Need to pay off an 11 year old debt, should I negotiate or pay the balance?

Question

I am buying a home, and when I went over my credit reprt with my agent, we discovered I had a debt of $2,500 in collections that needs to be taken care of to get full approval. It wasnt much of a surprise, becuase in the past especially in my younger years, I was irresponsible, but I thought I had taken care of my debts a few years ago. In any case I wasnt sure why, but what I found out in 1997 I had a credit card that went unpaid then charged off, then out of sight out of mind. Until another company apparently took responsibility for the debt, and reopened it. I am sure I didnt have that big of a credit line, so I am sure interest is included in the total. I want to take care of it, and I am sure the easiest way is pay the total, but since its so old would it be worth to try to negotiate a lower payment such as 1500 just to get it taken care of, or should I just pay the full balance? Thanks for the advice.

Answer 1

A credit card that you defaulted on 11 years ago should NOT be on your credit reports.

A credit card that you defaulted on 11 years ago is long past the collecting SOL.

If you defaulted 11 years ago and it is still reporting then they have "illegally reaged" it to report it for a longer period than it should be reporting.

Look over the reports to make sure they haven't further violated your rights by placing a phantom payment on the account (it happens)

Fire off letters to the CRA's it is reporting with, send the letters certified mail (but not return receipt).

Claim the account is obsolete and must be removed.  

Keep copies of everything.

If it is verified, and especially if you are denied the mortgage because of their illegal reporting - speak to a lawyer.

Answer 2

The statute of limitations should make the debt void...so technically if you hadn't made a payment in those eleven years it should be gone...unless it's a student loan.  The fact that it isn't is a concern.

Now assuming the house is at a price too good to be true, then you don't want to lose it over this issue if that is truly the reason for the hold up - although again it should be past statute of limitations...bankruptcies are only on records for 10 years...then yes, call them up - negotiate a price to pay and get it over with -