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Contributor: Pay Your Debt, No Matter How Old

John Ulzheimer is a nationally recognized credit expert and contributor to On the Money. Learn more at Credit.comor JohnUlzheimer.com.

Q. I recently checked my credit report and noticed that I have a collection account on my record but it says closed. I have a lot of credit card debts and I am just recently able to afford making ends meet each month, so I have been concentrating on paying my debts. But my question is will it be beneficial to pay the collection amount since the account is closed, I had read that collection accounts remain on credit records for 7 years.... Thank you. --Victor

A: Hi Victor. That’s correct, the collections can only remain on your credit files for 7 years. And, even better news, if the collection was for written-contract debt then they could have only sued you up until year number four because you live in Texas. So, it seems as if you are home free.

Having said that…you won’t find a reputable credit educator anywhere that will advise you to not pay your obligations no matter how old they are. I’m a firm believer that if you truly owe it then you should pay it no matter how old it is. Try and locate the original creditor and let them know that you want to pay the ancient debt. If they tell you they’re not interested in your money then at least you’ve made the effort and get the karma points for doing so.--John U.


Q: I am in the process of paying off my credit cards. One of my creditors just filed for Chapter 11. Should I pay off that credit card immediately or keep paying a little more than the minimum payment and wait to see how the Chapter 11 plays out? --Wanda

A: Hello Wanda. It is possible that the credit card holdings/portfolio of that lender may end up being purchased by another lender. And, even if it is not, them filing for Chapter 11 doesn’t release you of your written obligation to continue paying what you owe or the terms under which you owe it.

You said something in your email that intrigued me: “Should I pay off that credit card immediately…?” If you have the ability to pay off the debt in full and stop paying interest on the revolving balance then you should do that ASAP. Then you can avoid that credit card altogether if you’re uncomfortable with the lender’s current situation. -–John U.