Statute of Limitations on Old Debts

Q: My ex-wife and I financed her engagement ring in Texas for about $4500. We moved to Florida and I recently got a letter from a collection agency, saying they are representing another collection agency, offering to settle.  The debt is about to reach the 7-year mark and will fall off my credit report. Is my debt past the statute of limitations?  Does it matter?  I could really use some help. Thanks.

A: The statute of limitations in Florida is typically 4 -5 years, and in Texas it is typically 4 years. So very likely the statute of limitations has expired on this debt. That means if the collection agency sues you and takes you to court, you could raise the statute of limitations as your defense. (I am not an attorney, though, so it would be wise to check with a consumer law attorney if you are sued to make sure other rules don't apply.)

In addition, the collection agency listing must be removed from your credit report seven and a half years from the date you first fell behind on payments for the ring, regardless of whether it has been paid or not. That means it will drop off of your credit report soon even if you don't pay it.

But then there is the issue of "bad debt karma." I prefer to see people resolve their debts whenever possible in order to move forward financially.

Where is the ring now? If your ex-wife has it, then you may not be able to do much about it. But if you have it, I would encourage you to give it back to the jeweler who sold it to you.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com. Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts