Do You Have to Pay Off All Your Debts?

Do You Have To Pay Off All Your Debts
Mike Randall
By: Mike Randall
Updated: March 1, 2016
Experts share their tips and advice on, with the goal of helping subprime consumers. Our articles follow strict editorial guidelines.

For most people, the idea of paying off old debts is simply a matter of taking financial responsibility – an obligation to repay money borrowed never expires.

That being said, there is a difference between legal obligations and obligations that are of a moral nature.

This question has more than one answer.

My personal belief is any debt incurred, regardless of how long ago, should be paid back to the original lender.

That doesn’t mean it must be paid back in full or with accrued interest. It means a payoff must be negotiated and agreed to by both you and the lender.

It also doesn’t mean it is always possible to repay the original lender, as they may not even hold the debt any longer.

That being said, there are certain legal obligations to repay debt in addition to any moral ones that exist.

Typically, a debt that has gone into default stays on your credit report for seven years.

After that time, it will usually be dropped from your credit report, but the original holder of the debt may still have legal recourse to claim it from you.

For example, if there was never a legal judgment made against you, the courts may still entertain a default claim.

However, this is unusual because most debts get written off as uncollectible before that length of time.

“Begin by thoroughly combing

through your credit report.”

Let’s say you were able to pay off your old debts.

The first step to take would be to get a copy of your credit report from all three credit bureaus or a consolidated report that shows all of your debt obligations.

Next, go through the report to see which ones are still active and less than seven years old, as these will be the best ones to pay back first.

For any debts that show as uncollectible or forgiven, it may require contacting the creditor and trying to negotiate a settlement. However, this approach may turn out to be far more difficult than you think.

By initiating contact with a creditor who has already forgiven an old debt, you may be required to activate an old account.

This can start the clock ticking again from day one and will refresh the debt on your credit report.

For any debts that are seven years old or later, the best course of action, believe it or not, may be to let the matter rest.

In some states, the repayment of a debt like this exceeds the statute of limitations and is time barred from being collected.

So if you still feel a need to catch up on your debt obligations, it is to your credit that you want to do so.

Begin by thoroughly combing through your credit report and paying back all of the active outstanding debts.

For the remainder, chalk it up to karma that you had the right intentions and let the legal system prevail.

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