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Home / Debt / Does Debt Go Away in 7 Years?

 

In order to fully answer the question, we must define the difference between a debt becoming time-barred and ”going away”.

When a debt becomes time-barred, or collection actions become impossible, depends on the state that you live in. A national average is seven years, but some states allow up to ten years, depending on the type of debt. The clock starts ticking toward becoming time barred the day you become 30 days delinquent to the original creditor; however, the clock can be reset if you are taken to court and a judgment is awarded against you.

The general misconception that a debt automatically goes away after seven years has its roots in the Fair Credit Reporting Act or FCRA. According to the FCRA, most negative items must be removed from your credit report seven years from the first date of delinquency. A few exceptions are: Chapter 7 bankruptcy filings (10 years), judgments (seven years after the judgment or until the state statute of limitations expires, whichever is longer), and money owed to or guaranteed by the government. Items such as unpaid tax debt and delinquent student loans will remain on your credit report indefinitely or until seven years from the date paid. Just because a debt cannot be reported, does not mean it has gone away.

Even after the debt is no longer reportable, it may not go away. A debt does not officially ”go away” until your state’s statute of limitations expires. That can be up to ten years after you first became delinquent on some debts. The Federal Trade Commission has a list of time-barred debts that you may find helpful at this link (http://www.consumer.ftc.gov/articles/0117-time-barred-debts). You may find this chart on CreditCards.com that lists how long it takes for credit card debt to expire in each state helpful as well.

Even after a debt has reached the point where it should no longer be reported, does not guarantee that it will not be. Mistakes can be made, so you should request a free copy of your credit report each year at AnnualCreditReport.com. If you find an old debt is being reported past its legal life, contact all three agencies and dispute the debt. There is a dispute page on each credit reporting agencies website that will make the process as easy as possible.

 

About the author: Jerry Coffey

 

Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.

 

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