How is the SOL clock different from the credit report clock?

What-is-the-difference-between-SOL-clock-and-credit-report-clock

Posted by: consolidatecreditcard_admin on

The SOL clock and the credit report clock are distinctly different from each other. Let’s find out how in this article.

What is a SOL clock?

Will you believe me if I say that debt has an expiry date? Yes, it’s true. I ain’t joking. Debts are subject to the statute of limitations (SOL), which specifies how long a debt collector can sue you to collect an unpaid balance. Usually, it starts from the day of your first default on the debt.

The SOL clock ticks at a different pace depending on the following factors:

  • The state where you live in
  • The type of debt you have

How long does the SOL clock tick in all the states?

State

Oral contracts

Written contracts

Promissory notes

Open-ended accounts

Alabama

6

6

6

3

Alaska

6

6

3

3

Arizona

3

5

6

3

Arkansas

3

6

3

3

California

2

4

4

4

Colorado

6

6

6

6

Connecticut

3

6

6

3

Delaware

3

3

3

4

Florida

4

5

5

4

Georgia

4

6

6

6

Hawaii

6

6

6

6

Idaho

4

5

5

5

Illinois

5

10

10

5

Indiana

6

10

10

6

Iowa

5

10

5

5

Kansas

3

5

5

3

Kentucky

5

10

15

5

Louisiana

10

10

10

3

Maine

6

6

6

6

Maryland

3

3

6

3

Massachusetts

6

6

6

6

Michigan

6

6

6

6

Minnesota

6

6

6

6

Mississippi

3

3

3

3

Missouri

5

10

10

5

Montana

5

8

8

5

Nebraska

4

5

5

4

Nevada

4

6

3

4

New Hampshire

3

3

6

3

New Jersey

6

6

6

6

New Mexico

4

6

6

4

New York

6

6

6

6

North Carolina

3

3

5

3

North Dakota

6

6

6

6

Ohio

15

15

15

6

Oklahoma

3

5

5

3

Oregon

6

6

6

6

Pennsylvania

4

4

4

4

Rhode Island

10

10

10

10

South Carolina

3

3

3

3

South Dakota

3

6

6

6

Tennessee

6

6

6

6

Texas

4

4

4

4

Utah

4

6

6

4

Vermont

6

6

5

3

Virginia

3

5

6

3

Washington

3

6

6

3

West Virginia

3

10

6

5

Wisconsin

6

6

10

6

Wyoming

8

10

10

8

Debts fall into 4 categories. It’s necessary to know which type of debt you owe. Otherwise, it will be tough for you to determine the statute of limitations period for a particular debt. Keeping your concerns in mind, we have briefly described all the 4 categories of debt here.

  1. Oral contracts: These are debts that were initiated based on a verbal agreement to pay back the money within a specific period.
  1. Written contracts: All debts that come with a written agreement falls in this category. The terms and conditions of a loan are mentioned in a written contract. A typical example is a medical debt.
  1. Promissory notes: These are written agreements to pay off the debt in installments at a specific interest rate and within a particular debt and time. The typical examples are student loans and mortgage.
  1. Open-ended accounts: These are accounts with a revolving balance. You can borrow money from these accounts and then pay them off. But you have the option to borrow again. The biggest examples of open-ended accounts are credit cards, store cards, etc.

How can you restart the SOL clock?

The easiest way to restart the SOL clock is to acknowledge the debt. Let’s suppose a debt collector calls you and asks, “Do you admit you owe $5000 to us and you’re not willing to pay it?” and you say “Yes, I can’t pay the amount, but I agree I owe it.” This is considered as the reaffirmation of the debt, and the statute of limitations period will restart again.

You can also restart the SOL clock by making a small payment on the debt.

Let’s suppose, you get a call from the debt collector. The person asks you to make a small payment on the time-barred debt. You send $20 to the debt collector and the SOL clock starts ticking all over again.

Can you get sued after the SOL clock has stopped ticking?

A debt collector can try to collect a debt even after the statute of limitations period has expired. Don’t ignore a legal notice even if it’s an old debt. Be present in the court and state your side of the story. You can even consult a debt attorney to win the case. He can also file a lawsuit against you for collecting a time-barred debt. You have to inform the court that the SOL period has expired on the debt. This is your best defense against the lawsuit.

Several consumers don’t appear in the court, which is a bad financial move. It helps the debt collector to win the case and get a judgment against the consumer.

What is a credit report clock?

The credit report clock starts ticking after you open a credit card account or borrow a loan.

If you use credit cards responsibly and make monthly payments on time, then the clock ticks for an indefinite time period. But when you default on your credit cards or loans, the credit report clock ticks for 7 years and 180 days from the date of your first default. For instance, if you had a late payment in May 2015, then it would come off from your credit report in May 2022.

In the case of Chapter 7 bankruptcy, the credit report clock ticks for 10 years. However, if you file Chapter 13 bankruptcy, then the clock ticks for 7 years since you’re making an effort to pay off your debts within 3 to 5 years.

Let’s find out how long a credit report clock ticks for other tradelines. Have a look at this table and know how long information stays on your credit report.

How long a credit report clock ticks for different tradelines

1. Active accounts paid as agreed

As long as the lender is reporting it

2. Closed accounts paid as agreed

Up to 10 years

3. Late payments

Up to 7 years and 180 days

4. Debt collection accounts

Up to 7 years and 180 days

5. Chapter 7 bankruptcy

Up to 10 years

6. Chapter 13 bankruptcy

Up to 7 years and 180 days

7. Paid judgments

Up to 7 years and 180 days

8. Unpaid judgments

For 7 years but can be extended indefinitely

9. Foreclosure

Up to 7 years and 180 days

10. Short sale

Up to 7 years and 180 days

11. Repossession

Up to 7 years and 180 days

12. Hard inquiries

Up to 2 years

13. Paid tax lien

Up to 7 years from the date government filed it

14. Unpaid tax lien

Up to 10 years from the filing date

How is the SOL clock different from the credit report clock?

The credit report clock tracks how long information can stay on your credit report. The SOL clock determines how long creditors can sue you for your debts and garnish your wages. So both have different implications. The statute of limitations period has nothing to do with how long unpaid debts can stay on your credit report.

A time-barred debt can still appear on your credit report. For instance, the SOL period in Texas is 4 years for all kinds of debts. If 4 years have passed since the day of your first default, then the debt has become time-barred. A debt collector can’t garnish your wage now. However, the debt will stay on your credit report. It won’t be removed from your credit report before 7 years and 180 days.

The big question is how can you remove debt from the credit report after the statute of limitations clock has stopped ticking? The honest answer is you can’t. You have to wait for 7 years and 180 days. However, you can request your creditors to remove debts from your credit report on the basis of the good relationship you have with them. But this is an exceptional case.

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