Dear Debt Adviser,
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I settled some debts through an attorney about 11 years ago. But one account slipped through the cracks, and now it's with a second collection agency. The statute of limitations in my state has long passed. I have not made any payments or agreed to pay any amounts in that 11-year time frame, so the clock has not reset on this debt. This account is no longer on my credit reports, either, yet I still get occasional mail and calls about this account. I'd like to close the chapter on this, but I have a feeling this isn't going to go away on its own. What is your advice?
Well, you are right when you say you don't feel like the debt will just go away on its own. In fact, I have a saying that "unlike wine, debts do not improve with age." Old debts are so common in the collection business they even have a name for them -- stale debts. A very old or stale debt is typically purchased for pennies on the dollar from a creditor or collector who has given up on ever getting a payment, so any amount that can be collected would make the collector a profit. Because of the potential to earn a substantial profit for the collector, you will likely continue to be contacted regarding the debt, particularly if you owed a large amount. Unless, of course, you do something about it.
The fastest and simplest way to handle the debt that got away and is now past the statute of limitations for collection is to contact the attorney you worked with in the past. Request the attorney send a letter to the collector stating the debt is past the statute of limitations in your state, and you have no intention of paying. Also, have the letter include a statement that if the collector continues to contact you, they will be sued in court.
You can do this without the attorney, but in my experience, it's worth the few extra dollars to get some extra peace of mind the job has been done correctly. Additionally, once you have an attorney, any additional contacts by the collector must go through your attorney. A final reason to use an attorney is to be sure the debt is indeed past the statute limit. Just because you think it is doesn't necessary mean that's the case.
Whatever you decide to do, the Fair Debt Collection Practices Act provides protections that forbid collectors from contacting you once you have requested they stop. If the collector tries to pursue the debt in court, you may be entitled to monetary damages if you turn the tables and sue him or her in court.
Most collectors will cease and desist after receiving a no-contact letter documenting the age of the debt. Plus, once you are on record saying the debt is over the statute of limitations, they can't resell the debt as a valid debt.
Another option to "close the chapter" is to pay what you owe. Only you can decide if the potential hassle of being contacted occasionally about an unenforceable debt is incentive enough to pay the debt and be done with it for good. Of course, if you do pay the debt, be sure to get everything in writing before you pay anything.