Dear Debt Adviser,
My husband and I have an unusual debt situation. At least 15 years ago, he went through difficulties that resulted in his car being repossessed. At about the same time, he fell behind on a credit card and eventually stopped paying. Obviously, it has been a long time. So long, in fact, that neither of these items appeared on a recent credit report that we checked. We live in Pennsylvania. My question is this: What is our obligation on these old debts?
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It sounds to me like someone is feeling guilty! Obligation means different things to different people, but one definition in the dictionary is "a binding contract, promise (or) moral responsibility." Some people believe that if you promised to pay someone in return for goods or services, you are obligated to do your best to eventually pay what you owe. My guess is that most people do the best they can to honor their obligations.
Others believe you're only obliged to pay if someone can find you and force you to. That is generally referred to as a legal obligation. In your husband's case, as far as legal obligation (aka collectible), it is unlikely that either of the debts qualify. The reason: statute of limitations. Statute of limitations simply means that too much time has passed to bring a legal case. The rules vary by state. In Pennsylvania, the statute of limitations is four years for credit card accounts and contracts such as the car loan.
There is one possible exception. If a judgment was issued by the courts for the debt before the statute of limitations expired, the creditor may still have the right to collect. The judgment is good for 20 years and can be renewed in the courts for an additional five years. In Pennsylvania, a judgment cannot be used to garnish wages. But it can be used to place a lien against real property.
If one or both of your husband's creditors sought to collect the debt in court within the four-year time limit of the statute of limitations and received a default judgment, there is the possibility that you may still be legally obliged to pay the debt.
The statute of limitations doesn't protect you from what are not-so-lovingly referred to as "zombie" debt collectors. These outfits attempt to collect on very old debts that they paid pennies on the dollar to purchase. However, if the debt is not legally enforceable, collectors are in violation of the Fair Debt Collection Practices Act if they threaten court action.
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These companies make a profit if only a small percentage of consumers just get tired of being hassled and agree to pay all or some of what they owe to get rid of these debts permanently.
In your case, these old debts aren't appearing on your credit report because they are over seven years old. It apparently hasn't kept you or your husband from obtaining credit, jobs, insurance or housing. So I say, let your conscience be your guide. If you would feel better paying all or an agreed-upon settlement amount, then do so. Just be sure you have a full and final settlement agreement in writing before you send anyone any money. If you are uncomfortable or intimidated about paying these debts, then don't.
Here's a last suggestion for dealing with any pangs of guilt in your household. If you're not going to reopen this can of worms and come to a payment agreement, why not consider donating a part of what you owe to a good charity?