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What you need to know about resetting old debt

Bankrate logo Bankrate 9/14/2020 Dori Zinn
a person sitting in front of a laptop computer: Man checks finances on laptop © Dean Drobot/Shutterstock Man checks finances on laptop

It’s true that some types of debt will “expire” after three to six years - meaning a debt collector can no longer sue you for them. However, there are some things you can do that restart the clock on old debt, making it live longer than it needs to. If you’re dealing with old debt, make sure you’re taking the right steps to avoid starting over.

Statute of limitations

The statute of limitations is the time a debt collector has to take action against you - like suing you - for an old debt you haven't repaid. The statute of limitations depends on the type of debt and where you live, but for most states it’s typically three to six years.

As long as you don’t take action on your debts, the statute of limitations will continue to run. Within that time frame, creditors and debt collectors can reach out to you to pay old debt and even attempt to collect by suing you. If the debt is time-barred (meaning the statute of limitation window is closed), creditors won't be able to sue you for it, but they may still try to collect on it.

What can restart the clock on your old debt?

Restarting the statute of limitations can happen in a few different ways, including:

  • Making a payment: Whether in full or partial, making a payment on an old debt revives it, essentially restarting the clock on old debt.
  • Agreeing to pay: If you acknowledge that the debt is yours and agree to pay, the statute of limitations on your debt will start over.
  • Making a charge: If you have old credit card or revolving debt and you make a charge to your account, the clock on your old debt will restart.

Remember that when your old debt restarts, it starts from the beginning. So if your statute of limitations is seven years and you make a charge to the account after six years of being dormant, it'll start from scratch.

How does old debt work?

Old debt will likely affect your credit reports for seven years after it was first marked delinquent, and debt collection agencies are legally allowed to sue you until the statute of limitations runs out - typically three to six years, depending on where you live. While a debt collector can't sue you for a time-barred debt, they can still make an attempt to collect a debt. This means they can continue to call and send letters to get you to pay up. Having old debt on your record can also impact your other finances, including your ability to qualify for credit cards and loans.

3 ways to avoid restarting the clock on old debt

If you’ve decided to wait for the statute of limitations to expire on your debt, you can take a few steps to avoid restarting your debt's clock.

Record the start date

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The statue of limitations begins when the debt was first reported as delinquent. To learn this exact date, pull your credit report from The debt will likely fall off of your credit report after seven years, but in some states the statute of limitations could last longer, so make a note of the start date as soon as you can.

Don't admit to it

If debt collectors contact you trying to get you to pay up, be mindful of your language. Ask about the original creditor, the date or time period of when the old debt took place and any other identifiable information. But try not to admit that it's yours. Even if it is, you can pay on your own time once the debt is time-barred instead of restarting the statute of limitations.

Check your state laws

Since time-barred debt laws vary by state, you should make sure you know what your state laws are before taking action (or inaction) on old debt.

The bottom line

The time creditors and debt collectors have to get you to pay up has an expiration date. If you can't pay up or don't want to, old debt will eventually fall off your credit report and creditors won't always be able to sue you to collect a debt.

Make sure you understand the statute of limitations on debt in your state, since it's not the same for everyone. Even if a debt is yours, avoid taking ownership of it until you can prove the debt is yours. If you can afford to pay it, it won't hurt you. But if you make a partial payment or even acknowledge that the debt is yours, the clock restarts.

FAQ about old debt

Can a debt collector restart the clock on my old debt?

Debt collectors can restart the clock on old debt if you:

  • Admit the debt is yours.
  • Make a partial payment.
  • Agree to make a payment (even if you can't) or accept a settlement.
  • Charge something to the account (if it's a credit card or another type of revolving account).

Does disputing a debt restart the clock?

Disputing the debt doesn't restart the clock unless you admit that the debt is yours. You can get a validation letter in an effort to dispute the debt to prove that the debt is either not yours or is time-barred.

Is it better to pay old debt or let it fall off?

Old debt that you haven't paid off in many years means that at some point it probably went into default. Defaulted debt can crush your credit score and hurt your chances of borrowing money in the future, whether it's applying for a mortgage, car loan or credit card.

If you have the means to pay off old debt, it will help your overall credit - both your score and your report. Remember that even if debt is time-barred, creditors and debt collectors can still reach out in an effort to collect a debt.

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