When you have bills that are past due and you can’t pay them, it’s only a matter of time before debt collectors begin contacting you in an effort to collect what you owe. They’ll try to reach you in any way possible, including phone, postal mail and email. If you’re still unable or unwilling to pay, debt collectors may sue you for the unpaid balance. Being pursued by debt collectors can be very stressful. So, one question you may have is “What is the statute of limitations on debt collection?”
Being Sued for Unpaid Debt
In the letters and phone calls you get for unpaid debt, a collection agency may threaten to take you to court to sue you for what you owe. If they follow through on this threat and file a lawsuit, don’t ignore it. You’ll be given a date to respond by, and you should respond yourself or through an attorney.
When you respond, the collector has to prove you owe the debt and that you owe it to them and not someone else. If you don’t show up in court, the collector wins by default. When the court rules against you, the collector may be able to garnish your wages, levy bank accounts, place a lien on your property, etc.
Statute of Limitations
Debt collectors have a limited amount of time to file a lawsuit. The length of time varies from state to state but ranges from 2 to 10 years. This chart shows the statute of limitations for each of the 50 states and the District of Columbia.
Once the statute of limitations has passed, the debt collector can no longer file a lawsuit. That doesn’t mean they can’t continue to try to collect the debt. You may still receive letters, phone calls and emails, but they can no longer threaten you with a lawsuit.
Debt Collection and Your Credit
Your credit can be seriously harmed by not paying your bills on time, and it has an even bigger impact once a debt collector gets involved. If you have one or more accounts in collections, it shows clearly on your credit report as a negative item and is likely to make it harder for you to be approved for credit.
If you’re sued and there’s a judgement against you, the judgement is also listed on your credit report. This negative information remains on your credit report for seven years, sometimes longer.
What if the Debt Doesn’t Belong to You?
It can be very unsettling to be notified you’re being sued for a debt that doesn’t belong to you. Even if it’s not your debt, you shouldn’t ignore the notice. Send a letter to the collector letting them know you don’t recognize the debt. They will need to provide documentation proving that the debt is yours.
Protecting Your Credit
It’s much better to protect your credit before it’s damaged than to try to rebuild after you’ve been in collections or had a judgment against you. Pay your bills on time whenever possible and if you’ve fallen behind, try to work out a payment plan with your creditor.
If your credit report contains accounts that don’t belong to you, or if you’re contacted by a debt collector about an account that isn’t yours, don’t hesitate to reach out to Dovly for help. We’re an AI credit engine that can help you get inaccurate information removed from your credit report. Try it risk-free with our free membership tier.
