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HomeBlog Blog“Should I Pay Off A Six Year Old Debt Or Just Ignore It?”
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“Should I Pay Off A Six Year Old Debt Or Just Ignore It?”

March 16, 2013 by National Debt Relief

woman with help signI saw this question asked in a forum on personal finances. It was about a $400 debt from six years prior. The woman who asked the question reported that the statue of limitations in her state for collecting debts had elapsed. Since her creditor could do nothing to collect the debt she was wondering if she should just let it go until the seven years had elapsed and it dropped off her credit report.

It may be more than seven years

The mistake this woman was making was to think that this debt would definitely fall off her credit report after seven years. The rule is that debt doesn’t fall off seven years after it was acquired. It falls off seven years from the last collection notice or the last time you communicated with the collection agency. If at any time this woman had agreed to a payment plan or made any sort of payment, it would be seven years from then, plus 180 days.

Just pay it

Regardless of when the $400 debt will fall off or not fall off her credit report, the woman should pay the debt. It’s the honorable and ethical thing to do. If she pays it off, she’ll probably feel less guilty. Plus, an old debt like this could come back to bite her on the seat of her pants some day. This is because it might fall off her credit report but that doesn’t mean her creditor will ever forget it.

What happens when you default on a loan?

In this woman’s case, the debt was for cell phone service. While you might not think of this as a loan, it really was. Her cellular service provider had in effect loaned her money to use its service for 30 days (or longer). Credit cards and cell phone services are both technically loans. So, too, are medical bills and personal lines of credit. And how you treat these will have a serious impact – either negative or positive – on your credit score.

Do you understand the importance of your credit score?

If you’re not familiar with a credit score, it is a three-digit number that can vary from 300 to 850. The higher your score, the easier it will be for you to get credit. Conversely, the lower the score the harder it will be for you to get a new credit card, mortgage, an auto loan or any other form of credit. This is because whenever you apply for credit, your lender will first look at your credit score. In fact, in many cases, it won’t look at anything but your credit score.

What’s good, what’s bad?

A credit score of 720 and above will generally get you the credit you’ve applied for and the best interest rates. But a score in the low 600s and below will make it difficult for you to get any credit and if you do, it will come with a very high-interest rate. This is because potential lenders will see you at a poor credit risk and will charge you more to offset that risk.

Where your credit score comes from

A company whose name used to be Fair Isaac Corporation but is now known simply as FICO developed the idea of credit scoring. It’s based on a formula or algorithm that translates your credit report into a three-digit number. The three credit reporting bureaus, Experian, Equifax, and TransUnion have created their own credit score called VantageScore, which is growing in popularity. But most credit providers still rely on the FICO score. So this is the score you should know. You can get it at the website www.myfico.com if you are willing to sign up for a free 10-day trial subscription to its Score Watch program. Otherwise, you could buy it for $19.95.

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Moderate National Debt Relief Caller: Misty Transcribed WE 3/28/2021 Misty: The call, it may be recorded. Can you tell me do you recall how you heard about NDR? KYLE: I googled it, and then it went to Better Business Bureau or whatever it's called. And you guys have the highest rating. Misty: Which service did they actually provide for you? KYLE: So, basically, I enrolled all my credit cards into the program. And I stopped paying. And then, the lawyers reached out to the company's lawyers. And they've been settling, stuff like that. Misty: How would you describe your interaction that you had with your representative that you worked with on getting everything squared away? KYLE: Oh, it was excellent. Misty: Do you feel that the door of communication is still open if you have any questions or concerns? KYLE: Yes. Yes, I actually have been meaning to call you guys, too. [Laughs] I just haven't had time, but yeah. Misty: How did NDR work with you on your payment plan? Do you feel that they're flexible if you need to change the date? KYLE: Yeah. Yeah, if I ever had to. I don't need to, but I know that if I ever had to, I can just call them. Misty: What are your thoughts on the cost in relation to the quality of service you've received from them? KYLE: I'd say 10 out of 10. Misty: How has working with NDR impacted your life so far? KYLE: It's helped out a lot. I was really underwater with bills, and now I can breathe. And I managed it a whole lot better. Misty: Have you actually finished the program or are you still working through it? KYLE: Still working through it. I got one more card to settle. Misty: But we're making progress though, right? KYLE: Absolutely. Yeah, I think one of my cards was 17,000. They settled it for 6,000. That was pretty cool. Misty: Are there any other comments or even any suggestions on how they might improve their service for you? KYLE: Well, what I was gonna call them about was just as far as the payments that I make, and is there an actual date as to when it stops at 43 months, or if that was an estimated date? So, I guess I should have gotten more clarification in the beginning. But that's kind of what I had questions about. Misty: Well, that brings us to the star rating, which is 1 to 5. So, how would you rate your experience with NDR at this time, and 1 would be very dissatisfied, 5 is that you would recommend them to a friend at this time? KYLE: A 5. Misty: What would you say to that friend who asked you about it, just maybe one or two things you might tell them before they decide who they're going with? KYLE: That your credit is gonna take a hit, but it's gonna bounce back, and you'd be fine. Misty: Would it be okay if we shared your feedback on ConsumerAffairs.com for others to read it or in a similar point in their life where they're like, “I'm not sure who I need to go with,” but they can read reviews of people that have started the process with NDR? KYLE: Yeah. Is it gonna have my first and last name on the review? Misty: No, sir. Only first name, and we do not publish any contact information. KYLE: Okay. Yeah, that’s fine. Misty: I have kylecunningham1873@gmail.com. KYLE: Yes, ma'am.

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Kyle Cunningham
ConsumerAffairs Reviews

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