Removing Debt After the Statute of Limitations Expires
Negative information can leave terrible blemishes on your credit report. So when the time limit for that debt is up, you definitely want the debt removed from your credit report for good. With the negative information off your credit report, your credit score can improve and you can qualify for loans that you might not have been able to with the negative mark on your credit report.
Before you get your hopes up about a cleaner credit report, it's important to know that the credit reporting time limit not the statute of limitations dictates how long debts stay on your credit report. Credit bureaus can continue reporting delinquent debts even after the statute of limitations has expired.
Two Time Limits for Debts
The statute of limitations is the amount of time that a debt is legally enforceable, meaning the amount of time a creditor or debt collector can use the court to force you to pay a debt. It comes into play if you're ever sued for an old debt—you can use the expired statute of limitation as a defense to have the lawsuit dismissed. Typically, the statute of limitations has no bearing on how long a debt is listed on your credit report.
The credit reporting time limit is the time period is the one you need to know when it comes to removing expired debts from your credit report. It's the amount of time credit bureaus can report delinquent account information on your credit report. The credit reporting time limit for most negative information is seven years.
The statute of limitations, on the other hand, varies by state and may be shorter than seven years. Because of that, the statute of limitations on a debt can expire several years before the credit reporting time limit for that debt expires. In that case, the debt can (and usually will) still appear on your credit report even though the statute of limitations is up.
There is one instance that the statute of limitations takes priority over the credit reporting time limit, but not in your favor. A lawsuit judgment can remain on your credit report until the statute of limitations if that time period is beyond seven years.
When the credit reporting time limit does expire for a debt, it should drop off your credit report automatically. If for some reason, an old debt remains on your credit report, you can use the credit report dispute process to have it removed.
Accounts closed in good standing, that have no negative information associated, can remain on your credit report longer, based on the credit bureau's guidelines for reporting closed accounts.
Restarting the Clocks
The credit reporting time limit cannot be restarted. If a creditor or debt collector re-ages an account to extend the amount of time it's reported, they're breaking the law.
The statute of limitations, on the other hand, can be restarted with new activity on the account. Depending on your state's law, this activity can include making a payment or payment arrangement or even acknowledging the account.
If an account is approaching or past the statute of limitations and you're not intending to pay it, it's best to refrain from any activity on the account so that you don't restart the clock and extend the amount of time you can be used.
Federal Trade Commission. "Time-Barred Debts." Accessed Sept. 30, 2020.
Consumer Financial Protection Bureau. "How Long Does Negative Information Remain On My Credit Report?" Accessed Sept. 30, 2020.
Fair Credit Reporting Act. "15 U.S.C. § 1681 § 605 Requirements Relating to Information Contained in Consumer Reports." Accessed Sept. 30, 2020.
Nolo. "Debt Buyers and Your Credit Report." Accessed Sept. 30, 2020.