Don't rush to pay very old debt in collections

Check your state's statute of limitations; it may be uncollectible due to its age


Credit Smart
Credit Smart columnist Susan C. Keating
Susan C. Keating is the president and chief executive officer of the National Foundation for Credit Counseling. Prior to joining the NFCC, Keating spent 29 years in financial services. She was the highest ranking female CEO of a U.S. bank holding company, serving as president and chief executive of Allfirst Financial Inc., the largest U.S. holding of AIB Group. She currently serves on Bank of America's National Consumer Advisory Council and is a board member of the Council on Accreditation. Keating also participates in the Financial Regulation Reform Collaborative, a nonpartisan group committed to finding solutions for reforming financial services regulation.

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Dear Credit Smart
I had a collector call about a old credit card from 2008. Yeah, I owe the money ... but I couldn't pay it ... divorced with three kids it was impossible. Should I reply to the collections office or let it go? -- Lori


Dear Lori,
It seems that the ghosts of debts past often come back to haunt us at the most inopportune times. After all, it’s been eight years and it should have gone away, right?

My guess is, it probably has and this is just a last-ditch effort to get something from you. If it has really been eight years since there has been any activity on the account, it is most certainly past the point for credit reporting. Whether  it is past the statute of limitations for collecting card debt depends on the state you live in, but chances are good it is also past that.

Next, you should access a copy of your credit report and see if this credit card is still showing up on your report. You can get a free copy of your report at If the credit card is still on your report, you will need to notify the credit reporting agencies in writing that the card should be removed because it is past the reporting period, which is 7.5 years from the date the debt first became late. Even though the three credit reporting agencies – Equifax, Experian and TransUnion – are supposed to share information, it is still a good idea to notify them individually in writing. This is especially true since you have been contacted by a collection agency at this late date.

One problem I see lies in your statement that you know you owe the money. So does the collection company who bought your debt from your original creditor. If they can get you to admit that, you may "re-age" the debt, starting the clock again on the statute of limitations for collecting this debt. At that point, your option for just letting it go may get a little harder.

A debt this old generally is not collectible in court, but one thing to remember is that if you receive a notice to appear in court, you cannot ignore it. If you don’t show up, you could have a judgment for the debt rendered against you. Your defense is the age of the debt, but you must be able to prove that. If it comes to that point, you should seek legal advice. Depending on the state you live in, a judgment might even result in a wage garnishment. You don’t want that.

If your circumstances have now changed to the point that you feel like you can afford to pay off this credit card, you might consider doing so. If you decide to do this, be sure to get any agreement you come to in writing and keep good records. Ask that the debt be reported paid in full or paid as agreed. If you settle on a less-than-full balance amount, be aware that this ghost could come back to haunt you sometime in the future, as the amount you did not pay back is considered taxable income.

Remember to always use your credit smarts!

See related:  Forgiven debt causes unpleasant tax surprise, Careful: don't 're-age' old debt

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Published: March 19, 2016

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