Statute of Limitations question

This is a dumb question I'm sure but I'm new to this and just starting to try and get my credit mess under control. Does the SOL apply to the state you are a resident in or the state you lived in when you incurred the debt? Also when the SOL passes does the debt automatically come off your CR or is there something that needs to be done to do that?

The answer for this isn't completely cut and dry. In general, however, if you are speaking of credit card debt, the SOL usually applies to the state in which you currently reside. There are some "if's" that can be thrown into the mix depending on your particular situation, but as a general rule of thumb, this holds true - but remember, we are speaking of credit card debt in this answer.

As for your credit report, a negative item can appear on your credit report for 7 years, regardless of the SOL. The SOL simply means the length of time a creditor has to take legal action against you in a court of law. An item can be outside the SOL but still appear on your credit report if it is within the 7 year timeframe for reporting.

The debt I'm referring to is a Sprint phone bill. I stupidly let my mom talk me into using my credit to get a phone for her as she didn't qualify. The last payment was in 2001 so if I'm understanding you right this should be off my report soon as 7 years is almost up?

If you made any agreement or acknowledged in writing that this was valid at any time since your last payment the SOL begins at that time. Not when the last payment was made.

Yes, if the last payment was in 2001, it should be dropping off your credit report soon. I don't know what state you are in, but chances are that it is already beyond the SOL.

If it is a collection agency appearing on your credit report, you can always send them a validation letter. If they are unable to validate the debt, they will have to remove the entry from your credit report. I mention collection agency in particular because it is possible with a debt this old that it may have changed hands several times and whichever collection agency is reporting it may no longer hold the debt; therefore, they would delete their entry.

SOL of that state will be applied where the account was originally opened. You may shift to a different place later but the SOL of the previous state will only be applicable.

If the debt is now with a collection agency, they have to be licensed in the present state before they can collect. Go through the fine prints and know the terms you signed with the creditor, after it reaches collections.

One thing I might add, just because it is past, or nearly past, the SOL, doesn't mean they won't try to collect on it. I had a hospital bill for my son when he was in the third grad-paid it in full- then 8 years later a collection agency tried to collect. I,by then, had gotten rid of old receipts, and it took 4 more years of them passing it around from CA to CA before they finally gave up!!..Karen It means they cannot legally collect on it.

Miranda, what state was the account originally opened in?

At any time after 2001, did you ever confirm to anyone on the phone or in writing that this is legitimately your debt? Or did you ever make any kind of payment arrangement with anyone after 2001? If you did either of these, it would have restarted the statute of limitations. As someone else said, check the CA trying to get money from you--they may not even be licensed in your state.

The first thing I would most definitely do is send out a validation letter and a cease & desist letter as well, sent certified mail RRR. Due to the age of the debt it is possible that they dont even have the info needed to prove their legal right to collect on it, and if that is the case they are not allowed to take a penny from you.

The account was originally opened in Arizona and I now live in Washington. They haven't actually tried to collect on it I just noticed it on my credit report. The CA is afni.

SOL for WA is 3 years. WA is where they would have to file, if they filed. They would not want to file in AZ (which also has a 3 year SOL on oral and open-ended, 6 year on promissory and written) because even if they should get a judgment there, they would have to go to the expense and trouble of getting it transferred to WA where you currently reside. That is why they file in the state where you currently reside - and why that is the SOL that applies.

And, actually, placing a derogatory on your credit report is legally viewed as collection activity - and legally cannot be placed on your credit report without notifying you first and giving you the 30 days to dispute the validity of the debt.

SOL in WA is 3 years for all debts. This would be the SOL in force because it is where you currently reside. If they attempted to use AZ SOL (3 years for oral and open-ended, 6 years for written and promissory), you could easily fight it - besides the fact that they wouldn't want to waste their time with that since they would then have to go to the trouble and expense to attempt to move any judgment obtained to WA. If, however, you moved back to AZ, the SOL there could then be enforced.

Additionally, placing derogatory information on your credit report without first notifying you is illegal - they must notify you and give you an opportunity to dispute the validity of the debt first. Also, placing derogatory information in your credit report is legally considered collection activity.