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Is Full Of Hot Air?




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Does It Make Sense to Pay off Old Debts with a Collections Agency or Use

There are millions of Americans with collections on their credit reports. These can even surface years after the unpaid debt occurs. There are debt consolidation scams.

The original creditor might have suspended the account and you might have thought the matter was over. Then, years later, the obligation resurfaces in the form of a collection account.

Although commonplace, the element of surprise catches many consumers out.

What happens if you are now financially stable and you have an old debt on your credit report?

You might be asking whether you should pay this debt off, especially if it is now with a collection agency. Or should you work with a company like Credit9?

In most cases, you would be advised to pay the debt, certainly if you plan to maintain and improve your credit score.

Resist the Temptation to Immediately Contact the Collections Agency

You might become aware of debt in collections either by letter or phone call.

If you are contacted, resist the temptation to respond.

Sometimes, the collections agency might be attempting to tie you to a debt that’s not yours. Maybe they are trying to persuade you to pay an old debt that’s no longer legally enforceable.

Don’t respond immediately to letters and give no information over the phone.

Get Your Credit Report and Verify the Debt

Instead, first, acquire a copy of your credit report before contacting the collections agency.

Establish whether the information provided by the agency matches any obligations on your report. If not, ask the agency to document the debt and to as providing evidence, it’s yours. If the debt is not on your report, the burden of proof is on the collections agency.

If, however, the debt is yours, here’s what to do next.

Check the Statute of Limitations on any Collection Accounts

Whiles collections will disappear from your credit report automatically after 7 years, there are no federal or state limitations on collections. There is a federal law (FDCPA) that limits the strategies agencies can use for collections. Debtors also have certain rights under this law. The federal law doesn’t, however, set a limit on collectability.

This varies from state to state and ranges from 3 to 10 years. The average is between 4 and 6 years in most states.

Even if this statute of limitations is exceeded, creditors can still contact you over unpaid debts, but they will no longer be able to initiate legal action against you for non-payment.

Don’t ignore threats of a lawsuit by creditors

Remember, you must respond to legal actions for unpaid debts, or creditors will win summary judgments against you that will remain in place until the debt is paid in full.

The statute of limitations typically limits the length of time a creditor has to take action for an unpaid debt. The statute begins when you first start missing payments. Once this has expired, the debt is time-barred.

Don’t make payment on any time-barred collections unless you intend to pay in full

Sometimes, making payments or even acknowledging a debt in writing can cause the statute of limitations to restart.

If you are encouraged to make any payment on a collection account beyond the statute of limitations in your state, make payment in full or no payment at all.

Consider Your Other Options

You have other options at your disposal if you’re faced with this kind of situation.

Credit counseling

Whether you speak with a credit attorney or a credit counselor, you could try to make an arrangement to make partial payment in full satisfaction of the debt.

Get a signed letter from the collection agency so you are released from further obligation.


If you pay the debt in full, you can request that it be removed from your credit report entirely.

Remember that collection agency are not required by law to remove entries from credit reports even if repaid.

How Does This Affect Your Credit Score?

If a collection account falls off your credit report after 7 years, this should improve your credit score. The improvement will only be small, though, amounting to just a few points.

Should You Pay Old Debts with a Collections Agency?

If you have a collection account less than 7 years old, pay it off as long as it’s within the statute of limitations.

Failing to do could lead to legal action, including salary garnishing. Also, paid collection accounts have less of an adverse effect on your credit score than unpaid accounts.

Beyond this, if you legitimately owe the debt, you have a moral obligation to pay even if you’re no longer legally obliged to pay.

Make sure you get evidence of any payoff you make, along with a letter confirming that the payoff has been reported to the major credit bureaus. A month after the account has been paid, pull your credit file to check the payoff was reported.

Final Thoughts

Never assume you are liable for a debt just because a collection agency tells you so.

Research the statute of limitations on debt in your state then act accordingly using the advice we give you above. If the debt falls outside the statute of limitations, it’s down to you and your conscience whether you pay it or not.

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