To Pay or Not to Pay – That is the Question

A lot of consumers call us up after being pursued by a debt collector and ask us whether they should try to make payments on the debt.  The collector claims you owe the money, but you are just not sure.  Maybe you paid it, or maybe you don’t recollect having such a debt.  You check your credit report and it is not there.  Should you make payment on a debt that is not reported on your credit file?  To pay or not to pay?  That is the question and the simple answer…..it depends.

The first thing any consumer should do when hearing from a collector is to determine if the debt is time-barred.  That is, did the statute of limitations expire on this debt.  The statute of limitations, as we have blogged in the past, is the limit of time that the collector/creditor has to file a lawsuit in court seeking recovery.  Each state’s statute is different, and some states provide that a payment on the debt can re-start the statute.  Thus, before you agree to pay the debt, your first task is to find out when the last payment was made on that account, and what your state’s statute of limitations is for that particular kind of debt. 

If the initial contact is coming to you in a letter, then that should be easy enough.  That initial letter should advise you of your right to seek validation of the debt by simply mailing a request for validation back to the collector.  That is a step that any consumer should take.  The collector cannot go on with the collection until they have provided that validation to you.  

If the initial contact is coming to you by phone, then ask whether you will receive something in writing from them about this debt.  If they say no, then be skeptical.  Most legitimate collection agencies are happy to provide you written notification of your debt.  If they tell you that they sent one already, then respond by saying you did not receive it, and you wish to see something in writing about this debt before agreeing to pay.  If they still refuse, then you tell them you will not be discussing this debt and hang up.  If a collector will not provide you information about your debt in a writing, then chances are either (1) they are not a legitimate collector or (2) they have no proof that you owe the debt.  Either way, you are better off risking the next collection activity rather than paying up on a questionable debt. 

The Fair Credit Reporting Act provides that a negative item of credit may remain on a credit report for up to seven (7) years.  For some states, that is longer than the statute of limitations.  Therefore, an item can still be on a credit report even though the creditor can no longer legally force you to pay.  However, sometimes things fall off a credit report, and the debt can still be sued upon.  Not every collector reports debts to the credit bureaus.  Therefore, simply relying on a credit report to determine whether a debt should be paid is not a good idea.  If the statute of limitations has expired on your debt, but it still can be reported on your credit reports, the only reason to pay the debt at that point is because a lender that is reviewing your report wants the balances paid off. 

If you believe your rights have been violated by a collection agency and you would like the advice or assistance of counsel, contact SmithMarco P.C. for a completely free case review.