I Work for a Non-Profit and Provide Financial Education. – Talena

“Dear Steve,

I work for a non profit company and provide financial education. I have come to a conclusion on bankruptcy and I wanted your opinion.

I have a client who fell sick three years ago, and her credit report shows this. All her bills were not payed all in the same month and year. In California, the statue of limitations for a company to sue is 4 years. She was tempted to file bankruptcy, but since she only had a little less than a year left for litigation, I advised her to wait. So lets say she makes it one more year with no litigation, then the statue of limitations for the negative items to remain on her credit report is seven years. So ultimately she will have clean credit in four years. This seems to make more sense then filling bankruptcy now before anyone has started litigation, and tack on a negative for the next ten years. What is your opinion on this approach?


Dear Talena,

Unfortunately the statute of limitations only limits the amount of time she can be sued for the debt. Debt collectors can attempt to collect on that debt for the rest of her life.

So ultimately what is the goal, to hope to avoid suits or to close the door on the debt?

The real goal here is probably to close the door on the debt and then rebuild the credit to obtain a good credit score again, right?

If she is willing to put up with collectors and being in collection for years to come, then follow your approach. However, she can be sued up until the statute of limitations expire. So if she is sued next year, as creditors tend to get more aggressive as the end date nears, she hasn’t accomplished her goal.

If she goes bankrupt now, the debt is discharged, all collections end forever, and she can then focus on improving the credit.

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Thank you for letting me help.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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