| by Christina |
You legally owe debts until it is paid, settled or it is wiped off by bankruptcy filing (if you do file for bankruptcy). Even if your debt has been charged off or if your creditor cannot report it because if has gone past the statutes of limitation, you still technically are in debt. Your creditors can still come after you. Morally, one could argue that it is possible, you should pay off your debts when you can. And this seems to be a fair statement.
However, paying off old debts can actually hurt your credit scores. Why?
1. The credit bureaus weigh recent activity more than old activities. If and when your creditor or collection agencies update your report, this may hurt your score and you may be better off not doing anything.
2. Any action like contacting your old creditor or even acknowledging your old debt can land you in court. Some states have laws that allow the statutes of limitation to be extended if you make a payment to your old debt. You could be taken to court by your creditors and any judgement against you would be serious implications on your credit report.
But there may be another reason why you should never bother or acknowledge any debt past the statutes of limitations. More often than not, you will be dealing with collection agencies. And they could be very unpleasant to deal with.
So morally, it paying off your old debts seems like the right thing to do. But in reality, it is actually more complicated than you think because of the laws and how credit bureaus actually work.
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February 3rd, 2009 at 19:08
If you don’t pay the debt, How long will it show on your credit report if you never contact the collection agency?
May 27th, 2009 at 12:38
Can you pay off debt at the credit Beauras
April 15th, 2010 at 14:54
No, you cannot pay off debt through the Credit Bureaus. You do not owe them money.
If you don’t pay the debt, it could show up on your credit report for 10 years. However, don’t think that by not contacting them all you have to do is wait out the 10 years and then all will be well. It’s not that easy. I was finally in a position where I thought I could try to straighten up my credit. I got a copy of my credit report, started with some smaller debts, and paid them off. Unfortunately, that opened a flood gate. I don’t know if it was other creditors seeing action on my part or what. Anyway, to make a long story short, after not responding to one of my creditors (the amount was too high for me to work on that one), they sued me. Yep, Sheriff showed up at the door (not a happy day). Now, I’m in the middle of Chapter 7, which I would not have had to do if this one creditor hadn’t decided to come after me. I just could not meet their terms, nor could I let the lawsuit go through and have them garnish my wages (I’m also on my son’s bank account-he’s in the military, and I definitely couldn’t have his account affected).