Managing credit card debt responsibly is key to maintaining a healthy credit report and being able to get new lines of credit. It is always good practice to pay your bills on time and to maintain a strong credit score. In rare situations, however, paying old credit card debts may be detrimental.
Paying Old Debts
If you fail to pay back your debts on time, your credit score will suffer. A credit card agency can report the debt as unpaid or sue you in court, both of which lower your score. If you don't pay the debt, this negative impact can follow you for years and leave you unable to obtain new credit. Paying off the debt may help increase your score, but the late payments and lawsuit will remain on your credit report.
Age of the Debt
If you've not paid a credit card debt for a long time, you may not be obligated to pay it anymore. All debts have limits on them. This limit, known as the statute of limitations, exists in all states and limits how long a card company has to sue you to collect the unpaid debt. All states have different statues of limitations, ranging from as few as three years to up to 20.
Zombie Debt
Once a credit card debt has expired, meaning it is so old that the statute of limitations bars a creditor from suing you to collect it, creditors call it "zombie" debt. A zombie debt is one in which the only way a creditor has to collect is by trying to convince you to pay it. Typically, zombie debt collection agencies buy these debts for pennies on the dollar and try to get the debtor to pay, even though the debtor is no longer under a legal obligation to do so.
Paying Zombie Debt
Paying back a credit card debt that has gone past the statute of limitations is usually not a good idea. The creditor, or anyone who bought the debt, cannot file a lawsuit to get the debt, nor can it list the debt on your credit report, and paying it back will only result in you losing money. Always consult a lawyer in your area if you need assistance with understanding your rights concerning your credit card and the state laws governing your debt.
0 comments:
Post a Comment