20-year-old debt should not come back to haunt you

Repaying ancient debt is a moral decision; courts won't force you to pay it

Question for the CreditCards.com expert

Dear Credit Score Report,
I was recently contacted by a creditor. I haven't had this credit card since my early days in college -- over 20 years ago -- and I just received a settlement offer giving me a 60 percent savings if I make monthly payments. If I accept, how will this impact my credit score? I went through years of bad credit, and I'm trying to improve my credit score. I'm afraid if I accept these terms, I will start the time clock all over again and it will do nothing to improve my current score. Please help me understand my best options. -- Andre

Answer for the CreditCards.com expert

Hey Andre,
Whether you choose to repay that debt may come down to a moral decision, because you probably aren't in any danger on the legal or credit scoring fronts.

Experts say that debt from more than 20 years ago is too ancient to hurt you. "Not only is this information too old to include in a credit report, it may be past the applicable statute of limitations," says Chi Chi Wu, staff attorney for the National Consumer Law Center in Boston. "While I am not familiar with all of the state statute of limitations, many of them are shorter than 20 years." In fact, when it comes to credit card debt, no state has a statute of limitations more than half that long.

That means if you don't make a payment, in most states, while a creditor can take you to court in an effort to collect on that unpaid credit card account, the creditor can't win (if you put up a fight and legally object).

If you submit a payment voluntarily, however, you run the risk of "re-aging" that old debt. While  the vast majority of states do not permit debtors and collection agencies to successfully sue for unpaid bills that are more than 7 years old, making a payment can re-start the clock on the statute of limitations. Additionally, by acknowledging an old debt, you extend the window of time for potential debt collection lawsuits. That's why the best financial course of action may simply be to not repay that debt -- provided you can rest easy with a decision to leave an unfulfilled promise to your bank.

Even with a clear conscience, it may be tough to sleep if that creditor is calling you at all hours, demanding payment. To prevent that scenario, begin by mailing your card issuer a letter asking them to verify that account. Their response is important. By law, they must stop collection activity if they can't show evidence that the debt is yours. If that doesn't end their collection efforts, write another letter requesting that they cease communication regarding this debt. (CreditCards.com has a number of such debt collection sample letters on its website.) If the creditor continues to harass you, be sure to exercise your rights under the Fair Debt Collection Practices Act. That includes filing a complaint with the Federal Trade Commission.  

As for guarding your credit score against damage, make sure that old debt doesn't appear on your credit reports. Since negative items typically must be removed after seven years, you can dispute the appearance of this credit card account with the three credit bureaus -- Equifax, Experian and TransUnion. "There are time limits as to how long negative information can stay on a credit report (with the exception of criminal convictions). Twenty years is waaaay longer than these time limits," Wu says in an e-mail.

So while many of my columns end with a call for the reader to pay all their bills, in this case, your credit history may be better served by not fulfilling your old debt obligation.

Good luck!


See related: State statutes of limitation for credit card debtDebt collection sample lettersKnow your rights: Fair Debt Collection Practices Act, Free credit reports: How to get the actual free one, How to dispute credit report errors, Decade-old credit mistakes shouldn't appear on your report

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Updated: 03-26-2019