Credit Card Debt

4 Ways to Keep Zombie Debt in the Past

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Here’s some good news for people with old, unpaid debt: your debt may have already expired under the statute of limitations! Expired debt, also known as time-barred debt, zombie debt, or out-of-statute debt, could be harder for creditors to collect. That doesn’t mean they won’t try to get you to pay it back, though.

The statute of limitations puts a cap on the amount of time a creditor has to sue you for your unpaid debt. But it could be complicated to find out if you’re responsible for paying your old debt because different statute of limitation rules apply depending on the type of debt, the state you live in, and the contract you signed. These facts could help you defend yourself from zombie debt.

It’s Hard to Tell If Your Debt Has Expired

Determining if your old debt is expired under the statute of limitations can be tricky for the following reasons:

  • Depending on the state, certain debts may have a longer statute of limitations than other types of debt, like a vehicle loan.
  • The time that a creditor has to collect a debt also varies from state to state, generally ranging from 2 to 10 years.
  • The contract you sign with a creditor could include statute of limitations rules from an entirely different state than you or your creditor (This may appear in a “Choice of Laws” clause on your contract).

If a creditor contacts you to collect an old debt, it’s important to look through your contract and know which state’s statute of limitations rules apply to the debt in question. After reviewing your contract and finding out which statute of limitations you agreed to, a quick search on the internet could help you figure out if your old debt has expired.

Learn how to deal with debt collection calls here.

Expired Debt Isn’t Forgiven Debt

Wouldn’t it be great if old debts just died? Unfortunately, they don’t. Just because the statute of limitations is expired on your debt doesn’t mean that your debt is forgiven or considered to be paid off. Even if you don’t realize you have an expired debt, it could still have an impact on your credit profile. In fact, having an out-of-statute debt could show up on your profile for up to 7 years or more. To be safe and make sure you don’t have an old, unpaid debt, you could always get your yearly free credit report.

Creditors Might Still Try to Collect a Time-Barred Debt

Just because you have an out-of-statute debt doesn’t mean a debt collector won’t try to collect your old debt. Creditors and debt collectors may call you, or even try to take you to court, for a time-barred debt.

An expired statute of limitations could be a defense against any such lawsuit.

It’s your responsibility to tell the court that your debt is expired if you get a court summons. Otherwise, you may end up having to pay the debt, plus any late fees and interest charges accrued. If you have questions about your legal options on an expired debt, contact a licensed legal professional in your jurisdiction.1

Watch Out: Your Zombie Debt Could Come Back to Life!

Even if a debt collector doesn’t take you to court, they could still contact you to get you to pay your old debt. If you’re ever contacted by a debt collector about your zombie debt, be careful. If you put even 1 cent towards your old debt voluntarily, you could reset the clock on the statute of limitations and you may be on the hook to pay it off again. If you admit to owing the debt in writing, you could reset the statute of limitations, too.

What are your debt relief options?

Find out now.

The only way to make sure that a valid debt stays in your past is by paying it off. But that doesn’t mean you have to pay on your creditor’s terms. Freedom Debt Relief offers a debt settlement program that could help you resolve your debt faster and for less than you currently owe. If you qualify, our program could give you peace of mind knowing that your old debt won’t come back to haunt you ever again. Find out how our program works.

1 We are not lawyers – materials provided in this blog is general information – please consult a licensed legal professional in your jurisdiction for further information or advice.

John Russo is a Creative Manager at Freedom Financial Network. His goal is to make the world of personal finance more accessible so that everyday people can find the right financial solutions for themselves. In his free time, he enjoys hiking, reading pretty much anything, and spending time with his fiancée and two cats.