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I am confused about how the statute of limitations with regards to debt applies to what is reported on an actual credit report from the 3 credit reporting agencies in the United States. Researching the issue on the Internet, I've found that at least 2 separate legal statues apply:

  1. The statute of limitations that places a time limit on when a creditor can actually sue you for repayment of a debt, and
  2. The statute of limitations on when a credit reporting agency (like Transunion, etc.) can actually report the existence of a debt.

It seems that (1) varies from state to state, while (2) is governed on a Federal level by the Fair Credit Reporting Act (FCRA), and that the statue of limitations for (2) is 7 years.

Okay, so I understand this so far. But I'm having difficulty finding a straight answer on what particular "report" the Fair Credit Reporting Act actually applies to. To explain what I mean: say you take out a credit card, charge $1,000 dollars, and then fail to pay it back. The creditor in this case would be the bank that issued the credit card. After the account remains delinquent for some time, say a few months, the bank will generally hire a third party - some external collection agency - to actually collect the debt. Now let's say some years pass, and the collection agency fails to recover the debt, so they sell the debt to some other collection agency, which continues to try to collect the debt.

After many years pass, the statue of limitations from the Fair Credit Reporting Act kicks in. But what is the starting point for the statute of limitations? Is it the day that the "original creditor" (i.e. the original issuing bank that gave you the credit card) reported the debt to Transunion/Equifax/Experian? Or is it the day that some third party collection agency reported the debt to the credit reporting agencies?

If it's the latter, couldn't the statute of limitations from the Fair Credit Reporting Act effectively never kick in, as the debt is passed from collection agency to collection agency - so that each time a collection agency reports the debt, the FCRA time limit effectively resets?

I would think that it be common sense to assume that the statute of limitations must apply to the date that the original creditor reports the debt. But this does not match my actual observations with a recent negative report on my credit report. It shows a collection agency reporting a debt, and says the debt was first reported ("placed for collection") in 2015. But the "original creditor" is a bank that I opened up an account with at least 10 or more years ago.

So my question is, how exactly does the FCRA apply? Does the statue of limitations always apply to the date that the original creditor reported the debt? Or can it effectively keep resetting every time the debt is passed to another collection agency?

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First, I am not an attorney, and the correct legal answer will depend primarily on the venue... the State you live in... and some very specific facts. So, this is a general theory answer.

The SOL has nothing to do with when a debt was reported. It also has nothing to do with when you originally opened the credit card.

The SOL on a contractual debt that you created with an entity depends on events that happen between you and that entity. Since the debt is via a contract, the date of default on the contract is set by the contract. That default, usually when you miss a payment, is what gives them a right/duty to sue. Some very short length of time after your default, the clock starts ticking. (Generally their right/duty to sue starts from the time they KNEW, or SHOULD HAVE KNOWN, that you had breached the contract and they had suffered damage.)

However, any time you re-admit to the debt, for example by making a payment, then your act of acknowledging the debt can re-start the clock by renegotiating the terms of the contract. So, you might look back to the date of first breach as your "argued start" of the SOL, but the date of the last payment you made is your fallback position. (I'm not going to get into all the things that THEY could argue.)

If the credit collection bureau has reported you incurring the debt to them at a later time than the date of your last payment, then their report is false. What to do about it is a legal matter, and what works there in Texas might not work in Maine or vice versa.

Start by determining when you think the actual SOL might have started. If the expiration is still in the future, it might be prudent to wait until that date has passed to initiate any action.

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If it's the latter, couldn't the statute of limitations from the Fair Credit Reporting Act effectively never kick in, as the debt is passed from collection agency to collection agency - so that each time a collection agency reports the debt, the FCRA time limit effectively resets?

No. A debt is, almost by definition, a legal obligation. Once the statute of limitations for the enforcement of the debt has passed, there is no obligation to pass on any more. A collection agency (or the original creditor) can sell the "zombie" to another collection agency, but there is no default on a legal obligation for that agency to report if you don't pay it.

Just be careful. It's very easy to do something that resets the statute of limitations on the debt and experienced debt collectors will try to trick you into doing that.

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