Editorial Policy

Creditors May Ignore Old Credit Card Debt

Erica Sandberg

December 11, 2012

QDear Erica,

Once upon a time, I was in business and racked up about $25,000 in personal credit card debt. Now, after almost 15 years, my question to you is this: Since I never filed for bankruptcy and none of the debt appears on my credit report and no collection agency is after me, can collection agencies still come after me after 20 or 30 years have passed? — Joe

ADear Joe,

Sounds like you have the beginnings of a mystery novel: The Case of the Missing Business Debt.

Don’t start counting on a big advance from a publisher just yet, though. The explanation is probably so simple, it could end up being the length of, well, an advice column — like this one.Ask Erica

I strongly suspect that the $25,000 you accumulated was on a number of different credit cards and loans. Why? If you owed such a sum to a single lender, it would have almost certainly filed a lawsuit against you after the debt had gone delinquent. Most creditors would consider tens of thousands of dollars far too much money to just walk away from. However, if the total debt was spread out over many creditors, and each lent you a little, they might have decided that taking you to court was not worth the trouble.

So that’s the prologue. Here is what’s going on today, in the main body of your book:

Evidence of those unpaid balances is not appearing on your consumer credit reports because they timed out ages ago. Most negative information can be listed on a report for only seven years. Therefore it’s been invisible to anyone pulling your reports for a solid eight years. This doesn’t mean the balances don’t exist. Unless you have paid them or had them formally forgiven — as in a bankruptcy — you still owe the money. It’s a cosmic truth (and perhaps one of the morals of the story).

OK, so why isn’t a collector (the antagonist) hunting you down? Because it would be a waste of time and effort. The statute of limitations for filing a lawsuit has almost certainly passed. When that’s up, creditors can’t take you to court and win a judgment, so they have no way to force you to send them the cash. The number of years a creditor may sue for such a debt depends on state law, but no state exceeds 15 years, and most have time frame restrictions significantly less than that.

An interesting question is whether collectors can still call after the statute of limitations has come and gone. And the answer is, yes, they may. But if you tell them that you won’t or can’t pay and that you know they have no legal teeth to make you, they will probably stop. In the unlikely event that they continue, simply send them a cease-and-desist letter. It’s your right under the Fair Debt Collection Practices Act, the law that governs third-party collectors. Once they have your notice to knock it off, they can no longer contact you unless to say they will take you to court — which they can’t because too much time has passed.

And that, Joe, is the denouement to this tale. No great cliffhanger, and I doubt it will ever be made into a movie starring Daniel Craig as you.

All that’s left to write is the epilogue. What will you do in the future to make sure that your finances remain drama free? Because you didn’t mention any current and pressing obligations, I have a feeling that you’re already doing just fine.

Got a question for Erica? Send her an email.