Why Your Credit Report May Contain Expired Debts

Why Your Credit Report May Contain Expired Debts
Share on facebook
Share on twitter
Share on linkedin
Madeleine Jones
April 17, 2020

Your credit report is a report where you can find all about your credit accounts, loan accounts and existing debts. Even some public records. In order to take any financial decisions, the first thing you look up is your credit report, right? It only makes sense you would want to find in there the most positive and correct information. You definitely don’t want to find any expired debts.

If you are to find negative information in your credit report, you want to have it gone immediately. Positive information in your report can be reported indefinitely, but the negative can stay there only for a certain amount of time. This amount of time is called the credit reporting time limit.

Many consumers erroneously think that debts should disappear from their credit reports after the statute of limitations has passed, but they’re confusing the statute of limitations with the credit reporting time limit. These two are completely different. After the statute of limitations has run out some debts can still show up on your credit report.

Hand holding credit cards

Statute of Limitations on Expired Debts vs. Credit Reporting Time Limit

Both the statute of limitations and the credit reporting time limit are different and they are actually governed by different laws. The statute of limitations varies and it is different in every state. In Nevada, it’s 6 years, but in other states it can be only 3 years. The statute of limitations dictates how long a debt can be legally enforceable.

In other words, it’s the amount of time a creditor can use the court to force you to pay a debt. Actually it doesn’t have any authority on whether a debt appears on your credit report. It only impacts a creditor’s ability to win a lawsuit against you. In order to win a case by saying the statute of limitations expired, you have to appear in court and argue along with sufficient proof that the statute of limitations expired.

Now, the credit report time limit is the amount of time that stated how long a debt can appear on your credit report. The Fair Credit Reporting Act (FCRA) defines it as seven years for the majority of debts. The FCRA is a federal law and is the same for all debts. It doesn’t matter in which state the debt was created.

Once the credit reporting time limit has passed, the most negative information will automatically fall off your credit report with no effort on your part. If there is still old negative information in there, you can report it by submitting a credit report dispute with the credit bureau and have it taken off your credit report.

An Exception for Lawsuit Judgments

If you live in one of those states with a shorter statute of limitations, like Nevada, you may have debts that remain on your credit report even after the statute of limitations has passed. The exception is when a state’s statute of limitations for a lawsuit judgment is more than seven years.

If you restart the statute of limitations—by making a payment on the debt, for example—it does not increase the amount of time the debt will show up on your credit report. Normally, it’s best to pay your old debts that will still show up on your credit report for several years, no matter if the statute of limitations has passed. If you apply for a credit or loan, they will see you in a favorable light once the accounts are paid off. And, you’re more likely to get that credit or loan.

Judgments on Expired Debts: What They Mean & How to Fight Them

When a creditor wins a lawsuit, the statute of limitations is no longer in play given that it merely dictates when you can use the age of your debt as a viable defense against a lawsuit, and that ship has clearly sailed already. With that being said, a judgment will be listed on your major credit reports. It will remain for seven years from the date it’s filed. No matter what you do, which will damage your credit standing significantly. The decision will also open up a number of different means of collection for the creditor (or whoever has purchased your debt). Depending on the state, the collecting party may be able to garnish funds from your bank account and/or your monthly salary, force you to sell property, or even put you in jail. As if that weren’t enough, the amount you owe may accrue interest until it is paid off in full. And, debt collectors generally have 10-20 years to collect on judgments, depending on the state – a timeframe that can typically be renewed.

Given that many consumers become indebted due to job loss or other financial hardships, there’s no guarantee that the aforementioned collection techniques will work. That’s why credit card companies will often accept settlements. If you can afford to pay a significant amount of what you owe in one lump sum, it might be a good idea.

Cogburn Law FCRA Attorneys in Las Vegas, NV

Ultimately, the decisions of whether or not to pay outstanding credit card debt and when to do so are yours alone to make. However, as is the case with any major decision, it’s imperative that you have all of the facts and know your options. Be sure to understand the statute of limitations. Do not let a creditor bully you into doing or saying anything that will extend the time during which you are liable. Finally, if a creditor files a lawsuit when your debt is time-barred, remember that you must take action to have the courts throw it out. You must prove how old the debt is or the creditor will likely win the case.

Contact our experienced team of attorneys at Cogburn Law Offices today. Get a free case consultation if you need help understanding expired debts. You have rights – we can help.

If you would like to learn more about the FCRA, or you would like a guide on how to win your consumer protection case, just add your email below. We will send you our top tips for absolutely free.