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  Dear
Steve,
A collection agency has asked me to pay off a debt that I defaulted
on more than seven years ago. As a matter of fact, it is not even
on my credit report anymore. What do I do? Also, the collection
agency is saying that this debt is accruing interest and I don't
know if that is possible (it was a credit card debt). Bottom line,
they want me to pay as soon as possible as this debt is accruing
more interest every day! In advance, I thank you for your assistance.
-- Geronimo
 Dear
Geronimo,
After seven years, most negative information
drops off your credit report as you have noticed. However, just
because the debt does not appear on your credit report, that does
not mean you don't owe it. To find out if you still legally owe
the debt, I suggest that you check the statute of limitations for
collecting debts in your state. The National
Association of Attorneys General provides links to state offices
that often have a consumer affairs section where you can determine
what statute applies in your case. For example, in the great state
of Rhode Island (from whence I write) the statute of limitations
on collecting a credit card debt is 10 years.
If the statute has not run out in your state and you
owe the money legally, I would advise you to pay. Although the original
debt will not be reported on your credit report, a court judgment
will be, if the collector turns the bill over to a lawyer and is
awarded a judgment in court. The collector is likely to call in
a lawyer, particularly if the statute of limitations is running
out.
If the statute has run out and you no longer legally
owe the debt, you have another question to ponder -- to pay or not
to pay? Only you and your conscience can make that decision.
From a practical standpoint, ask the collection agency
to send you paperwork documenting the debt. You should receive information
that tells you the original balance of the debt, when it was turned
over or sold to collections, any interest that has accrued and a
total balance due. This will verify that the collector has the legal
right to collect the debt. If the agency cannot verify the debt,
then you are within your rights to refuse payment with your honor
intact.
If you owe the money, another option would be to negotiate
with the collector to accept the original amount without interest.
Often interest accrual is optional among collectors and collecting
a seven-year-old debt is the stuff of dreams for these guys, so
I would think they would accept such an offer. If the collector
goes for it, make sure to get the agreement in writing before you
send payment.
If you can't pay the debt in full, propose a payment
plan that you can afford. Put the payment offer in writing and mail
it to the collector, saving a copy of the letter. The collector
may not be willing to accept payments and may opt to take you to
court for the money. If the debt is older than statutes of limitation
allow for collection, you will probably win in a court case. If
the debt is currently collectible, the judge may still let you pay
it as you proposed because you showed a willingness to pay the collector.
Good luck!
The Debt Adviser, Steve Bucci,
is the president of Consumer Credit Counseling Service of Southern
New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.
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