What is the "Statute of Limitations" and Do I Have To Pay This Old Bill?

In my experience as a bill collector, most people think the "statute of limitations' is 7 years and mean you no longer owe the bill. That is not true. The "statute of imitations" regarding a debt varies, depending on the state that you live in. It could range from 3-15 years, depending on the state you live in. Check your state here: http://www.fair-debt-collection.com/statue-limitations.html.

The statute of limitations doesn't mean you no longer owe the debt. The statute of limitations limits the time in which a creditor can file suit/take legal action against a debtor. This limit starts from the date of last activity and ends depending on the state that you live in. A creditor can still file a suit in court, but you can have it dismissed based on expired statute of limitation. You must appear in court to have it dismissed.

The statute of limitations does not mean you no longer owe the debt. It is still collectible in MOST states. Please check your state to see laws regarding this, http://www.fair-debt-collection.com/statue-limitations.html. The statute of limitations does not prohibit your account from being sent to a collection agency or from being sold. It merely limits what a creditor can do to collect the debt. The creditor/collection agency can continue to call and send letters regarding the debt, unless you send them a "cease and desist" letter. They cannot threaten to take any legal action, once the statute of limitation has expired.

The confusion that most people have is the 7 year thing. The credit bureaus will keep an account on your credit bureau for 7 years. Even if the statute of limitations has expired, the account remain on the credit bureau for 7 years and 10 years if it is a judgment. If the statute of limitations for your state is 15 years, the account will still only remain on the credit bureau for 7 years and 10 years for judgments. See the Fair Credit Reporting Act.

Why should I pay an account that is out of statute? If the account is still being reported on the credit bureau, it is still effecting your FICO score. Keep in mind that in MOST states if you make a payment, it will reinstate the statute of limitations. Meaning the clock starts over again. So, if you decide to pay on a debt where the statute of limitations has expired, it is no longer expired. HINT: If you are not going to "settle or pay in full" you are hurting yourself.

If the account is out of statute and no longer on the credit report, should I pay? That is totally up to you. There is absolutely no legal reason you have to pay and it is not effecting you in any way creditwise. The only reason I can think of, would be morally. So you decide.

Make sure you check your states laws, http://www.fair-debt-collection.com/statue-limitations.html. They vary from state to state. And the law varies depending on the type of account owed. Be informed. The bad collectors are preying on your ignorance. If you are being threatened in any way, contact the Federal Trade Commission, http://www.ftc.gov/.

Please post any questions you may have.