What Happens to Unpaid Credit Card Debt After 7 Years?
Written by
Andrew Lisa
Edited by
Emily Gadd
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The Fair Credit Reporting Act forbids consumer reporting agencies like credit bureaus from listing outdated negative information, including credit card debt. In most cases, “outdated” means anything that is more than seven years old, although some bankruptcies can stay on your report for up to 10 years.
The clock starts ticking from the date of the first missed payment, or original delinquency, but just because a debt is not on your report doesn’t mean it disappears.
Can You Still Be Sued for Credit Card Debt After 7 Years?
According to the Consumer Financial Protection Bureau (CFPB), debts don’t typically expire until they are paid in full or settled. However, many states have statutes of limitations that limit how long creditors and collection agencies can use legal means to pursue outstanding debts.
In most states, the limit is three to six years, but in some states, like Louisiana and Rhode Island, creditors can pursue old debts for up to a decade.
After your state’s statute of limitations expires, you can no longer be sued in most cases. However, statutes of limitations only prevent creditors and collectors from using legal mechanisms like lawsuits or court judgments. There is nothing to prevent them from contacting delinquent borrowers and asking them to pay what they owe.
How the 7-Year Rule Affects Your Credit Score
Missed payments are credit score kryptonite.
Payment history accounts for 35% of your FICO score — no other factor carries more weight. According to LendingTree, a single missed payment can tank your score by 50 to 100 points or more.
The damage compounds with each consecutive missed payment until the account goes into full default after 180 days. In terms of your credit profile, score and the risk you pose to lenders, landlords, employers or anyone else who pulls your credit, the consequences are nothing short of catastrophic.
However, the damage is most acute when the delinquency is first reported. As with any derogatory mark, the impact diminishes over time until it finally drops off your report after seven years.
How To Get Out of Credit Card Debt
If you get into credit card debt, not paying is almost always the worst course of action. Not only do delinquencies and defaults crush your credit, but ignoring the problem doesn’t make it go away — you’re still legally liable for the debt for as long as your state allows and the choice will haunt you on your credit report for seven years.
Instead, make at least the minimum payments, contact your creditors and consider the following debt-elimination strategies.
| Debt Snowball Method | Debt Avalanche Method | Debt Consolidation |
|---|---|---|
| Concentrate on eliminating your smallest debt first, regardless of the interest rate, to score a quick win while paying only the minimum on your other balances.
Once that debt is paid off, move to the next-smallest debt and repeat the process until all your debt is eliminated. |
Pay as much as you can toward the debt with the highest interest rate while paying only the minimum on the other balances until your most expensive balance is paid.
Then, move on to the debt with the next-highest interest rate and repeat the process until your debt is eliminated. |
Take out a lower-interest loan, like a personal or home equity loan, to pay off high-interest credit card debt. This simplifies your bills by combining all your credit cards into one predictable fixed monthly payment.
Alternatively, balance transfer cards allow you to move your high-interest debt to a new credit card with a 0% introductory offer that can buy you more than a year to pay down the debt without accruing interest. |
No matter which strategy you choose, it’s essential to prepare by laying out all your debts to make sure your balances are up to date and accurate, and that you don’t overlook anything.
The second step is to create a budget based on your overall finances so you can determine how much you can pay each month for either the snowball or avalanche method, or to know how much you can comfortably borrow if you’re considering debt consolidation.
Does Credit Card Debt Really Go Away?
Credit card debt doesn’t go away until it’s paid in full or settled, but many states limit how long creditors and debt collectors can sue or use other legal means to collect most debts.
Whether it’s paid or not, old credit card debt will fall off your credit report after seven years, giving you a chance to rebuild your score and make yourself a more attractive candidate for loans, employment and apartments.
If you’re in trouble, dive deeper by reading the following articles that can help you break the chains of credit card debt.
- Learn more: How To Get Out of Debt: A Step-by-Step Guide
- Get expert insight: How To Pick the Best Debt Payoff Strategy for You, According to Ramit Sethi
- Strategize, even if you’re struggling: How To Get Out of Debt On a Low Income
FAQ
- How long before credit card debt is uncollectible?
- Each state sets its own statute of limitations on how long creditors and debt collectors can use the legal system to pursue old debts. In most states, it’s three to six years.
- Is it true that after 7 years, your credit is clear for bad credit?
- Most derogatory marks fall off your credit report after seven years, but many other factors determine if your credit will emerge as bad, fair, good or excellent after that.
- How many years before credit card debt is written off?
- Most creditors will write off debt as uncollectible when the state’s statute of limitations expires.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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