Tyler Durden writes:

What the law actually states is (basically) a defaulted loan must be forgiven after seven years. In other words, it is illegal to continue to attempt to collect on a loan, 7 years after the default.

There are different levels of illegal. The most important one is the statute of limitations on suing the individual, and converting the delinquent debt into a judgment, with which assets can be forcibly seized. This varies by state, and also varies by whether there is a contracted for amount in writing, such as a loan or mortgage, or whether the debt is an "open account", which would cover revolving charge accounts with retail establishments, and also in most states, credit cards. A typical statute of limitations for open accounts is 3 years. Contracts can go up to 10 years, depending on where you reside. You can still be sued over any debt, but you can move to dismiss if the statute of limitations has expired. The other axis of debt is "reporting", which is how long the credit bureaus and other organizations which keep files on you can tell other people about the debt. This is typically 7 years for delinquencies, and 10 years for bankruptcies and judgments. This only applies to reporting for credit purposes. Nothing is ever expunged from your credit file. The file is simply redacted according to who is requesting it. LEAs, and also in certain cases employers, can see your entire credit file from day one, with information you have contested, and an audit trail of possibly successful attempts to have it "removed." Now, as far as collection practices go, there is absolutely nothing to prevent your basic brand name credit card company with which you have a 20 year old delinquency, from offering you a financial product which includes re-affirming all or part of an old debt, even one which has been discharged through bankruptcy. For instance, they can offer you a new gold card with your charged off balance on it, forgive all the interest and fees since charge off, charge no interest, and give you 50 cents on every dollar paid off added to your credit line, and free tickets to the Super Bowl, all "PRE_APPROVED." This can do this with money you owe them, or with a delinquent account they have purchased from someone else in the marketplace. THe only restriction is that they cannot report you paid off the old debt to the credit bureaus, if it is over 7 years delinquent. In almost all cases, you're an idiot to accept such an offer, of course. So, as you see, all of this is a bit more complex than it being "illegal" to collect on anything over 7 years. They can't win a lawsuit. They can't call you at 2 AM in the morning to bitch if you send them a "cease and desist" notice. But they can certainly trade your antique debt in the debt marketplace, and anyone who buys it is free to think up all the clever ways they can invent in order to seduce you to pay it off, before selling it at an even greater discount to the next lowest level of the delinquent debt food chain. Now, occasionally, states Attorneys General get after companies who try and collect on old debts. I remember a few years ago, American Express got some flack over its practice of letting people who went through bankruptcy keep their American Express Cards if they re-affirmed the balance. It is, however, a largely unregulated industry, aside from an occasional wrist-slapping. -- Eric Michael Cordian 0+ O:.T:.O:. Mathematical Munitions Division "Do What Thou Wilt Shall Be The Whole Of The Law"