This is key information when considering whether to pursue the collection of an old account. It is important to take into consideration the applicable statute of limitations for the type of account to be collected. However, regardless of the time that has lapsed, you may pursue the collection of the debt as long as you do not threaten to litigate on the account, or threaten to report the debt against the consumer’s credit. If the consumer makes payment on an expired debt or signs a promissory note for the debt in most cases it will be considered a novation (renewal) of the debt. The statute of limitations in regards to judgments is 10 years. Keep in mind a judgment may be renewed for an additional 10 years and the process must be done within 90 days prior to expiration.

Many businesses and consumers believe the statute of limitations for credit reporting (seven to 10 years) is the same for enforcing debts. This is not the case; enforcing and reporting are two separate issues. If an account has been placed for collections and six years has lapsed from the activity date, the time in which to pursue a legal judgment has passed. However, the account will remain on the consumer’s credit report for seven years. It’s also interesting to note that frequently, an account is paid by consumers for the purpose of minimizing the number of collections and delinquent accounts on their credit report so they may obtain a loan or job security clearance required in many government positions.

Many businesses will delay placing an unpaid debt with a collection service in hopes that the amount owed will not have to be shared with a collection agency. In the event you have obtained a judgment you must keep in mind that the judgment has to be enforced through garnishments and/or liens. This may require engaging the services of an attorney or a collection service. Delaying the placement of a past due account will only minimize the odds of collecting the money due. When making your decision, keep in mind that time is a debtor’s best friend.