Dear Penny: Can I Get Sued for a Car Loan I Co-Signed 22 Years Ago?

Dear Q.,

I wouldn’t pay a penny of this debt. This is clearly a case of zombie debt, which is debt that has already been paid or is so old that it’s no longer collectible.

But that doesn’t stop sketchy companies from trying. Agencies buy tons of ancient accounts for pennies on the dollar, or sometimes even less. If they scare just a small fraction of people into paying up, they can make a profit.

Of course, you should pay debts that you know you owe when you can afford to do so. But you really don’t know if this loan actually went delinquent. Even if it did, your roommate’s lender had plenty of time to sue you. It chose not to. It’s more important to take care of your basic needs than to pay a loan you co-signed on 22 years ago.

Each state has what’s called a statute of limitations for taking debtors to court. This window can range from three to six years, depending on the state. In Florida, it’s five years for written contracts, including car loans.

Once the statute of limitations has passed, a debt collector may still try to get you to pay up. But they can’t sue you for it. Once seven years have passed since the account went delinquent, it should no longer be listed on your credit reports, either.

Technically, you still owe old debt. But there really are no consequences if you don’t repay it. They can’t get a court judgment. They aren’t allowed to add negative information to your credit report, though some debt collectors use this illegal tactic. They can’t garnish your wages or bank accounts.

And for the record, your Social Security benefits can’t be withheld unless you owe the government for taxes or federal student loans, or you have unpaid alimony or child support. A debt collector can’t garnish your Social Security for delinquent consumer debt, like car loans or a credit card.

The true risk comes if you make even a small payment. Depending on the laws of your state, you could restart the collection clock. The same goes for if you’d acknowledge that you owe this debt.

Normally, I wouldn’t advise ignoring any financial matter. But I think that may be your best approach here. This company probably buys a huge number of accounts, knowing that the vast majority of the people they contact by mail will never respond. I’m afraid that contacting them would spur them to take more aggressive actions.

This company knows it can’t legally sue you. In the unlikely event it would try to do so anyway, the case would automatically be dismissed since the statute of limitations has expired.

But do get a copy of your free credit reports from each of the three bureaus to verify that this account isn’t listed. Unpaid debt shouldn’t appear on your credit reports once seven years have passed since the original delinquency. If the account is still listed, use the Consumer Financial Protection Bureau’s sample dispute letter to have the debt removed.

If the agency continues to contact you, you may want to request a debt validation letter asking for information about the money they’re claiming you owe. It’s essential to avoid acknowledging that you owe anything. Under no circumstances should you provide personal information, like your Social Security number or banking info.

If they respond, you can send a letter stating that the statute of limitations has passed and demand that they stop contacting you. Report the company to the Federal Trade Commission or your state’s attorney general if they continue to do so.

I’d only communicate with this company if absolutely necessary, though. You’re no longer responsible for this debt. Don’t let any debt collector tell you otherwise.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].