When Is A Debt No Longer Collectible?

Question: What does it mean that a credit debt is no longer collectible? My father is now in a home, and when I went through his financial records, I found he owed nearly $2,000 on a credit card from the 1990s! Does he still have to pay that? He says he doesn’t, but he’s also suffering from some dementia. Will I get stuck with this bill, since I’m now taking care of him? My mother died a few years ago, and I’m an only child.

— Regina in New York

Howard Dvorkin answers…

The answer is simple: Your father owes nothing. The explanation behind the answer is a little more complicated. I’ll describe it like this….

Let’s pretend we’re peering into a crystal ball and viewing your father back in the 1990s. He has run up $2,000 on his credit card and has simply ignored his statements. What happens next? If you want all the gory details, read Debt.com’s report, What Happens If I Stop Paying My Credit Cards?

I’ll cut to the chase: Six months later, after his credit card issuer has asked nicely and sternly to please pay what you’ve already spent, the entire amount goes into collections.

So when is a debt no longer collectible?

Debt collectors have a dark reputation, and rightly so. It’s a tough business, and unscrupulous collectors were so pervasive, the federal government passed a law to protect us from them. It’s called the Fair Debt Collection Practices Act. Luckily, it was passed long before your father stopped paying his credit card bill, so he was protected by it.

Another law says the statute of limitations on debt collection is a maximum of 15 years. It depends on where your father was living, because each state is different. (New York is only six years.)

Suppose your father’s debt went into collections even as late as the end of 1999. If it wasn’t paid by the end of 2014, it’s now “time-barred.” That means your father can’t be sued to collect the money. It’s as good as gone.

Even if it wasn’t, you’re not affected unless your name was on the credit card account. I most often hear similar questions from spouses. (Check out Am I Responsible For My Spouse’s Credit Card Debt?)

This all sounds like good news, but I’ll give you this warning: Review your father’s financial records carefully. In my experience, someone who ignored their credit card bill until it went into collections probably didn’t stop there. He may have more recent bills that also went unpaid.

Depending on their dates and dispositions, he could still be pursued by debt collectors. I’ve heard of collectors targeting the children of infirm parents, hoping to scare them into paying. You need to know your rights. Check out Debt.com’s Debt Collection report before responding.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.