A common misconception among consumers is that their credit card debt will simply go away once the Statute of Limitations (SOL) has expired. However, in reality, the debt goes nowhere and creditors still have the right to try and collect what is rightfully owed to them. So, what good does understanding the SOL do when attempting to clean up your credit reports?
What the Statute of Limitations does offer is an absolute defense in the event a creditor attempts to sue after the SOL has expired. You see, all creditors have a certain amount of time during which they can sue you for an outstanding debt and obtain a judgement. If they miss that window of time and still attempt to sue, all you'll need to do is prove that the Statute of Limitations has expired to win. For this reason, many debt collectors will abandon pursuing a judgement once the SOL on a debt has expired.
Keep in mind that the Statute of Limitations has nothing to do with how long a debt can be reported on your credit reports. They are completely unrelated, but often confused. Some negative marks can remain on your credit reports for up to 10 years. However, depending upon the state in which you live, the statute of limitations could be as short as three years for credit cards.
