Many people are confused about how long old debt can haunt them and whether they should pay it off. Here are the two time limits that apply to old debt:
Debt Time Limit #1: Your Credit Report
Unpaid debt gets wiped off your credit report 7 years after the date you initially missed a payment. Making a payment on an old debt doesn't reset the clock and cause negative information to stay on your credit report longer than a total of 7 years.
Debt Time Limit #2: Your State's Statute of Limitations for Debt
You legally owe a debt unless it's forgiven or discharged through bankruptcy. Creditors can attempt to collect from you forever, but they can't sue you once the Statute of Limitations for Debt has expired. This legal window varies widely by state and by the type of debt. In general, it begins from the date of your last account activity--such as a credit card charge or a loan payment. In some states making a payment on an old debt or even agreeing to a repayment plan can reset the clock on the statute of limitations.