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When debt repayment is optional

Can collection agencies come after you for debt that is years old? Yes, but what they can actually do is limited. However, a mistake on your part could be costly.

By Smart Spending Editor May 16, 2013 11:56AM
This is a post by Janna Herron from partner site Bankrate.com.

Bankrate logoDear Credit Card Adviser, 
I have been receiving letters from a debt collector for about 20 years saying I owe a balance of $18,000 on a credit card. I have never responded to them and there is nothing on my credit report. In the 20 years they have been after me, I have moved four times and each time they find me. What is this, and what can I do to stop them? 
-- Ginny

Business man with open hand out © Le Club Symphonie, Cultura, Getty ImagesDear Ginny,

Unfortunately, creditors and debt collectors can attempt to collect an old debt ad infinitum. What they can't do is sue you for the debt after your state's statute of limitations has passed, which has probably happened in your case. The debt collector -- which probably bought your debt from the credit card issuer for pennies on the dollar -- is hoping you don't know that or that you will satisfy an old debt out of some lingering moral obligation.

Here's the thing: This debt can't hurt you. It's too old. The collector can't get a judgment against you from the courts, and the bad history of that debt is too old to be found on your credit report. Negative items fall off your credit report after seven years from the date of the first delinquency (bankruptcies take 10 years from the court filing), under the Fair Credit Reporting Act. So, the debt collector can't say the debt will hurt your credit, because that is a lie and a violation of the Fair Debt Collection Practices Act, or FDCPA.

Now, this is how you can get the letters to stop. Write a letter of your own, telling the collector to stop contacting you. Copy the letter and send the original by certified mail to the debt collector. Get a return receipt for the letter to record that the collector received the letter. The U.S. Postal Service charges $2.55 for a mail receipt and $1.25 for an email receipt.
The collector cannot contact you again once your letter has been received, under the FDCPA. There are two exceptions. A debt collector can contact you to confirm there will be no more contact or to inform you of a specific action, such as filing a lawsuit. In your case, the debt collector can't do the latter.

If for some reason you decide to pay the debt, make sure you pay it in full or settle the debt for an agreed amount. If you send a small, good-faith payment that doesn't satisfy the debt, you restart the statute of limitations on the debt's life span. That means the debt collector then has the ability to sue you for the debt.

If the debt collector gets a judgment for the debt, that judgment can show up on your credit report because, as a public record, it's counted as a separate item from the original delinquency, charge-off and collections account of the debt.

So, write the letter, and either pay all or nothing. The choice is yours.

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