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What is a Time-Barred Debt?

In a recent post I discussed that the Seventh Circuit held that it is a violation of the Fair Debt Collection Practices Act ("FDCPA") for a collection agency to pressure a consumer to make payment on a time-barred debt. This sparked the question "What exactly is a time-barred debt and how do I find out the timeline of my debt to avoid making a payment that I may not necessarily need to pay?"

The simple answer to the question is, a debt that has passed the period of time in which a collection agency can report the debt on your credit report and/or sue you for collection.  The first way to find out the age of your debt is to see if it has been deleted from your credit file.  Each of the three major credit reporting agencies, Equifax, Experian and Trans Union contain different information so you must pull a copy from all three agencies to see if the account in question is still reporting.  You are entitled to one free copy of your credit report a year from each of the three credit reporting agencies.  You can obtain a copy of your report at AnnualCreditReport.com.  I suggest using this website to order a copy, other websites advertise free reports but may end up requiring you to sign up for another service that could cost you money in the long run.
 
After reviewing your report you can find out the age of the debt.  If the debt is no longer on your report, then you more than likely do not need to make payment.  If the debt is still reporting on your credit file, review the information and make sure the dates reported are accurate.  If the debt is older than seven years from the last date of delinquency (the last date when you fell behind on payments) then the account should no longer be reported and you will need to dispute the information with the credit reporting agency to have the account removed.  Some exceptions to the seven year rule do apply, including Chapter 7 bankruptcy filings, judgments, student loans and tax liens. 

Each state has its own statute of limitations that will determine the length of time a collection agency may file suit against you to collect the debt through the court system.  There is no law, however prohibiting a collection agency from attempting to collect a debt that is beyond that statute of limitations by calling or sending a letter.  In other words, a collector can attempt to collect a debt forever, but why would you pay a debt that cannot be reported on your credit file and that you cannot be sued for. 

If you believe you are being contacted regarding making payment on a time-barred debt or you have a debt that is passed the statute of limitations still reporting on your credit report, contact SmithMarco P.C. for a free case review.

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