How Long Does a Debt Collector Have to Collect a Debt?

How Long Can a Debt Be Collected?

The amount of time a debt collector has to take legal action on a debt depends on the state where you live.

In some states, the debt is collectible until it's paid. Other states set statutes of limitations, which restrict taking legal action to collect a debt once a certain time period has passed. These statutes typically range from three to six years, though it could be longer.

The exact timeline could depend on three factors: the type of debt, your state where you live and the state law listed in your credit agreement.

For example, in New York, collectors generally have up to three years to take legal action on most consumer debts. In Arizona, the timeline depends on the kind of debt involved. Credit card, medical and mortgage debt typically carry a six-year limit, car loans are subject to a four-year window (if your car was repossessed) and state tax debt can remain enforceable for as long as 10 years.

When the statute of limitations period begins also varies by state. Depending on where you live, it may start once you miss a payment or from the date of your most recent payment. And in some states, making a payment after the statute of limitations has passed could restart the clock on the statute of limitations.

The timeline can also be impacted by your contract terms or if you moved to another state with different collection limits.

Tip: It's important to note that in most states, debt collectors can still pursue a debt even if the statute of limitations has passed. They may contact you to ask for payment, but they generally cannot sue or threaten legal action unless the debt is raised through a bankruptcy claim.

Learn more: How Do I Know if I Have Debt in Collections?

How Long Do Collections Stay on Your Credit Report?

Debt collections stay on your credit report for seven years from your original delinquency date, which is the date the debt became past due and was never brought current. These collection accounts can hurt your credit score as long as they're listed on your credit reports, though their impact diminishes over time.

How much a collection account affects your credit score depends on what else appears on your report, the size and type of the debt and whether you pay the collection balance. For example, newer versions of FICO^® Score^Θ and VantageScore^® credit scores don't factor in paid collection accounts. FICO^® Scores 8, 9 and 10 also don't count third-party collections under $100, and VantageScore 3.0 and 4.0 exclude all paid collections.

Keep in mind, collection efforts can continue long after the debt has been deleted from your credit history, so it is best to repay the debt if you can.

Learn more: How to Pay Off Debt in Collections

What to Do if a Debt Collector Contacts You About Old Debt

Here are some guidelines to consider if a debt collector attempts to collect on an old debt, even if the statute of limitations has passed.

1. Don't Ignore Court Papers or Written Correspondence

If a debt collector contacts you about an old debt, don't ignore it, as doing so could result in a default judgment in the collector's favor. But be cautious about paying it right away, as acknowledging the debt or even making a small "good faith" payment could restart the statute of limitations clock.

2. Verify the Debt

Confirm the debt and its amount by checking your credit reports at the three major credit bureaus—Experian, TransUnion and Equifax. These reports are available for free once per week at AnnualCreditReport.com. You can check your Experian credit report for free anytime.

You may find your debts in the Collections or Account Information sections of your credit reports. The information could include the account's payment status, history and the amount you owe. If the collector is suing you for the debt, you can also verify the lawsuit's legitimacy by confirming the case number and court information with your local courthouse.

If you're unsure that the debt is legitimate, you have the legal right to send a debt validation letter to the collector within 30 days of receiving the notice. Under federal law, the collector must respond with written verification of the debt and cease collection efforts while verifying the debt.

3. Check Your State's Statute of Limitations

As mentioned, debt collectors can't sue you if the debt is time-barred, meaning it's past its statute of limitations. That will depend on the type of debt and the state named in your credit agreement. The state likely has its own statute of limitations guidelines, including when the period begins and what actions can restart it.

Contact your state attorney general's office to find out your state's statute of limitations details. If there's any uncertainty about the timeline or legality of your case, consult a lawyer.

4. Consult a Consumer Law Attorney

As long as you owe on a debt, a collector may still attempt to collect it. They may even sue you, though it's illegal to do so if it's time-barred. The Consumer Financial Protection Bureau (CFPB) states that a court could even rule against you if you don't appear in court and present the statute of limitations as a defense.

With that being the case, you'll likely want a consumer law attorney with experience fighting debt collectors to represent you. Many offer free consultations to present your options and gauge the strength of your case. If the collector has engaged in illegal collection actions, it will strengthen your case and your attorney may even recommend counter-suing them.

5. Resolve the Matter

Once you've verified the debt and whether it's past its statute of limitations, it's time to resolve the matter. The action you ultimately take will depend on the details of your case.

You may decide to pay the debt if you're certain you owe it. Keep the receipt in case the debt is sold to another collection agency that tries to collect it again later.

If you're unable to pay the full amount, you could try to settle it, but consult an attorney before proceeding. Remember that negotiating could restart the statute of limitations, giving a collector a longer timeline to sue you.

Finally, you have the right under the Fair Debt Collection Practices Act (FDCPA) to ask the debt collector in writing to stop contacting you. If the debt is past the statute of limitations, include that in your letter. Once you send the written request, communication should cease, though the collector can still send legal notices, such as a lawsuit notice.

Benefits of Paying Off a Collection Account

Paying off a collection account won't automatically remove it from your credit report, but it can still benefit you in several ways, including:

• Improved credit score: Paying off a collection account could directly improve your credit score since FICO^® Scores 9 and 10 and VantageScore 3.0 and 4.0 no longer factor paid collections into credit score calculations. FICO^® Score 8 also excludes paid collections, but only if the original amount was under $100.
• Higher odds of loan approval: Some lenders, such as mortgage lenders, require you to pay off any past-due debts before they will consider you for new credit.
• Helps avoid a collection lawsuit: If you don't repay a debt, a debt collector may take you to court. And if the court rules against you, they may be able to garnish your wages or freeze your bank account. They could also place a lien on your property, except for income or property protected by law. Paying or settling the debt generally stops that from happening.
• Peace of mind: Paying off a collection account puts the matter behind you. Debt collectors can no longer hassle you about the debt, so you can stop worrying about it.

How to Improve Your Credit Score After a Collection

There are numerous ways to improve your credit score after a collection account appears on your credit report, starting with paying off the account. These three additional steps will carry the most weight when building credit after a collection and in general.

• Make on-time payments. Payment history is the most significant factor in your FICO^® Score, accounting for about 35%, so paying all debts by their due date could have the greatest impact on your score.
• Pay down revolving debts. Paying down balances on revolving debt, such as credit cards, can quickly improve your credit. Your credit utilization ratio, which measures the amount of your available credit limits you're using, makes up 30% of your FICO^® Score.
• Keep older accounts open. Since the length of your credit history makes up about 15% of your FICO^® Score, keeping your oldest accounts active could help you maintain a longer average credit age, and help to avoid a negative impact on your score.

Learn more: How to Improve Your Credit Score

Use Your Credit Report to Help Improve Your Score

A debt collector can collect on a debt long after it's been removed from your credit report. They may even attempt to collect even if your debt is past your state's statute of limitations, though laws generally prevent them from pursuing legal action.

Consider the guidelines above if a debt collector contacts you about an old debt. At the same time, keep a keen eye on your credit and look for ways to improve it. Consider checking your credit score for free from Experian, which includes a list of credit score risk factors you can use to determine which changes you can make to help improve your scores over time.