Debt collectors do a lot of things when trying to recoup money owed: They call you relentlessly, send you all sorts of strongly-worded letters, and even threaten you with lawsuits.  But are these threats for real, or are they just empty words?  Can creditors really sue you?

Credit card debt has many possible repercussions including costly interest, credit score damage and yes, even a lawsuit.  However, what many people do not know and what debt collectors might not tell you is that debt has a statute of limitations, meaning that it is only relevant under the law for a certain period of time.  Before the statute of limitations runs out, collectors can successfully sue you for amounts owed.  However, once it expires, your debt becomes “time-barred.”  This means that debt collectors can still initiate a suit against you, but as long as you make it clear that your debt is older than the statute of limitations, the court will dismiss the suit.

The statute of limitations for debt varies widely by state and ranges from three to 15 years.  The clock starts ticking at the time of last payment and resets each time you make a payment.  Thus, in making a payment, you effectively re-age your debt.  Additionally, signing a document in which you promise to pay the debt or waive the right to stop a collector from suing might also re-age your debt.

On the other hand, it’s important to note that making a payment in no way affects the amount of time negative information about debt stays on your credit report.  Defaulting on your credit card debt will stay on your credit report for seven years from the time of first delinquency, no matter what you do in the meantime.  This amount of time is completely independent of the statute of limitations.

Still, while you might think it’s wise to pay a small amount in order to get collectors off your back that might not be the case. If you can manage to agree to an affordable payment plan or reach a settlement with your collector, do so, because the sooner you can change the status of your debt to “paid” or “settled” from “not paid,” the less detrimental debt will be to your credit score. However, if these things are unattainable, don’t make the mistake of paying a small amount in good faith.  This will only re-age the debt and increase your vulnerability to lawsuit.

After the statute of limitations runs out, collectors efforts might continue, but you cannot be sued successfully as long as you make clear in court that the debt in question is time-barred.  Additionally, if debt collectors continue to harass you and threaten lawsuit after your debt becomes time-barred, you can send cease and desist letters to stop them.  Often though, creditors will abandon collections of their own volition because the complexity of collecting time-barred debt might exceed the benefit.

Understandably, there is a great deal of confusion when it comes to credit card debt and collections.  Should we pay what we can when we can?  Will a payment reset the amount of time negative information about debt will remain on our credit reports?  In order to properly handle credit card debt and protect yourself sufficiently against collection agencies just remember that nothing changes how long negative information stays on your credit report, and if you are going to pay, you must do so in the smartest way possible.  Avoid making yourself unnecessarily vulnerable to a lawsuit by being aware of your debt’s statute of limitations and using it as a defense should a collector initiate a suit to recoup time-barred debt.  Armed with this knowledge, you will be able to escape debt as quickly and efficiently as possible, hopefully never to experience it again.


This article was written by Odysseas Papadimitriou, CEO of, a Web site that not only helps consumers find the best credit cards, but also buy discounted gift cards.