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The Old Debt Dilemma – To Pay or Not To Pay

On Behalf of | Jan 28, 2013 | Consumer Protection

One of the most popular questions from consumers is do I have to pay an old debt?  It is the old debt dilemma – to pay or not to pay.

TO PAY:  If you incurred the debt, the collector can continue to seek payment until it is satisfied.   The debt will fall off your credit report after 7 or 10 years, depending on the type of debt (link this to the “types of debt” page on website.  The collector can file a lawsuit to collect the debt and obtain a judgment against except if the debt is old (read section below).  Once a creditor or collector has a  judgment, your wages and/or bank account can be garnished and they can file a lien on property. Thus, if some of the above circumstances exist, it is likely in your best interests to pay the debt, or make arrangements to pay the debt.

NOT TO PAY:  This occurs when the debt is old and the collector can no longer sue you to collect the debt.  To determine if your debt is old enough, you need to check the statute of limitations in your state.   Every state has a statute of limitations.  View our website or call us today to find out about your state rules.  The Statute of Limitations governs how long the creditor or collector can sue you.   The clock starts ticking approximately 180 days after default.  Default is the missed payment.  Beware, depending on the state you reside in, if you make another payment the clock may start ticking again.  Therefore, check to see when you last made a payment for that account.  The collector cannot sue you or make threats to sue you if the debt the Statute of Limitations has expired.  If the collector uses such tactics (link to blog Threats from Collectors), they are violating your rights under the Fair Debt Collection Practices Act.  You can sue them and earn up to $1000 for violations.   The attorneys’  fees are paid by the Defendant, therefore, there is no out of pocket costs for the consumer.  For good results and success stories, click here.

If you are annoyed by the collection calls or are unsure that this debt was yours, you can simply write to the collection agency disputing the debt and instruct them to stop contacting you.  Send your letter certified mail and keep a copy for your files.  You can check out our sample letter and modify it to fit your situation.

There are some special circumstances that you should keep in mind with debts in general.

  • Threats of Lawsuit: A debt collector can not make empty threats.  Unless a collector truly has an intention on filing a lawsuit against you, they cannot threaten to do so.   Read blog Threats From Collector.
  • Payment Plans: Creditors and debt collectors are not required to set up a payment plan.  Even if you have been making regular  payments to a hospital, your account can be sent to a collection agency.
  • Medical Debts: With medical debts that should have been covered by health insurance, you need to make sure that gets processed correctly and timely with your health care provider and insurance company. If you see something not right, be proactive and make sure the bill is covered by your health insurance.  Many times the bill is coded incorrectly and is rejected by the insurance company. Then the consumer finds out too late to file it with their insurance company and gets stuck with the paying the bill.
  • Student Loans: Federally funded student loans are treated differently.  See our website.  Once you take out a federally funded student loan, you are stuck.  There are a few limited exceptions such as extreme financial hardship and total and permanent disability.  Check out this Department of Education website to learn more.  Collectors for federally funded student loans can garnish your wages without obtaining a judgment first. .

If you feel your rights have been violated under the Fair Debt Collection Practices Act, contact SmithMarco P.C. for a completely free case review