Steps to take to pay off old debt

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

Dear To Her Credit,
Without getting into details of the reasons why, I haven't kept track of who I owe or how much I owe over the last 10 years. I am severely in debt simply because bare necessities (food, shelter) in life came first, and there was rarely anything left over.

I know that not everything I currently owe is on my credit report (because it hasn't been reported there yet). What is the best way to find all the debt that you owe -- outside of consulting your credit report? -- June

Answer for the expert

Dear June,
Your credit report may tell you more than you think -- it's amazing how much shows up there! But you are right, it won't show everything.

Ex-bankruptcy judge and lawyer R. Glen Ayers says, "There really is no simple way. Even if she pulls a credit report, that will show only those creditors who report problems, and some do not bother to report."

Still, your credit report is the best place to start. Get your free report at and use it to start a list of your debts. Make a note of any debts that are not legitimate or that you have questions about.

After you read your credit report, Ayers recommends you do two things:

  1. Make a list of your creditors by referring to your checkbook register, canceled checks, credit card statements, and bills. Don't forget:
    1. Landlords, current and present
    2. Insurance
    3. Utilities
    4. Personal loans (including relatives and friends)
    5. Credit cards
    6. Services; i.e., newspapers, lawn care, and so on
    7. Car loans
    8. The Internal Revenue Service
    9. State income tax
    10. Property tax
  2. Contact each one to find the current balance due.

I suggest contacting each creditor by mail or e-mail, not by phone. If you call, you'll probably get a different customer service representative every time, and often they'll tell you something different, too. Get everything in writing, and save all correspondence.

When you have debts so old you can't remember what they are, your creditors may also have forgotten them or have written them off. Some people may prefer to "let sleeping dogs lie."

Contacting a creditor may even restart the statute of limitations in your state and reaffirm your debt. Statutes of limitations are laws that prevent creditors from collecting very old debts, long after debtors could be expected to remember details or to have adequate records to defend themselves. State laws vary; find the rules in your state.

If you have debts that are past the statute of limitations, you have a choice. If you have the means to pay the debts now and you want the satisfaction of having done so, go ahead and ask for the balance and pay it. (Don't feel obligated to pay outrageous interest and fees they may tack on, however. See How to avoid debt collectors' fees.)

Your other choice is to determine whether you want to pay all your debts that are past the statute of limitations. That may depend on how you got the debt and the dictates of your own conscience. I suggest getting legal or credit counseling help if you have significant old debt. It's easy to inadvertently restart the statute of limitations or acknowledge your debt if you don't know the rules. 

After you make a list of the debts you think you have, you must prioritize them.

Pay for the most important necessities of life first, to the creditors who control them. That puts rent or mortgage payments at the top of the list, followed closely by utilities. Pay your doctor if you want to keep making appointments, and car payments if you must have a car to get to work.

Next, work on the debt with the highest interest rates. If two debts have the same rate, paying off the one with the smallest balance first can help you feel like you're getting somewhere.

You should be commended for your determination to get your finances in order and get out of debt. It's hard work, but you should feel a tremendous sense of accomplishment every time you check another creditor off your list!

See related: State statutes of limitations for credit card debt, How to avoid debt collectors' fees, What is debt reaffirmation

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Updated: 01-18-2018