Woman using calculator on desk full of bills and statements © Sheer Photo, Inc-Photodisc-Getty Images

That free advice you get from friends, co-workers or the "charming" bill collector on the phone could be worth even less that what you paid for it.

From the perils of acknowledging old debts to the odds of "inheriting" financial obligations, here are nine myths that need to be permanently busted, along with a few things it pays to know about debts:

Myth No. 1: Paying old debt always raises your credit score

Not always. This much is true: If a debt is seven years old or younger, and it's on your credit report, paying it could improve your credit score, says Anthony Sprauve, spokesman for myFICO, a division of FICO. How much depends on how old the debt is.

 The myth part comes in if a debt is too old, or isn't on your credit report.

If a debt is older than seven years, by law it should have already come off your crdit report. So repaying it won't raise your score because it's no longer considered, says Sprauve.

In fact, if the debt is younger than seven years old and for some reason is not on your report, paying it could potentially lower your score, Sprauve says. The reason: If the collector reports the payment to credit bureaus, suddenly that old debt will be added to your report. Even though the debt is now paid, it's a negative mark your report didn't previously have.

When it comes to debt, time really is on your side. New debts affect your score more than old ones, says Laura Udis, senior financial services advocate at the Consumer Federation of America.

Myth No. 2: Paying an obligation 'restarts' the clock on your debt

Half right. There are two clocks to consider. One is the length of time in which a creditor can force payment on a debt. The second is the length of time a debt can stay on your credit reports.

  • Forced-collection clock: Under state statutes of limitations for debts, creditors can use the courts system only so long to sue you for debt, get a judgment and garnish wages. But watch out: A consumer can unwittingly restart the collections clock on old debt, says Gail Hillebrand, associate director for consumer education and engagement at the Consumer Financial Protection Bureau. Acknowledging a debt (verbally or in writing), making a partial payment or accepting a payment plan can all risk "re-aging" the debt, restarting that clock.
  • Credit history clock: No matter who owns the debt, how many times it has been sold or whether you acknowledge it, it has to come off of your credit history after seven years, says Chi Chi Wu, staff attorney at the National Consumer Law Center.

And it's illegal to tag an old debt with a new "birthday," she says.

This seven-year clock starts 180 days after the last payment the consumer made on the accounts.

One notable exception to the seven-year reporting rule: collection judgments. A judgment is considered a separate item from the original debt, Wu explains.

Myth No. 3: Once the statute of limitations on forced collection passes, creditors can't sue

Not entirely. You have no legal obligation to pay a debt that's passed the state statute for forced collection, says Ira Rheingold, executive director of the National Association of Consumer Advocates. But creditors or collectors can still file a lawsuit.

If a creditor or collector sues, and you don't have someone in court to contest the claim, the courts may assume it's valid and grant the judgment, Rheingold says. Then, just like a B-movie zombie, that once-expired debt is alive and kicking again.

So if a collector sues, you or your attorney need to show up in court and demonstrate that the statute of limitations has expired, he says. Merely sending a letter to the courts or the creditor often isn't enough to prevent a default judgment, he adds.

Short on funds? You can contact NACA.net to find a consumer attorney who will take the case for a reduced fee, Rheingold says.

Myth No. 4: Making a small or partial payment stops lawsuits and debt collection attempts

Not true, unless that's part of a payment arrangement you have in writing, says Udis.

When dealing with representatives for creditors or collectors, get any promises or payment arrangements in writing or record those calls, if that's legal in the consumer's state, she says.

Myth No. 5: Paying old debt removes it from your credit report

Nope. If an old debt is on your report and you pay it, that doesn't mean it will stop appearing on your credit history, says Udis.

What's most likely: It will still be reported, along with a status of paid or settled, she says.

And if the original debt is more than seven years old, it shouldn't still be on your report, which means it won't be included in your credit score, whether you pay it or not.

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