A debt doesn’t generally expire or disappear until its paid, but in many states, there may be a time limit on how long creditors or debt collectors can use legal action to collect a debt.
In many states, statues of limitations are in place to prevent creditors and debt collectors from using legal action to collect on an older debt. Some debts, though, such as federal student loans don’t have a statute of limitations.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the:
If you’re sued by a debt collector and the debt is too old, you may have a defense to the lawsuit. In addition, you may have a claim against the collector for violating the Fair Debt Collection Practices Act, which prohibits suing or threatening to sue for a time-barred debt.
Many people believe that debt simply disappears or expires after a certain period of time This myth persists because of confusion surrounding statutes of limitations and credit reporting timelines. But the reality is that debt doesn’t just vanish on its own Unpaid debts can legally remain collectible for years, though creditors’ tactics are restricted over time. Understanding the truth about old debt is key to effectively managing lingering obligations.
When Debts Fall Off Your Credit Report
One source of the myth is the 7-year credit reporting window The Fair Credit Reporting Act limits how long negative information can appear on a credit report Most adverse items like late payments, collections accounts, and bankruptcies can only stay on your report for 7 years from the date of first delinquency.
But this does not mean the debt itself goes away. Creditors can still attempt to collect on obligations even after they no longer appear on your credit. The 7-year credit reporting limit only restricts what can show up on your credit history. It does not erase legal liability for the debt.
So if you’re still getting collection calls for a credit card bill that went unpaid 9 years ago, it’s because the creditor still views you as owing the money. The debt likely fell off your credit report 2 years ago, but remains collectible in the creditor’s eyes
Statutes of Limitations Restrict Legal Action
Another source of confusion is statutes of limitations (SOLs), laws that restrict how long creditors have to sue for unpaid debts. SOLs vary by state and debt type, but typically fall in the 3-to-6 year range.
SOL expiration does not cancel the debt, but it does limit creditors’ legal remedies. They are barred from bringing lawsuits or obtaining judgements after the SOL runs out. However, creditors can still attempt collection through calls, letters, settlements, and other non-litigation means.
So if you get contacted in 2022 about a credit card bill from 2014, you may be protected from being sued. But the collector can continue dunning you for voluntary repayment. Only full debt cancellation or expiration extinguishes the creditor’s contractual rights.
Bankruptcy Eliminates Many Debts
For consumers struggling with old accounts across multiple creditors, bankruptcy may be the most effective option. Filing under Chapter 7 liquidation or Chapter 13 reorganization discharges many unsecured debts like credit cards, personal loans, medical bills, and utility arrears. The debts essentially vanish through the bankruptcy court’s authority.
Your bankruptcy discharge order legally prohibits creditors included in the filing from any further collection actions. They cannot litigate, contact you, or even sell the cancelled debts to collectors. Bankruptcy provides a definitive end to old unsecured obligations.
Of course, not all debts qualify for discharge. Student loans, tax debts, alimony/child support, and certain other obligations will survive a bankruptcy filing. But for most credit card, medical, and personal debts, the bankruptcy route offers the closest thing to making them disappear permanently.
Settling Debt for Less than Owed
When an old debt is with a single creditor, settlement may be an option. This involves negotiating to pay a lump-sum that is less than the full balance owed, in exchange for the creditor canceling the remainder. Settling makes sense when the account is so delinquent that the creditor may accept 25 cents on the dollar just to get something.
Settlements do leave you with a responsibility to pay the agreed lower amount. But they can effectively make a portion of the debt disappear – the difference between what you pay and the original obligation. Just get any “settled in full” agreements in writing before sending payment, and make sure the creditor withdraws any negative credit reporting on the account.
Outliving the Debt Collector
For very old obligations that have passed SOLs, settling may not be necessary. If the original creditor sold the debt to collections long ago, and the collector has made little headway in recovering anything, you may be able to simply outwait them.
Passive non-payment can make debt functionally disappear when past the SOL and owed to remote buyers unlikely to litigate small-dollar amounts. Collectors may give up on chasing decade-old $500 credit card debts that they purchased for pennies on the dollar. They have no cost basis or expectation of recovery. If you wait long enough without engaging, there’s a chance the collector will write the debt off.
The Zombie Debt Trap
A risky trap to avoid is making payments on old time-barred debts. In many states, this “re-ages” the SOL under revival statutes, giving collectors more time to sue. It also creates a new expectation that you will continue paying.
So if a collector contacts you about a 12-year old hospital bill demanding $2,000, don’t send them $20 just to get them off your back. That resets the SOL clock, revives the creditor’s remedy rights, and makes the debt more collectible. Cease all communication and let the old obligation fade away.
While the myth persists that unpaid debts simply vanish after 7 years or some other fixed term, the reality is more complex. Creditors may aggressively collect old accounts for a decade or longer through legal means or by selling debts to collectors. Protections like SOLs and credit reporting windows restrict but don’t eliminate collectors’ rights. To definitively eliminate old debt, bankruptcy discharge or settlement may be necessary. Or with enough time passing, you may be able to outwait collectors on obsolete obligations. Just avoid carelessly reviving old debts and recognize they won’t disappear on their own. Understanding the truth about how long unpaid debts remain collectible is key to managing lingering financial obligations.
When does the statute of limitations period begin?
In some states, the statute of limitations period begins once a required payment is missed. In other states, the period of time counts from when the most recent payment was made, even if that payment was made during collection.
Keep in mind that making a partial payment or acknowledging you owe an old debt, even after the statute of limitations expired, may restart the time period. It may also be affected by terms in the contract with the creditor or if you moved to a state where the laws differ.
To calculate the statute of limitations for your debt, you may want to consult with a lawyer.
Can a debt collector collect debts or sue me after the statute of limitations expires?
In most states, debt collectors can still attempt to collect debts after the statute of limitations expires. They can try to get you to pay the debt by sending you letters or calling you as long as they do not violate the law when doing so. They can’t sue or threaten to sue you if the statute of limitations has passed. However, this prohibition doesn’t extend to proofs of claim that are filed in connection with a bankruptcy proceeding.
A lawsuit filed after the statute of limitations expires is a violation of the Fair Debt Collection Practices Act, but a court may still award a judgment against you if you don’t show up and raise the statute of limitations as a defense. Ordinarily, it’s the responsibility of the person being sued to point out that the statute of limitations has expired. For example, you may need to show that there has been no activity on the account for a certain number of years. Again, if you have questions about the law, consider consulting an attorney.
If youre having trouble with debt collection, you can submit a complaint with the CFPB.
What Happens To Your Debt When You Die?
FAQ
What happens after 7 years of not paying debt?
Does an unpaid debt ever go away?
A debt doesn’t generally expire or disappear until its paid, but in many states, there may be a time limit on how long creditors or debt collectors can use legal action to collect a debt.
Does debt ever get wiped?
You might not have to pay an old unsecured debt if it has been more than 6 years (or 3 years in the Northern Territory) since you last made a payment or acknowledged the debt in writing. This is called a statute barred debt.
How long does it take for debt to disappear?
… such as late or missed payments, accounts that have been sent to collection agencies, or a bankruptcy stays on credit reports for approximately six years
Does debt disappear after 7 years?
The debt itself doesn’t legally disappear after 7 years, but it will fall off your credit report, meaning for the most part, it no longer affects your credit score or appears to new lenders. Can creditors still collect after 7 years?
Does credit card debt go away after 7 years?
A common misconception exists that credit card debt you owe disappears after seven years when it disappears off of your credit report. In reality, credit card debt you left unpaid does not go away. However, a creditor has a limited time in which to sue you for the debt, called the statute of limitations.
How long does a debt stay on your credit report?
A credit report does not list current valid debts for consumers, it reports on payment history. The Fair Credit Reporting Act says a delinquent account stays on your credit report for for 7 years from the first time you missed a payment on of the debt. So even if a debt is expired, the payment history stays on your credit report for 7 years.
How long does unpaid credit card debt last?
After seven years, unpaid credit card debt falls off your credit report. The debt doesn’t vanish completely, but it’ll no longer impact your credit score. Considering a way to help build your credit? Join MoneyLion Credit Builder Plus membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.
Do old debts disappear when you stop paying them?
Old debts don’t simply disappear when you stop paying them. It’s important to confront your debt by mounting a collection defense, an FCRA action, or by utilizing a debt relief solution such as entering into a debt management plan or filing for bankruptcy.
What happens if unpaid credit card debt falls off your credit report?
After unpaid credit card debt falls off your credit report at the 7 year mark, it will no longer directly impact your credit score or appear to new lenders for most standard credit checks. This means, for the most part you can apply for new loans or credit with a clean slate as far as that particular debt is concerned.