How Does the Statute of Limitations Affect Your Credit Repair?

A statute of limitations defines a set frame of time during which legal action may be taken. With very few exceptions, all debts have legally defined statutes of limitations. These are usually state rules, and for an unsecured debt a statute of limitations may run from three to six years. After the statue of limitations runs out, creditors may no longer pursue legal action to collect on the debt. It is noteworthy, however, that the debt is still legally owed by the debtor; she or he is just safe from civil or criminal prosecution.

While the numbers of years that make up the statutes of limitations vary, the methodology of starting the count is universal: the date of the last payment received on any account starts the count. This of course explains creditors’ urgency to get delinquent borrowers close to the end of the statute of limitations to start up on making payments again. After all, when a debtor – perhaps after a two or three year interval – can be talked into taking up a payment schedule, the debt is renewed and any pending statute of limitations is void.

This tends to wreak havoc with consumer undergoing credit repair. Whether they attempt to do it themselves or have enlisted the help of a credit repair agency, the renewal of a debt that – for all intents and purposes – is no longer legally enforceable adds a blemish to the credit profile. This seriously impacts those consumers with a debt that has been reported as a negative notation on their credit profiles and was due to drop off, due to the standardized seven year reporting requirement. Once renewed, the bad debt remains on the credit profile and the fact that adverse notations are to drop off after seven years is voided.

Credit repair agencies warn consumers to become aware of their rights before communicating with creditor that may attempt to collect on a debt. Moreover, when working with a credit repair professional, it is crucial that prior to making any payments on accounts past due, the debtor consult with the professional to get proper advice and understand how making a payment, even if it is a payment in full, may actually affect their credit profile and thus their credit rating. In some cases creditors may agree to not report any payments to a credit bureau, but this is done on a case by case basis and in the absence of a written agreement, there is little value to a promise made by a phone agent.

Consumers who disregard this warning may see copious bad debts reappear on their credit profiles for another seven years. Making matters worse, these are usually consumers who have left bad times or maybe even irresponsibility behind, but because of their newfound ability and willingness to make things right, their poor choices from the past will haunt them for another seven years to come. Don’t make their mistakes! Always get help from a professional in the credit repair field before negotiating, and in some cases actually employ a professional to do the negotiating for you. While in the short run this is an expense, in the long run it will save you quite a bit of money.

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