the most up-to-date advice for your unique situation.**
What Happens to Old Credit Card Debt?
The truth is, your old debt can lurk around in the background and may rear its ugly head at any time. However, you may not be legally required to pay that debt because it exceeds your state’s statute of limitations. You should contact a lawyer or accountant who can advise you.
If you are up to your neck in debt ($10,000 or more) and are having trouble paying off current bills, let alone old debt, there is help available. Debt settlement, debt consolidation, and credit counseling companies can help you get out of debt. Pacific Debt, Inc has been awarded for its customer service and may be able to help you get started today!
About Pacific Debt, Inc
Pacific Debt Inc is one of the leading debt settlement companies in the US and has settled over $300 million in debt for our customers since 2002.
If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t repay, contact Pacific Debt, Inc.
Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.
Pacific Debt is currently providing debt relief coverage in the following states:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners
For more information, contact a debt specialist today. The initial consultation is free, and they can explain your options to you.