Statute of LImitations & The Reporting Period

By: Kate Rieger

The Statute Of Limitations, also referred to as SOL, can mean a lot of things to different people, even when they are referring to SOL as it applies to the credit industry. Many people get the Statute Of Limitations confused with the reporting period. Here's how to keep the two terms clear in your mind. It can make the difference in winning or losing a lawsuit over an unpaid debt.

The reporting period is defined in the Fairness in Credit Reporting Act (FCRA). It is the time that negative items can stay on a report. This is usually not longer than 7 years from the date it was charged off, or 7.5 years from the Date of First Delinquency.

The Statute Of Limitations (SOL) has ABSOLUTELY NOTHING to do with how long a debt is listed on your credit report. The SOL is governed by the laws of YOUR STATE and differs from state to state. Refer to your state's statutes for what the limit is in your state. Also, you should look up the statute for the state in which you signed the loan contract. That state's SOL could be used against you in a lawsuit.

SOL is the amount of time a collection agency or original creditor can sue you over a debt -- successfully. If you find yourself in a lawsuit over an unpaid debt, the creditor has the upper hand even after the SOL has passed. The SOL is also known as an 'affirmative defense'. This means that the judge doesn't automatically dismiss the suite because the creditor filed it after the SOL passed. You, the Defendant, have to use SOL as a defense. You must prove that the creditor or collections agency is suing after the Statute Of Limitations has passed.

Here's how to calculate the SOL:

1. Take the date you last made a payment and add 6 months to this date.

2. Add the number of years of the statute of limitations in your state.


You last stopped paying on a credit card on March 15, 2002. The statute of limitations for credit cards in your state is 6 years.

You can use the SOL as a defense from a creditor if you are sued after September 15, 2008 calculated like this:

March 15, 2002 + 6 months = September 15, 2002.

6 Years + September 15, 2002 = September 15, 2008

Therefore, a creditor cannot sue you for this debt after September 15, 2008.

Your credit is an extraordinarily powerful piece of your financial toolkit. Understanding the laws that protect you can end up saving you from paying unnecessarily on debts that have passed the Statute Of Limitations. Do not let debt collectors bully you into paying something just because they sue you. Stand up for your rights or hire an attorney to stand up for you.

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