Ask The Money Coach

Q: I Opened A Credit Card Back in College in the Year 2,000 and I Have Never Paid it Off. Should I Pay It or Not?

A: If the credit card is still open, then by all means pay if off if you can. But I think your question is referring to an account that you had a decade ago that went delinquent because you never paid it at all. If that’s the case, my advice to anyone in this situation is this: if you can afford to pay a debt, then go ahead and do it. That’s the right thing to do because you did, after all, go out and make the charges. No one forced you or put a gun to your head to make you spend on that credit card. Also, you will learn a good financial lesson in honoring your obligations. But in other instances, especially in this tough economy, certain old debts are best left in the past.

Some Old Debts Are Best Left in the Past

If you are cash strapped and really don’t have the money, or it would be a big financial burden to pay that old debt, then from a credit management standpoint, you should probably just let that old debt stay in the past. Negative information, such as a late payment or collection account, can stay on your credit report for seven years from the date of last activity. So if you last used or paid that card in, say, the year 2003, then in 2010 it will fall off of your credit report. Also, you should know the statute of limitations for credit card debts in your state. They can be anywhere from 3 to 10 years. Once the statute of limitations expires, a creditor can’t sue your, try to garnish wages or get a judgment against you for non-payment.