However, you should know that just like a gallon of milk expires so do most debts. There is a statute of limitations on your debts that protects you from being pursued by collection agencies for the rest of your life. The statute of limitations basically works like an expiration date on your debt. At some point the debt has to be tossed out.

With this in mind you should always ask questions when a collector is attempting to collect a debt that you feel may have passed its expiration date. If it has met the statute of limitations, you may not legally have to pay off the debt anymore. (See the fair debt collection Act )

There are 2 limits you need to familiarize yourself with

The first is the credit reporting time limit. Businesses are not required to report your delinquent account the moment that it becomes over due. In fact, they are legally allowed to wait up to seven years from the date that your account is delinquent before they actually turn it over to collections or report it.

You will always want to research this by getting a copy of your credit report and noting when the debt was first reported.

Many people get this confused and are shocked when they discover something far back in their past is now on their credit. They will automatically assume that it has already reached the statute of limitations, when in fact it has not.

There are a few exceptions to this general seven year rule. Bankruptcy is allotted ten years before it has to be reported, while tax liens can be reported 15 years later. You will want to refer to the Federal Credit Reporting Act for the specifics on every type of debt.

Now, the statute of limitations doesn’t begin on the date that the debt is reported to the credit bureau. It actually begins on the date that the reported account had activity. This being the last time that you actively used the account. This date should appear on your credit report.

Most creditors will rely on the fact that the majority of consumers are not aware of their rights let alone the statute of limitations on debt. Therefore, they will continue to attempt and collect the debt, even when it is no longer a valid debt. If they convince you that the debt is valid and you make an agreement to pay the debt, make a payment, or reuse the account, then the statute of limitations will be broken and the account will in fact restart under the statue of limitations.

However, if you know for a fact that your account does fall under the statue of limitations of debt, you can simply inform the debt collector of this fact. In most cases you won’t be hassled anymore. The moment a creditor knows that you are aware of your rights and credit laws, they usually will stop attempting to manipulate you into paying an expired debt.