Collections-statute of limitation?

I am a resident of New Jersey. Recently I applied for a pre-approval on a home mortgage and was informed that there was a collection notice posted to my crdit report in February 2002. I obtained the collection agency's contact information and was told that the debt related to something from 1998. My first question is: Is there a statute of limitation on sending debt to collection? Second: Since the original debtor never contacted me about this debt, did they have the right to send the debt to collection? Any advice is much appreciated as it is holding up my mortgage proceedings.

Thanks.

[JETX]

Q1) "Is there a statute of limitation on sending debt to collection?"
A1) As you have asked the question, the answer is no, a creditor or debt collector can file anything they want as old as they want. The key here is 'does it stick'?? The answer to that is, depends. In NJ, the SOL (Statute of Limitations) on open accounts (credit card type) is 6 years. So, the creditor can pursue recovery against you for 6 years from the last transaction (or breach). If he attempts to collect (by contact or lawsuit) after the expiration of that time, you can simply respond that the debt is unenforcable due to expiration. Then, if reported to the CRA (Credit Reporting Agency), it can stay for an additional 7 years. That means that your negative credit 'hit' can be on your report for up to 13 years!!!

Q2) "Since the original debtor never contacted me about this debt, did they have the right to send the debt to collection?"
A2) Yes. Once you failed to repay the creditor as agreed (breach), they can pursue the debt in accordance with the applicable laws. And the laws do NOT require any specific notice before sending to collection.

Finally, the only way to clear this up to meet your mortgage lenders profile is to pay the claimed debt and get a release. Then, the lender MIGHT allow it to go through (depending on other reports in your filess).

Thank you for such a prompt reply. I appreciate your assistance.