Paying Off Old Debt

Very often consumers ask me if it makes sense to pay off their old collection account debts or should their focus be on establishing new, positive credit information on their credit report. While the answer is never straightforward, here are some things to consider: How old is the debt? Collection accounts remain on a credit report for seven years and six months from the date of the last activity on the original account. This time can be extended by: Making a payment on the account Acknowledging in writing that you owe the debt Agreeing to make payments on the account when it is near the maximum seven years that it can remain on a report. Payments made after seven years may extend the time...

Posted on Sep 27, 2010

Should I Contact My Creditors?

Q: Recently, I received letters from my credit card companies stating this is my last chance to work with them before being written off as bad debt. At this point, I still do not have enough income to pay them even the slightest amount. Should I contact the credit card companies, or continue to ignore there calls and letters? If I speak to them, what can I accomplish? How does this affect my credit over the long term? A: The debt to concentrate on is “essential” debt–things like the mortgage, utilities, food, medicine, and car payments. As to your question about contacting the creditors, that has to be your decision. However, I feel it is always a good idea to communicate with...

Posted on Aug 27, 2008