How to Handle Old Debt

There’s a debate going about how to handle old debts that haven’t been paid yet. If you have some old debts that you haven’t taken care of, you’re probably curious what that has done to your credit score, and you’re probably still receiving calls from collection agents. The question is, should you pay the debt or continue to ignore it?

State credit card laws are all different, with a statute of limitations in place. Debts cannot be collected after a certain amount of time, but beware- if you make a payment or other arrangement on the debt, the clock resets and the statute of limitations is no longer in effect.

A lot of people end up letting the debt ride and expire from their credit report, which will happen after seven years. However, there are some cases where you should pay your debt, even if it has expired.

It’s better to have a paid debt on your report than an unpaid one. If you need a loan or you’re going to buy a house or a car, settled debts will raise your score and make you more attractive to lenders.

Keep in mind also that any debt you settle could be considered taxable income. It’s perfectly legal for a collector to report unpaid and uncollectable debt to the IRS.

Paying your debt is the right thing to do. When someone defaults on a credit card, they make it harder for everyone else to get credit because the company will raise interest rates and tighten lending standards. Should you pay off that old debt? It’s really up to you. If your credit score is a top concern (if you’re applying for a car loan, an apartment lease, or even a job) then you may want to consider settling that old debt.

For online advice with credit card debts, visit creditcarddebt.org now.