Hello Old Debt– Why does it Stay, Just a Little Bit Longer?

Bankruptcy Lawyer

How long does bad credit history stay on your credit report?  There’s a short answer and a long answer. The short answer is most negative information, such as Judgments, collection accounts, paid tax liens, and late payments, can stay on your credit report for 7 years.

For Bankruptcy cases, Chapter 13 cases that are discharged (paid and finished) stay on your credit report for 7 years from the date the case is filed.  That means if you had a Chapter 13 plan that lasted 5 years, it would only stay on your report for 2 more years.  Chapter 7 Bankruptcy can stay on your credit report for 10 years, as can Chapter 13 cases that are dismissed (not finished).

Here are the rules, directly from Equifax blog.

But, just because a debt might “drop off” of your credit report doesn’t automatically end your debt.  There is one important set of rules that people often don’t think about, the Statute of Limitations.  The Statute of Limitations is the time period that a company you owe has to sue you, and if they don’t, they cannot collect from you.  So, even if a debt “drops off” of your credit report, it does NOT mean that the creditor can’t sue you.  In fact, it has nothing to do with a company’s right to sue you.  So, for example, if you had a credit card agreement which uses Illinois Law, they have ten years to sue you.  But, many agreements use a different state than the one you live in, so that may vary.  And, the company could sue you, get a judgment, and keep collecting after that time period.  Or, the company could record a lien on your property, and just wait until you try to sell or refinance your house.

These are some of the many questions that come up when reviewing someone’s credit.  If  you have questions about your credit, call, and we can help you sort it out.