Can Debt Collectors Collect on a Debt That's Over Seven Years Old?
The debt is so old it's fallen off your credit report and you've already forgotten about it, yet you just got a threatening phone call from a bill collector, telling you to pay up or else. Before agreeing to pay it, first research whether you are legally obligated to do so.
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Statute of Limitation
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Whether a debt collection agency has the right to sue you for a debt that's over seven years old depends on the state you live in. Each state has its own "statute of limitation," or a legal time limit on how long a person can be pursued over a debt. For instance, the statute of limitation in the District of Columbia is three years, while in Kentucky it's up to 15 years.
How to Respond
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When a creditor contacts you about an old debt, silence is the best answer, according to BankRate.com. Don't acknowledge the debt or agree to make payments unless you truly want to. You can also challenge the validity of the debt in writing and if it's too old for the statute of limitations, tell the company you're aware it can't legally sue you for the debt and that you want to be left alone in the future. Don't be intimidated by threats. If the debt is too old, there is nothing the creditor can legally do about it, according to the Federal Trade Commission.
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Consequences of Payments
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Don't make payments on an old debt unless you feel morally obligated to clear the balance and you have the money to do it. Making even one payment on an old debt renews it on your credit report. Old debt falls off your credit report after seven years, but that payment will bring it back to life and give it another seven-year run. It can also reset the clock on your statute of limitations, warns BankRate.com.
Paying it Off
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If you can pay off the debt in one lump sum and you'd prefer to do that rather than let the debt go, then make sure you have written proof the debt will be settled once the payment is made. You can also negotiate to have the amount due greatly lowered, says BankRate.com, but again, make sure to have it in writing that the smaller payment will clear the debt. Otherwise, the collection agency can pursue you for the rest of the balance, no matter what was said over the phone.
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