Dear Consumer Ed:
A collection agency sent me a bill for a debt that is 12 years old. I remember this bill, but since it’s so old, am I obligated to pay it? Do debts expire?
Consumer Ed says:
While debts don’t “expire”, there are state laws known as statutes of limitation that place time limits on a creditor’s or collector’s ability to use courts to force you to pay a debt (exceptions include income tax and federal student loan debts, which are always collectible).
These time periods vary by the type of debt. Credit card debt, for instance, has a statute of limitations of six years in Georgia. Even after the statute of limitations time period has run out on a debt, however, debt collectors may still try to collect. This type of debt is known as “zombie debt.” While you may have a “moral obligation” to pay a debt that you legitimately owe, you do not have a legal obligation to pay it. Debt collectors who try to collect on zombie debt are hoping that you don't know about the statute of limitations and the law on zombie debt, and that you'll pay up if they threaten you. They may even file a lawsuit against you. If you are certain the statute of limitations has expired, you can use that fact as justification that you do not have to pay the debt. So before you agree to pay an old debt, first make sure the statute of limitations hasn’t expired. If it has, you might not have to pay.
Be careful not to restart the statute of limitations. Anytime you take an action with an account, the statute of limitations is restarted. Making a payment, making a promise of payment, entering a payment agreement, or making a charge using the account can restart the statute of limitations on an account. When the clock restarts, it restarts at zero, no matter how much time had elapsed before the activity.
Also note that zombie debt is not a credit card balance that you may have racked up years ago but are still making minimum monthly payments on. In this case, you will not be considered to have defaulted on the debt.
In addition, be aware that many debt collectors file lawsuits to collect on zombie debts. Studies have shown that most people who are sued on a debt they know is very old simply don’t answer the lawsuit. This is a mistake. If you are sued and you do not answer the lawsuit, the debt collector will be able to get a judgment against you – even though, had you gone into court and asserted that the debt was too old, the case would have been thrown out. If you are sued on any debt, do not ignore the lawsuit.