There is nothing more confusing than understanding anything to do with credit scores or anything to do with the government. A lot of people can get mixed up with the statute of limitations and the reporting periods on credit accounts. They are two very different things, but the can be quite confusing to understand and in some cases, if you don’t know enough about them, you can get hoaxed into paying an old debt that had no need to be paid by collection agencies. This article will go over all of the information ones needs to understand the statue of limitation and reporting periods so that everyone can throw their confusion out the window.
The Difference between Statute of Limitations & Credit Reporting Periods
Before anything, I want to begin this article off with setting the record straight on the difference between the statute of limitation and credit reporting periods.
Statute of Limitations
In basic terms, a statute of limitation refers to the amount of time a creditor has left to sue you. Each state gives creditors a different amount of time, so it depends on where you live. Unless, in the event, you receive a judgment, this length never shapes a credit score in any way.
Credit Reporting Periods
A credit reporting period refers to the amount of time an account remains on your credit report. The Fair Credit Reporting Act itself mandates the reporting period for most items and is a matter of federal law. The credit period under review for a collection account is seven years, no matter which state you live in; unlike the statute of limitations, the reporting period of a collection account can affect your report and credit rating.
What Are The Limits On Old Debt?
The Reporting Act states that all negative items on your credit report will remain there for seven years from the first date of delinquency. Charge off’s will occur once a debt has become delinquent for 120-180 days again. Be aware, the length of the original account, loan or card has no effect on how long the delinquency went though is on your file. Even though the debt has become charged off, one still has to go through dealing with the black mark on their report for seven years until expired. Although charged off account can keep a credit score negative, even if there are no more late payments or charged off accounts, lenders like to see that one is responsible for paying them off eventually.
How Long Do Credit Bureaus List Credit Information?
Credit bureaus keep personal credit history for periods between 7 to 10 years. As you can see below, credit bureaus keep certain information longer than others over the course of time. Most, if not all, closed negative information eventually falls off a small page of your credit report and doesn’t apply to the overall calculation of your scores.
Bankruptcies: Chapter 7, 11, and 12 bankruptcies will remain on a credit report for 10 years. A chapter 13 bankruptcy will stay on a credit report within seven years from the filing date if completed, and ten years if not completed.
Collection Chapter Accounts: Debt Collection and charge-offs remain on a credit report for seven years according to the credit reporting act, and then the delete button is pressed, and it is taken off. For example, if you default on any credit payment, after seven years after the last payment.
Judgment Case: An unpaid judgment remains on a credit report for seven years or until the state’s statute of limits has expired. Paid judgments cannot be declared on a credit report for more than seven years from the filing date.
Tax Liens: Paid tax liens only get reported for seven years after the date of payment. An unpaid lien, however, can be on a report indefinitely, as long as the outstanding tax lien is properly filed and in full effect.
Civil Suits: Civil suits show up on court records and defendants in such actions get reported to the credit reporting agencies for seven years from the date of every or until the limitations have expired.
Child Support: Reported overdue payments made are only allowed to stay on a credit report for seven years from when the payment due starts.
Criminal Records: Certain public records don’t effect the actual calculation of one’s score, but can affect other things, such as one’s chance of getting a job, being accepted for a mortgage, or education continuation. Dispositions, releases, or parole are all reported after seven years later or until the governing statute of limitations is expired. The only way to remove a conviction is a granted full pardon. If an arrest, indictment or misdemeanor doesn’t result, removal from a credit report is necessary. The only indefinitely said criminal act is a criminal conviction.
Credit Inquires: Reported inquiries will stay on a credit report for two years; prescreened inquiries stay on for one year. Fair credit reporting sees that prescreened offer inquiries won’t affect a score in a bad way.
Student Loans: There are two types of student loans, Fedral Family Education Loans and Perkins loans. FFEL’s include Guaranteed Student or Stafford Loans, PLUS (Parent), and SLS’s (Supplemental Loans for Students) loans. The second type is called a Perkins loans (formerly a National Direct Student Loan) are obligations owed to a school by the student and may be assigned to the government if it defaults. FFEL loans are only reported seven years from the latest of three dates:
- The time when the secretary of education or the guarantee agency pays a claim to the credit holds on the guarantee.
- The date when the Secretary of the Education, guaranty agency, lender or any other loan holder first reports the account to the agency.
- The date when the borrower defaults on a loan for the second time.
Perkins loans are not subject to any limit on reporting, whether you like it or not.
Other Entries: Any bad credit entries that aren’t listed above may not remain on a credit report for any longer or less than seven years. In some cases, they can stay on this list longer.
Calculating the Statute of Limitations
It is important to know that the statute of limitations runs out for a set period of the last late payment or activity on that account. This means, if one pays a payment on an old account that is past the statute of limitations, the clock starts for seven more years plus 180 days for a new collection period. Do know, depending on the state, just promising to repay an old debt will reset the statute of limitations, even if the commitment doesn’t go through. If this happens, the creditor can legally sue you for the unpaid debt and interest.
The above reason shows when the statue of limitations has gone out on an old account is critical. Bill collectors can be very sly and hoax one into resetting the statute of limitations to keep collecting money, or so the original creditor can file a lawsuit.
Step 1: Add six months to the last date of activity on the account (Last payment or whichever other activity)
Step 2: Add the number of years for your state’s statue of limitations
Step 3: After the date calculated above, creditors can not longer legally file a suit against you. Just make sure you have proof that the statue of limitations has expired.
Questions on Statute of Limitations
No matter what the question, always remember, there is usually an answer. Depending on the circumstances, a collector can either help you, but sadly they like to hoax you into restarting the limitations without you knowing, resulting in some major consequences.
Can a Debt Collector Try to Collect After The Statute of Limitations Has Expired?
In a lot of cases, yes they can sue you for an old item on your report that isn’t current. Consumers who are getting bombarded with debt collectors can tell the collects to stop all contact; this is your right, and they have to stop. It is best to do this in writing. Once they’ve been requested to stop contact, the only way they can get ahold of a consumer is to confirm they’ve received their letter, or they are notifying the user they are taking legal action against you. In some states, collecting barred debt is illegal and against the law.
If The Statute of Limitations Has Expired, Can I still get Sued?
It isn’t uncommon for a consumer to receive a lawsuit filed against them for time-barred debts. If a consumer is unfairly getting dragged to court for an old debt and the statute of limitation is expired, you can transfer this as a defense against the lawsuit.
Should I Pay An Old Debt?
Regarding the statute of limitations, if a consumer pays any amount, they restart the clock on the statute of limitation. It can be hazardous when restarting the statute of limitations; a customer can open themselves up to a collection agency bugging them or a lawsuit. If there is an old bill that needs to be re-paid, and the statute of limitations is expired, either pay the full amount or don’t pay it at all.
Can a Debt Still Appear On My Credit Reports After The Statute of Limitations Has Expired?
Yes, most negative information gets reported for seven to ten years. The Statue of Limitations is completely different than a reporting period.
What State’s Statue of Limitations Applies If I Move Out Of State?
Consumers can generally be sued in the late where they took out the loan and in the state where they live. Sometimes, the statute of Limitation is commonly listed in a credit card contract.
When the answer isn’t clear, it is all up to the court to decide how to rule. It is helpful to consult with an attorney to know if the statute of limitation has expired.
What is The Statute of Limitations for Court Judgments?
In many states, the period is ten years or longer, and don’t be surprised to see a prior judgment get renewed. A ruling getting renewed is not bureaus or a business breaking any laws; they are renewing it within their rights.
Knowing the difference between statutes of limitations and credit reporting periods can help you save hundreds of dollars in your checking account. If you are going through money issues and are in debt, it may seem like you have limited solutions, but there is always help given when asked. Very few people ask for help. They tend to be more reserved because of embarrassment or just because they don’t know where to turn. A credit repair company or lawyer can point out those items while helping you save money in ways you didn’t know you were wasting. Yes, you have to pay them, for their services but it is worth every dime.
Articles for Learning More about Managing Credit and Credit Cards
Managing credit can be hard if you have many bills in collections, and if you don’t set your cards up right and play by the rules, you may see it go so far down that your card debt reaches more than you make in a year. If that is happening to you, and you are in search for some help here are some links for further investigation on credit scores and money management. Make sure you check out the general comments to get more information from people who’ve gone through this and maybe talk to them.
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Click here to fix your credit report on your own. If you are a DIYer and don’t want to hire an agency to repair, this is for you. Fixing your credit by yourself can be invigorating. But can also be frustrating and tedious if you have a lot of items to fix.
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