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Dear Scott,
Better off not paying them? Dream on! Sure, it would be great if you could
improve your credit and not have to pay the bill. I'm afraid in your cae, it !ut
ain't o. "ou are confuing the time limit for negative item to appear on your
credit report and the tatute of limitation for collecting a debt in court. Don't
worry. "ou are far from alone in mita#ing one for the other. $ere' how it wor#.
%he &air 'redit (eporting )ct tate that mot negative item mut be removed
from a peron' credit report even year after the firt date of uninterrupted
delin*uency +more than ,-. day pat due/. Ban#ruptcie, federal debt and
child upport are among a few e0ception. 1a#ing payment on the account or
paying off the account doe not in any way affect the allowable time the item can
legally be reported on a credit report. &or e0ample, the original account that wa
turned over to collection mut be removed from your account even year after
it wa firt reported delin*uent. So, if that date wa 1arch 2, 3..4, the account
would be removed from your credit report 1arch 3, 3.,,.
%hat bring up another miconception I'd li#e to addre. 1any people believe
once a collection account i paid, it will be removed from your credit report. %hat
i not true. )n account le than 5 year old will remain on your report even if it i
paid. $owever, any potential lender, landlord or employer, viewing your report
before the account mut be removed, would much rather ee a paid collection
account than an unpaid one. %hi i the reaon I recommend paying off your
collection account.
%he tatute of limitation on debt varie by type of debt and by tate. It ha
nothing to do with credit reporting. "ou can find the tatute of limitation for your
tate by viiting your tate' attorney general webite. %he cloc# tart from the
lat date of a payment activity on the account. &or e0ample, if you have not made
a payment on an account for five year and the tatute in your tate i four year,
you may ue the tatute of limitation to prevent the account from being collected
in court.
%he important thing to #eep in mind i the lat date of activity. )ny type of
payment, or in ome tate a written agreement to pay, i conidered an activity
and can retart the cloc# on the tatute of limitation.
)nother omewhat fine point of the tatute of limitation i that while the debt
cannot be enforced in a court of law, you'll need to how up and dipute the debt.
) econd point i that while creditor can't ue the court to collect, they can till
do everything hort of getting a court order for garnihment to collect the debt.
So, they can till write, call and generally be a royal pain. %he bet way I #now of
to get an e0pired debt 66 one pat the tatute of limitation date 66 out of your life
i to have an attorney write to the collection agency aying it i only to contact
the lawyer regarding the debt and that you don't intend to pay anything. %hi will
generally deter even the mot determined collector becaue puruing a debt that
i pat the tatute of limitation will be a wate of time.
7hether an account ha paed the tatute of limitation for collection ha no
bearing on how long it i reported on your credit report. If it were me and the
amount were mall, I'd pay the debt off to put an end to any future collection
activity and clean up my credit report for anyone who ee it for the ne0t two
8ood luc#!
(ead more9 'hec# tatute of limitation on old debt