If a debt has gone past its statute of limitations, and then a debt collector calls, what should I do?

by **taillefer** » Mon Oct 31, 2011 12:40 am

I have an old phone bill that went to collections, it was more than 8 years ago, and in my state the statute of limitations for consumer debt is only 7 years. But they are still trying to collect on it.

If I do agree to pay it off, will it have any positive effect on my credit report? Right now my report shows it as charged off, unpaid. But since it's beyond the limit now to collect, will my credit report change if I do decide to settle the debt?

by **wattekinson86** » Mon Oct 31, 2011 12:43 am

Check out the statute of limitations in your state, but I think making a payment would restart the SOL (I could be wrong). Since the SOL has passed, they can't take legal action to force you to pay, but they can harass you until the end of time. You can dodge their calls/letters or you could settle the account for 25%-50% of the balance. Research settlement online because there are many caveats to doing it correctly; the big 2: always get settlement agreements in writing and never give collectors access to your bank account information (via transfer or personal check). Any forgiven debt will be considered income by the IRS and taxes will be owed. Forgiven debt is the difference between the balance and the settlement amount. Technically, if you don't pay a debt, the IRS would consider the entire balance income. However, the IRS relies on collection agencies to submit a form 1099-C. When I settled a debt, I never received the 1099-C form, but the IRS informed me of it a couple years later along with late fees & interest. I've *heard* many collection agencies do not take the time to submit 1099-C's to the IRS if the debt is never paid, but I'm not sure how true that is.

Negative items will remain on your credit report for 7.5 years; if it's been longer than 7.5 years contest the item with the credit reporting agencies. If it's not quite 7.5 years, it will probably drop off the report soon. Paying this debt or settling it would not really help your credit score, even if it were to remain on the report for years in the future.

by **treasigh** » Mon Oct 31, 2011 12:55 am

NO.
TELL EM TO TAKE A HIKE...

YOU'LL JUST START ANOTHER 7 YEAR BILL HERE...

8 YEARS PASSED. WRITE CREDIT BUREAU (s)
AND CONTEST THAT BILL. THEY WILL PURGE IT.

by **shipley** » Mon Oct 31, 2011 1:05 am

hang up.

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