You have to be careful with debt collectors because dealing with them can affect your finances in some unexpected ways. For instance, agreeing to repay a debt can restart your debt’s “statute of limitations.” This is often confused with the time frame on your credit report, though, so let’s clear up the confusion.




Your debt’s “statute of limitations” gives creditors the right to sue you for a limited amount of time when the debt is past due. The time frame varies by state, but once it expires, those unpaid debts are considered “time-barred,” and a collector can no longer sue. As the FTC warns, talking to a debt collector can restart the statute of limitations on time-barred debts.


We’ve told you how this works in detail, but many people believe this is a myth. It’s not, but the confusion lies in your credit report. Typically, negative items like unpaid debts remain on your credit report for seven years. Settling a debt will not restart that clock—it’s totally separate from the debt’s statute of limitations. In short, if you settle on a debt, the statute of limitations may be restarted on it, but it will still drop off of your credit report in seven years from the time it was delinquent.

CreditCards.com explains the mix-up in a bit more detail, so check out their post on debt myths below.

9 Debt Myths Debunked | CreditCards.com

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