Withholding payment over late pay dispute unwise

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 CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,
Ten years ago, I had a credit card that they had incorrectly reported me as being 30 days behind. I was so mad when they refused to fix it that I refused to pay them. I sent letters stating that they were wrong and threatening to not pay them if they didn’t fix it. I even called them several times. I simply refused to pay them when they are falsely accusing me of being late!

I hadn’t heard anything about the debt all these years, but then today I got a letter from another collection company wanting me to take a settlement and pay them for the debt. They say they can sue me if I don't take the settlement or pay the full amount.

I do not understand how that's possible 10 years later! What can I do, or can I do anything but pay them? I live in Virginia. – Cecile


Dear Cecile,
First, not paying a credit card bill because the bank reported you as late is a very bad idea. If you weren’t late before, you were after you stopped paying. What started as one late payment, which would soon fade into the distance even if you couldn’t get it removed from your report, turns into a huge negative mark on your credit report as it gets bigger and bigger, and more past due.

Ten years after the last activity, however, a credit card debt is uncollectible. That’s longer than the statute of limitations in every state. (Most credit card companies name the state whose laws apply to their credit card agreements, regardless of where you live.)

It’s important to know when the statute of limitations started in your case. The statute of limitations generally begins the date of the last payment or other activity, including any time you reaffirm the debt. In your case, even if the exact start date for the statute of limitations is slightly different than you remember, you should still be in the clear.

Debt collectors know that a debt from 10 years ago is too old to collect. They’re just hoping you don’t know. Collectors buy these debts for pennies on the dollar, hoping that if they send enough letters to people with decade-old debts, a few of them will certainly send them money. If you respond by telling them that this debt is beyond the statute of limitations, they should leave you alone.

Don’t admit to the debt, send a partial payment or in any way validate it, or you may restart the clock on the statute of limitations.

I don’t think the debt collector will take you to court, but should they try, never ignore it. You must respond and show that the debt is past the statute of limitations, or you can lose the case by default.

You should also check your credit report to make sure this old debt is not on your credit history. (You should be checking your credit report at least once a year anyway. Make sure you get the your free report at AnnualCreditReport.com.) This old debt shouldn’t be on your report now. A delinquent account should drop off your credit report by the end of seven years.

Next time you want to punish a credit card company, try writing a review, file a complaint with the Consumer Financial Protection Bureau, tell your story to your friends, or write a post on Facebook. Or better yet, just pay off your card, close it, and never do business with that card issuer again. Whatever you choose, find a way to express your displeasure that can’t hurt you worse than it hurts the credit card company.

See related: Withholding payment after dispute goes against you

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Updated: 01-19-2019