Old Debt

March 26, 2007 1:51 PM

An old debt has found it's way back to me. Should I pay it? If not, is there an optimal strategy for not paying it?

So, around 1997 or 1998, I let unpaid phone bills stack up and with with late fees and so on this reached $475. This of course went to collections agencies. I never paid it.

If my memory serves correct, this appeared on my credit report as a negative, thus lowering my score, and stayed there for the seven years that these things are supposed to stay there. I'm not sure when I stopped receiving notices about this debt, but it's been years. To be fair I've moved several times, so it's always possible notices continued to be sent that never reached me. However, I always assumed that once it had gone on to my credit report, it was over and done with.

Fast forward to present day, and I have suddenly received a notice in the mail from a collections agency about this $475, and I'm wondering what to do about it.

Obviously, I realize I owe this debt and I should pay it, but I am interested in the nuts and bolts of what happens if I don't pay, and in what way I should go about it?

If it's already been on my credit report once before, can it go back on again?

If I choose not to pay, in what way should I go about it? Just ignore the letter and do nothing? Call the collections agency and dispute it? If I do dispute it, on what grounds would I do this?

Also, if I do pay it, are there any foreseeable consequences to this? Can they, having received the payment from me, which implies an admission of guilt on my part, then for example apply ten years worth of late fees or some similar horror?

posted by poppo to work & money (32 comments total)

In what state was the debt incurred? The statute of limitations on it may have already expired.
posted by yeoz at 1:59 PM on March 26, 2007

Make sure it's legit first. I've been getting calls from a collection agency about "old debt", and googling revealed it to be a scam. A clever scam, I think, because a lot of people have bad memoies of that era and might assume it was something real when it wasn't. Just because you had bad debt from that era doesn't necessarily mean this is that debt.
posted by selfmedicating at 1:59 PM on March 26, 2007

Think about it logically. Do they send debt collectors round to every house where someone ignores a letter? They have no way of knowing that you're the person they're after, and actually chasing you is expensive - they'll only do it if they're sure. And the only way they're going to be sure is if you respond, which is what the language in the letter is designed to make you do. So I'd vote for ignore, personally - if it's gone unpaid this long, it might as well be forever.
posted by reklaw at 2:07 PM on March 26, 2007

What happened the first time collection agencies contacted you? Were you served with any documents on it, was a judgment filed against you? That'll make a difference on how you should treat this new interest in the debt.
posted by Lucinda at 2:11 PM on March 26, 2007

For yeoz: Maryland

For selfmedicating: Thanks. Definitely my old debt. The phone company I incurred it with is mentioned, and the amount sounds correct.
posted by poppo at 2:11 PM on March 26, 2007

For Lucinda: No, no documents, judgements etc, either then or now (to my knowledge)

Thanks reklaw, I also considered the idea that they were just fishing for the right me. On the other hand, surely there are more than a few things on file with that old phone company that must connect the "old" me to the new "me"...name, ssn?
posted by poppo at 2:16 PM on March 26, 2007

Obviously, I realize I owe this debt and I should pay it, but I am interested in the nuts and bolts of what happens if I don't pay, and in what way I should go about it?

Really? If so, that would imply that you're interested in this subject from a purely educational, gosh even just a hypothetical point of view - since you obviously intend to repay the debt.

If you were really just interested in how to go about not paying it, my answer to your questions would be to move again, don't forward your mail, don't apply for any jobs that involve your name or social security number, and don't sign up for any phone service. Oh, and don't pay.
posted by matty at 2:16 PM on March 26, 2007

Don't do anything. I've heard that if you do contact them then the last "contact time" becomes current. If you do nothing, then it will stay off your credit report.

That's just something I heard in askme. This credit stuff is is like alchemy.
posted by delmoi at 2:17 PM on March 26, 2007

My guess is that some company probably bought the rights to the debt for pennies on the dollar from the old collection agency, with the expectation that a very few people might decide to pay for some reason.
posted by delmoi at 2:20 PM on March 26, 2007

According to this website ( http://www.fair-debt-collection.com/SOL-by-State.html#21 ), it's 3 years in Maryland. Do you remember when the date of last activity on your credit report for that debt was? Assuming it wasn't reaged, and it's been three years since then, I don't think they won't be able to collect on it. Have you spoken with them at all? I assume you haven't. Just write them a letter telling them to go f*ck off.
posted by yeoz at 2:20 PM on March 26, 2007

Don't acknowledge it. The first payment you make is going to flip it back on your credit report, and the clock starts over. This debt was gone and done for in 2004 or 2005 - ignore the letter, and don't say word one.

(Shady-ass) Companies have started buying expired, bad debt and trying to collect it. It sounds like that's what's happening to you. Article here (It's kinda a crap link, but the article itself links to other, more informative links.)
posted by plaidrabbit at 2:21 PM on March 26, 2007

Sorry, thats, "I don't think they will be able to collect on it." Not legally, at least.
posted by yeoz at 2:21 PM on March 26, 2007

Er, sorry, 4 years.
posted by yeoz at 2:22 PM on March 26, 2007

Actually, I guess, I should just say, "IANAL, please consult one." :E
posted by yeoz at 2:23 PM on March 26, 2007

Ditto plaidrabbit about the shady companies. Some friends in VA were contacted about old phone company debt that they allegedly had. A call to the phone company revealed that it was a scam. If you really want to pay this to salve your conscience, I would call the phone company first to verify - or just call and play dumb and say you don't remember the debt. If this debt was written off by the phone company years ago, then I doubt you need to pay it.
posted by selfmedicating at 2:27 PM on March 26, 2007

I would request verification of the debt, and then send them a "drop dead" letter. They're required to honor both requests, under the Fair Debt Collection Practices act. It's outside the statute of limitations, so they can't collect in court, although they may hint that they will. In all, they really haven't a leg to stand on other than intimidation. As soon as you flex your rights, people like this go away, never to be heard from again.

Of course, IANAL, IANADC, IANERQTGTA (I am not a lawyer, I am not a debt counselor, I am not even remotely qualified to give this advice).
posted by deadmessenger at 2:32 PM on March 26, 2007

1. It is most likely not a legal debt. Pull your credit report to check if it's on it.

2. I found creditboards.com forums invaluable. They have sample letters to send. Look at the sample letters they have requesting info to find out if it is a valid debt. If it's not, the collection agency will stop sending you stuff.
posted by hazyspring at 2:41 PM on March 26, 2007 [1 favorite]

If the statute of limitations has run out (and it seems it has), what good can come of contacting this company? Why not just ignore it?
posted by reklaw at 2:58 PM on March 26, 2007

If the statute of limitations has run out (and it seems it has), what good can come of contacting this company? Why not just ignore it?

I agree. If your conscience bothers you, why not donate an equal amount to the charity of your choice?
posted by drjimmy11 at 3:00 PM on March 26, 2007

I swear this came up recently (though I can't find it) and someone was emphatic that there is no statute of limitations on debt. There are rules that govern how collections agencies are allowed to behave, but debt is debt and you will owe it till the day you die (and then I suppose it gets passed to your estate). I have to say this seems logical to me. In particular, I find it hard to believe that there is such thing as a 'drop dead letter' that a collections agency would be obligated to respect. Can anyone verify this?
posted by PercussivePaul at 4:26 PM on March 26, 2007

the website linked above seems pretty clear about this:

Maryland Statutes of Limitation

Civil action: 3 years from the date it accrues, unless:

Breach of contract under any sale of goods and services under the UCC: 4 years after the cause of action, even if the aggrieved party is unaware of the breach.

Promissory notes or instruments under seal, bonds, judgments, recognizance, contracts under seal, or other specialties: 12 years.

Financing statement: 12 years, unless a continuation statement is filed by a secured party six (6) months prior to end of twelve (12) year period. (Maryland, Commercial Law article Sec. 2-725; Courts & Judicial Proceedings Article Sec. 5-101-02, 9-403).

NOTE: The 3 year statute of limitations begins again if creditors can document that a debtor has reaffirmed a debt by a good faith basis by a written agreement, orally, or by payment.


perhaps you could make an argument about whether the debtor still "owes" in some abstract sense, but if the debtee can no longer take any action to collect, and it disapears off the debtor's credit report, I don't know that he still "owes" in any practical sense.
posted by drjimmy11 at 4:43 PM on March 26, 2007

and, just by my cursory reading here, it seems that the "drop dead" letter might have EXACTLY the opposite of its intended effect, in that, depending on how it was phrased, it might be seen as reaffirming the debt and thus give them another three years to harass you.
posted by drjimmy11 at 4:46 PM on March 26, 2007

@drjimmy11: I was thinking the same thing as you, but it can be avoided by making the letter as concise as possible:

"Please immediately cease all contact with me regarding this matter."

That's it. At that point, legally they can only contact you to announce that they are no longer going to pursue the matter, or to announce that they're taking you to arbitration/court. Plus, it neither confirms nor denies the debt, so it doesn't get re-aged, and you don't have to lie.
posted by CrayDrygu at 5:08 PM on March 26, 2007

I went looking and found this. Assuming you believe it, salient points include:

- debts never die but there is a statute of limitations after which they cannot collect in court (so I was wrong there). Note that they can still sue you, but simply asserting that the statute of limitations has passed will get it thrown out.
- statue of limitations vary by state; in some cases they are ten years or more.
- there is a separate 7-year limit, starting from the date of the original deliquency, after which the debt cannot affect your credit report. "Collection agencies cannot legitimately 're-set the clock.'"
- the 'drop dead letter' is indeed real! You can order them to cease communication. Otherwise they can badger you forever.

You learn something new every day.
posted by PercussivePaul at 5:10 PM on March 26, 2007

"Debts never die" in the sense that even long after the statute of limitations has passed, should you promise to re-pay the debt, you are then legally obligated to do so, and a new statute of limitations period springs up anew. (Whether this starts another 7-year credit reporting history period I don't know). Be very careful about making any statement that could be construed as promising to pay back the debt. Even acknowledging its existence would be unwise.
posted by thewittyname at 6:01 PM on March 26, 2007

The form letters on creditboards are very careful not to acknowledge whether you admit this is a valid debt.

A lot of times what happens is companies write off their debts after a few years. Then they sell the debt info to collection agencies who will try to collect the debts and keep the profit.

If this is the case, they will continue to keep contacting you. That is why I recommend sending the form letter to find out if it valid.

I had this experience for a $1000 medical debt over five years old, received numerous communications, but it wasn't on the credit report. I sent the form letter, and never heard from the company again.
posted by hazyspring at 6:30 PM on March 26, 2007

Is your honor worth $475?

Are you looking for community encouragement to act in an unethical manner?

What makes you think that a legal distinction of collectibility makes any difference as to the right/wrong of your actions?

If you incurred the debt, and you are not bankrupt, and you are able to pay it, why would you not pay it?

If you don't, you've given yourself permission to simply ignore your word when it doesn't suit you. You've set the stage for next year's character flaw. What will it be then? What do you say about yourself to your friends? Kids? Family? Community?

If none of that matters, keep your money.
posted by FauxScot at 7:15 PM on March 26, 2007

"If you incurred the debt, and you are not bankrupt, and you are able to pay it, why would you not pay it?"

As noble as you're trying to be, paying back this debt would actually do him harm. Were he paying back an individual, I'd agree with you, but corporations (especially the ones that old debts are farmed out to) have no honor, and no soul.

The money will not be going back to the people or company he owes it to, and it will be a scar on his credit report for another seven years. There is no honor to be had here.
posted by CrayDrygu at 9:06 PM on March 26, 2007 [2 favorites]

Thanks everybody! For now, I'll just sit tight on the one notice and assume they were fishing, as some of you suggested. If I get more notices, then I'll look into some of the other options.

Matty: I don't think there was anything hypothetical about what I wrote. I don't want to pay it.
posted by poppo at 6:24 AM on March 27, 2007

they can always sue. SOL is a defense to a suit filed which must be brought up in response to a lawsuit if they file one- but they CAN file....
- just fyi.
posted by Izzmeister at 6:56 AM on March 27, 2007

there is a separate 7-year limit, starting from the date of the original deliquency, after which the debt cannot affect your credit report. "Collection agencies cannot legitimately 're-set the clock.'"

When a similar issue happened, I spoke with a lawyer, and this is not exactly correct. Yes, there's a 7-year limit, BUT! (and this is the big but they get you on) that clock starts over when the debt is sold to one of these third-party agencies! So, if they kept the debt for 6 years, and then sold it, the new agency has another 7 years to harass you with.
posted by Spoonman at 10:53 AM on March 27, 2007

Yes, there's a 7-year limit, BUT! (and this is the big but they get you on) that clock starts over when the debt is sold to one of these third-party agencies! So, if they kept the debt for 6 years, and then sold it, the new agency has another 7 years to harass you with.

Not true... the clock can be reset if you make payment toward that old debt, say, six years later. But the SOL isn't affected by who holds the debt.
posted by funkbrain at 3:42 PM on March 28, 2007