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All of them work. Which one is best for you?

3 minute read

Debt comes in many forms. For the non-professional it can be difficult to understand how it all works.

Expired debt is just one other form of debt you’ll have to deal with. It’s the type of payment that has passed the statute of limitations. That means a creditor can’t sue you or pursue you for it any longer, although many of them will still try.

If it has expired it will still appear on your credit record and debt collectors can still come after you. Legally there’s nothing they can do to you, but dealing with expired debt can still be a frustrating experience.

This guide is going to show you what you can do about this debt.

1. Ignore it

If you’re not a massive fan of credit cards any longer, or you’re stressed about debt, you might want to just not borrow in the future. That means you don’t have to worry about this type of debt still existing on your credit record. As already mentioned, you have no obligation to pay at this point. Legally there’s nothing they can do to you.

But ignoring it does come with risks. The average consumer started the year with $15,310 in consumer credit card debt. This debt might expire over time, but you can still be harassed by the collectors. It can be a horrible way to live your life.

2. Pay it

Of course, you can pay it off and get that monkey off your back. If you do decide to pay your debt, you should know that there’s a right way and a wrong way to do this. First of all, never give out any of your bank details. You don’t want to inadvertently let them raid your bank account.

A debt like this should be paid in a lump sum, with any interest and fees on top. Collection agencies are notoriously hard to deal with and you don’t want to enter into a relationship with them.

3. Move from it

Depending on the type of debt in question, you can just move away from it. There are people with lots of expired debt who have just moved out of the state, or even to another country. They might try to pursue you for the money, but evidence has shown that most agencies will simply let it go.

Remember that if you do move, you have no obligation to let them know you’ve left. Leave without saying a word and they’ll often find that it’s not worth the hassle to track you down when they can’t legally do anything to you anyway.

4. Counter it

You already know that expired debt stays on your credit record. It’s a big red flag for anyone who’s applying for credit. Even if you pay off that amount, it’s still going to be on your record for a long time. For many people, this is a reason not to pay it off. You should begin working on rebuilding your credit score immediately.

There are those who will start working on taking out cards for those with bad credit and start using them responsibly. You can easily rebuild your score, especially when those who have entered bankruptcy are capable of doing the same.

5. Discharge it

The final way to get rid of debt like this is to discharge it. Filing for Chapter 7 bankruptcy will discharge even expired debt. If a collection agency still tried to track you down, you would have grounds to sue them. It’s a clean slate and a brand new start. But getting rid of it this way will leave you dealing with a number of consequences.

First of all, you have to remember that bankruptcy essentially stops you from getting credit for at least seven years. Few companies will touch anyone with a bankruptcy charge on their record. It will also stop you from sitting on any board of directors.

This is the nuclear option and it’s not one you want to take without due diligence. But it’s an effective way of getting out of debt.

Last Word — dealing with the problem

There are many ways of dealing with the problem of expired debt. There’s no right or wrong way to do this. You need to make sure that it’s the right decision for you. Think about the different options on the table and determine the consequences of each.

On a side note, remember that any payment, no matter how small, will reset the clock on the statute of limitations. Think twice before you try to pay it off.

How will you handle this debt?

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About the Author’s writers are journalists, personal finance experts, and certified credit counselors. Their advice about money – how to make it, how to save it, and how to spend it – is based on, collectively, a century of personal finance experience. They’ve been featured in media outlets ranging from The New York Times to USA Today, from Forbes to FOX News, and from MSN to CBS.

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