Learn what a statute of limitations on debt actually limits; that is, what activity or action can no longer justify legal proceedings in court. In all cases, a statute of limitations on debt only refers to the ability of creditors to bring a debtor to court for violating the terms of the credit agreement; the statute does not limit the ability of the creditor to attempt to collect on the debt nor does it remove your obligation as a debtor to repay the balance of your account.
Be very careful what you say to creditors once the statute of limitations governing your debt has expired. Depending on your state and the type of debt, even acknowledging that you owe the debt may be grounds for reviving the time period for legal action against you. In fact, under some circumstances, you may end up unintentionally extending the statute of limitations on a not-yet-expired debt that you owe.
Not all debts have a statute of limitations. If you are uncertain about whether your debt has a time-barred collection horizon, check your state's website. Under the Fair Debt Collections Practices Act, or FDCPA, the creditor is legally required to inform you of any statute of limitations.
Another tricky function of statutes of limitations is that they do not all start when the debt is first owed. Some statutes may start their "clock" as soon as the first payment is made, while some debts restart after every payment, and others do not start until a payment is missed.
If you are contacted about a debt that is past the statute of limitations, check your credit report. You should be able to see if the debt is being represented accurately and, if not, this could constitute a violation of the Fair Credit Reporting Act (FCRA) on the part of your creditor. It is not always legal for debts past their statute to be reported.
The only ways to remove your credit balance is to either repay in full, arrange with the creditor to have the debt cancelled, enter into a debt settlement program or have the debt discharged in bankruptcy. Once the statute of limitations expires, however, the creditor cannot use the power of the U.S. court system to make you pay. Your rights under the FDCPA are still in good standing, meaning you have legal recourse should your creditor use abusive or deceptive collection practices.
It is illegal for a creditor to try to force repayment by suggesting it can take legal action against you if the statute of limitations governing the debt has expired. However, not paying a debt likely has a negative effect on your credit score, regardless of any statute of limitations.