When to Pay Off Your Debt

When
being contacted by a debt collector, I often hear complaints from
consumers that the debt is “too old” and the question, “how can a
collector contact me about a debt that is so old?”  While the
answer to this question is simple, a debt collector can attempt to
collect a debt from you forever as long as he or she adheres to the
guidelines of the Fair Debt Collection Practices Act (“FDCPA”), the
explanation is a bit more complicated. 

In answering the question, I must first address what is
considered “too old” to collect.  A collector can contact you
to collect a debt for the rest of eternity.  However, you
cannot be sued on a debt after your state’s
statute of limitations has passed and it cannot report the debt
on your credit file after 7 to 10 years depending on the type of
debt being collected.  For a complete list of each state’s
statute of limitation based on the type of debt being collected
visit our firm’s
website.  Both threatening to file suit when the time to
file that suit has passed, and/or threatening to reporting the debt
to the credit bureaus beyond the reporting time limits are a
violation of the Fair Credit Reporting Act (“FCRA”) and the
FDCPA.      

The reason behind why
repayment of an older debt is optional is because if you cannot
be sued for the debt and it cannot be reported on your
credit file, then the only reason one would pay the debt would
be a moral obligation.  However, there is no longer any legal
obligation to pay that debt.  In fact, in some states making
payment on an old debt could re-start the statute of limitations
period, making the debt essentially new and collectable. 
Essentially, the new payment is taken as a new payment agreement or
new contract which will have its own new statute of
limitations.  If you do plan to repay the debt, make sure you
either pay the debt in full or for an agreed upon settlement
amount.  Making a small good faith payment will restart the
statute of limitations and the collector then has the right to file
a law suit. 

If you want to stop a collector
from contacting you regarding an optional debt, the first step
is
to write a cease and desist letter telling the collect to stop
contacting you.  Make sure to send this letter by certified
mail and to save a copy for your records so you have proof that the
collector received it.  Upon receipt, under the FDPCA, the
collection agency can no longer contact you to collect the debt
outside of a few isolated exceptions-acknowledging receipt of your
correspondence and to notify you of a lawsuit (which it cannot
legally file anyway).   

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.