Despite settlement, demands to repay old debt resurface

Steps to take if you didn't get a written verification

Let's Talk Credit
Let's Talk Credit columnist Jane E. McNamara
Jane E. McNamara is president and chief executive officer of GreenPath Debt Solutions, a nationwide, not-for-profit, providing financial literacy through consumer education and counseling for more than 50 years..
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Question for the expert Dear Let's Talk Credit,
I paid off a credit account, which I thought was paid in full when the payment was made. I now found out that I paid a settlement on the account and there is still money owed even though I paid. I was told my account was paid in full. Now, when I was told it was a settlement, my understanding of a settlement was you paid a lower price but the bill was paid. They said yes, you paid the settlement but it was just an amount not the full price. You still owe more. Please explain to me how they can say that the account was paid in full and then tell me now that I still have to pay the full amount that was owed. Thank you. -- Cindy

Answer for the expert Dear Cindy,
The best way to resolve the issue of payment on your account is to review the written agreement for settlement. If you received a written verification, it should state the amount you paid was settling the account in full. If so, send a copy of it to the persons who are contacting you attempting to collect on the account. Proof of the agreement that you settled the account in full for the amount you paid should keep them from contacting you again.

Without a written verification, it may be more difficult to resolve the situation. I would recommend you start by disputing in writing the amount of the debt. The Fair Debt Collection Practices Act requires that a collector send you validation of the debt and the amount owed, once it is disputed. In addition, collection activity must cease until such validation is provided to you in writing. The federal Consumer Financial Protection Bureau has published debt collection sample letters you can use to help craft yours.

While you are waiting for validation of the debt, you could do some research on the statute of limitations for collecting a debt in your state. The clock would have started on the date you made what you believed was the final payment. If the statute in your state for collecting the type of debt you had has passed, the collector cannot sue you in court to collect the debt, or initiate a bank levy or wage garnishment.

You might also check your credit reports to see if the account is listed. If the account does not appear on your credit reports, and it is past the statute of limitations, you could choose to ignore the collection attempts. But, if it is not past the statute and you receive validation that you do owe, I suggest you work something out to pay what you owe. Go to to get copies of your reports; you're entitled under federal law to get one free report per year from each credit agency.

If you can afford to pay the debt off in one lump sum, get the payment agreement in writing, before you make the payment. If you can't pay it in full, work to negotiate monthly payments that will fit your budget.

Let's keep talking!

See related: Settling a debt? Verify it, and get everything in writing 

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Updated: 11-24-2017