Paying a credit card or loan in good standing is a pretty simple task; you just go online or send a check to the address on your statements. However, if you have older bills that you were not able to pay in the past but now have the means to cover, it may not be so easy. If you have been lucky enough to avoid a barrage of collection calls and letters, you may not know who is holding the debt. You also may not be sure about the best way to deal with a collection agency, or if it is even a good idea to pay the debt.

Check Your Payment History
Before trying to pay an old debt, you should first confirm how long it has been since you last made a payment on it. Every state has a statute of limitations that determines how long a creditor has to sue you to collect a debt. (You can find out what it is for your state here.) While there are many reasons that people pay a debt past the statute of limitations (such as a lender requiring it to get a mortgage or feeling a moral obligation to), others may not feel it is necessary if they don’t have to worry about legal action being taken against them. The date of last payment can typically be found on your credit report. You can get a free copy of your credit report from each of the three credit bureaus, Equifax, Experian, and TransUnion, once a year from the Annual Credit Report Request Service (www.annualcreditreport.com, 1-877-322-8228).

View Your Credit Report
Viewing your credit report can also help you locate the current holder of the debt. There may be multiple listings for the same debt—see which agency has the most recent report date. Ideally, the collection agency’s contact information will appear on your credit report, but if not, you may have to search for it online. Another possible way to locate the debt is to call the original creditor and ask what collection agency they sent it to. Then call the collection agency to see if they still have the debt. If not, ask who they sold it to. You may have to repeat this a few times before locating the debt. (Unfortunately, if their records are not thorough, checking your credit report may be your only option.)

Negotiate
Once you find the agency that you believe holds your debt, call them or send them a letter asking them to verify that they have it. Once verified, you can negotiate a payoff. Collection agencies are often willing to settle for less than the full amount owed if you pay a lump sum. Typically, the older the debt, the bigger the discount you can get. In exchange for paying off the debt, ask if they will remove the account from your credit report. At the very least, they should report that it is paid (although this does not raise your credit score like having the account removed does.) You should always get a settlement agreement in writing before sending a payment. If it is not affordable to pay off the debt all at once, it may be possible to make smaller monthly payments until the debt is satisfied. However, keep in mind that in most states paying even one dollar on a debt restarts the statute of limitations, so a payment plan typically only makes sense for more recent accounts.

With a little bit of research and negotiation, you can check paying off old debts from your to-do list.

Revised January 2016.