The Old Debt Dilemma – To Pay or Not To Pay

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.