Dealing with old debt is a nuisance for most people who’ve likely moved on with their lives or even forgotten about the debt completely. But, as they say, old things come back to haunt us. You’ll find a bit of relief, however, because it’s much easier to handle older debts than new. With the right information and steps taken, you can again live life without the worry about old debts from the past.
Cool, Calm & (Won’t) Collect –
Keep your cool, if an old creditor reaches out to you or if it suddenly appears on your credit report. Study the new information on the credit report carefully. Do not allow debt collectors to scare you when they call you on the phone. That is what the collectors hope will happen. If it is older than 7 years old, you might be in luck (unless you live in Rhode Island). Thanks to the statute of limitations, any debt that is 7 years old or older is now a time-barred debt and the creditor is not allowed to sue you over the debt. Each state has their own set of rules for the statute of limitations regarding debt, so it’s a good idea to find out what that is for your state.
They can still try to collect it and they can contact you, but they can’t bring any legal proceeding against you. It’s essential to know that even if you can prove that the debt is now time-barred, it will not be erased. A statute of limitations means that you can no longer be sued for that debt, but it’s going to stay on your credit report for up to 7-10 years as part of your credit history. The exception to this rule is federal student loan debt, which is never indisposable per 484(a) of the Higher Education Act.
Be careful, however. Some creditors may call you 8, 10, even 15 years later, if your number and address haven’t changed. If the creditor can get you to admit that you owe the debt, then the time for collection and the statute of limitations restarts! Never admit owing a debt collector who calls you over the phone or who mails you letters if the statute of limitations time has passed. You should also never make a payment (not even a partial payment) on a debt that is time-barred. This too can “restart the clock” on the statute of limitations.
Dispute the Debts –
Debts that are under your state’s statute of limitations may also still have remediation. Start by requesting proof of the debt from the debt collector. This proof must be in writing and state the original date of the debt, the last payment made, and to whom the debt was with.
You can dispute any debts that you owe that appear on your credit report if they are past the statute of limitations. Ensure the amounts owed are correct and dispute any debt that you feel is incorrect. Disputing a debt may help get it erased from your credit report altogether if you request proof, and the creditor is unable to provide that proof in a time-sufficient manner. Do not hesitate to dispute any and all of the debts on your credit report. They may not remove them but it doesn’t hurt to try. Most definitely dispute any debt that isn’t yours. Mistakes happen on credit reports all the time. If something is on there that’s false or untrue, dispute it and try to get it removed. This can help increase your credit score.
Pay off the Debt –
Some people feel morally obligated to pay off debts they’ve accumulated. If you’re on this list of people, certainly do what you feel is right. But just know that once you make a new payment or admit to owing the debt, that statute of limitations “clock” restarts back to zero. However, paying off the debt can still provide savings if you aren’t so quick to rush into the situation. Perhaps you can first work out a deal with the creditor that lowers the amount owed. Many creditors will settle for a fraction of the original debt amount if you can pay it off in one lump sum. Others will, at a minimum, remove late fees and interest, which in itself can take off a huge chunk of the overall amount due. Make sure to get any and all settlements or deals in writing from the creditor. This will protect you from the creditor coming back years later saying you still owe an amount.
Don’t Sweat Time-Barred Debt & Old Debt –
They say that debt never truly goes away, but in a legal sense, it certainly disappears after the statute of limitations has been reached, as long as you remain mum on the topic. While it is stressful to be reminded of past debts or to have debt collectors ringing your phone with threats and other aggressive tactics, do not panic. Please do not give in to their threats or attempts to frighten you. Take a deep breath, check the statute of limitations laws for your home state, file disputes with the creditor, and take the right steps to ensure your name is free and clear of old debts much sooner.