Can a Creditor Report a Debt Barred by the Statute of Limitations?

credit reportingNegative information on your credit report can make a big impact on your financial well-being. It can disqualify you from obtaining home mortgages and car loans, cause your interest rates to soar and may even keep you from getting the job you want. It goes without saying that you would want any negative information removed from your credit report as soon as the time limit for that debt has been reached.

So, what is that limit and how long will negative info remain on your credit report? It is important to be familiar with the two important time lines for debt—the statute of limitations and the credit reporting time limit.

The statute of limitations is the limited amount of time creditors or debt collectors have to file a lawsuit to collect a debt. It is what protects you from being sued for an old debt. The time period varies from state to state. In the state of Florida, the statute of limitations is 4 years on oral contracts and 5 years on written contracts. The clock typically starts ticking after the first missed payment to the original creditor. However, be aware that the limitations period can “restart” if you make a payment toward a debt. Debt collectors will often harangue debtors into making even a $5 payment toward a delinquent account in order to re-age the debt and add another 5 years to the limitations period!

The credit reporting time limit is the amount of time a creditor or debt collector can report information about a delinquent account on your credit report. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old. The negative information will typically remain on your report for seven years. This is the time frame that you’ll want to pay attention to when looking at your credit report.

Many people confuse the statute of limitations with the credit reporting time limit. They assume that once the 4-5 year statute of limitations is up, the delinquent information will be removed from their credit report. However, the statute of limitations typically has no bearing on your credit report. Rather, it is the credit reporting time limit of 7 years that dictates how long negative information remains on your credit report.

This means that even if the statute of limitations on your debt has expired, negative information can remain on your credit report for several more years. Once the credit reporting time limit has been reached, the negative information should automatically fall off of your credit report. If for some reason it doesn’t, you can dispute the information using the credit dispute process. Reviewing your credit report regularly can help you ensure that all of the information is accurate and up to date.

If you have negative information on your credit report that you believe is inaccurate or past the credit reporting time limit, remember that you have rights as a consumer. It is illegal for a creditor to re-age a debt to lengthen the amount of time it’s on your report. Contact a law firm that specializes in consumer protection law in Jacksonville like Parker and DuFresne.

Sources:

https://www.consumer.ftc.gov/articles/pdf-0096-fair-credit-reporting-act.pdf
https://www.consumer.ftc.gov/articles/0117-time-barred-debts
https://www.debt.org/faqs/americans-in-debt/consumer-florida/
http://www.experian.com/blogs/ask-experian/when-negative-information-will-be-removed-from-your-credit-report/
https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports