Legal Question in Credit and Debt Law in Pennsylvania

You have things half-right but half-wrong.

The statute of limitations is a court defense only. You raise it in an answer that is timely filed with the court if and when you ever would be sued. The statute of limitations, assuming this is a PA debt, would be 4 years and would start to run from the time of your last payment. The statute of limitations can be tricky though so a lawyer would have to review your situation to know if the debt is truly-time barred. Also, any payment by you after the statute of limitations has run will start the clock running again. Debt collectors and creditors are sneaky about tricking you into making good faith payments after the statute has run.

Assuming that 4 or more years has passed since the time of your last payment of any kind on the account and assuming that no other statute of limitations would apply, then the debt probably would be time-barred in PA. Moreover, the debt has probably fallen off your credit report by now or it should so I would not pay this.

The second part of your question concerns collection of what I call "zombie" debt. The statute of limitations has nothing to do with collection of debts. Debts never go away. They may fall off your credit report but nothing prevents a debt collector from trying to collect a debt after the statute of limitations has expired and its not unlawful for them to try. However, just because you get a debt collection letter after the statute of limitations has expired does not mean that you have to pay.

What I do for my clients is send them a form cease and desist letter to use. There are plenty of free samples on the internet - I call these "drop dead" letters because basically you are telling the creditor trying to collect the debt to "drop dead" because you are not paying as the debt is no longer legally collectible. Please contact me at [email protected] if you would like me to send you a form letter to use for a small fee.

Your third question concerns 1099c's. I am not a tax attorney and this is not tax advice. If you receive one of these you need to take it to a real cpa not a chain outfit (in my experience some of these chain outfits do not know about these and they wrongly tell people that taxes must be paid on it).

Many of my clients get these. A lot depends on who they are from and when they are issued. If you get one it generally means that a creditor has given up trying to collect on a debt. Anything over $600 that is cancelled/forgiven by a creditor must be reported to the IRS and you would be taxed on this as if you received the written off amount as income. However, all, some or none of the 1099c amount may be excluded from income by you using form 982 if you meet the insolvency test (your debts must outweigh your assets by at least the forgiven amount in order to exclude all of the forgiven amount from income). There is a test and worksheets accompanying form 982 and that is why you need to see a cpa rather than try and struggle with this yourself. It would be unlikely that you would get a 1099c after 8 years. Most of my clients get these either after they have settled a debt for less than what is owed or shortly before or after the statute of limitations has expired.

I have a lot of articles on zombie debts, the statute of limitations and 1099c's at my website at www.rachelhunterlaw.com if you are interested in a longer explanation on these topics.