Difference Between the Age of Debt and Your Credit History
You have to be careful with debt collectors because dealing with them can affect your finances in unexpected ways. For example, agreeing to pay a debt may renew the “statute of limitations” for your debt. However, this is often confused with the time frame on your credit report, so let’s clear up this confusion.
The “statute of limitations” for your debt gives creditors the right to sue you for a limited period of time if the debt is overdue. Deadlines vary from state to state, but after the deadline, these unpaid debts are considered ” overdue ” and the collector can no longer sue. As the FTC warns , talking to the collector could renew the statute of limitations on expired debts.
We’ve told you in detail how it works , but many believe that this is a myth. It is not, but the confusion lies in your credit report. Usually, negative elements such as unpaid debt will remain on your credit report for seven years. Debt repayment will not restart those hours – it is completely separate from the debt statute. In short, if you pay off the debt, the statute of limitations can be renewed on it, but it will still disappear from your credit report after seven years from the date of delay.
CreditCards.com explains the confusion in more detail, so check out their post on debt myths below.
9 Myths About Debt Debunked | CreditCards.com
Photo by frankieleon .