Best way to handle old debts

HOUSTON If you owe someone money, pay it. Having said that, if the debt is really old, how you pay it matters.

Like a lot of people, Eneditra Johnson has been getting calls about an old debt.

"It's a computer company that I got a Compac computer from in like 2001 or 2002," she recalled.

The store Johnson bought the computer from has likely sold the debt to someone else and it's that new holder of the old debt trying to the collect money.

The student lawyers at the Texas Consumer Complaint Center have been getting dozens of calls from people who are seeing old debt coming back to life. There are some important time frames to keep in mind. First, the original holder of the debt has four years to seek a legal judgment against you. After that you cannot be sued on the debt.

After seven years, the debt can no longer appear on your credit report. But if you owe someone money, you owe it forever and the debt can be resold over and over until you pay it.

University of Houston Law Professor Richard Alderman said, "If you really cannot afford to pay the debt, let the debt collector know."

But Alderman says if you can pay a portion of the debt, you may be able to reduce the amount you owe. Ask the debt collector if you can settle for a lower amount. If you owe $500, offer to pay $250, if that's what you can afford. If the debtor agrees...

"Get every single word in writing," Alderman advised. "Make sure you have it spelled out, for so much money we settle this in full, the debt will be marked as paid in full, as settled in full and then pay it in full."

If you can only pay a little, it may be best to let the debt go unpaid until you can come up with enough to fully erase the debt because...

"If you make small payments on it you start this lawsuit clock over again," Alderson explained.

Simply speaking to a debt collector does not start the clock over again, making a payment does that. So if you cannot settle in full or feel you do not have the ability to pay in full over time, it's best to put off paying an old debt until you have the ability to pay.

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