Sunday, August 3, 2014

Q&A: Does Agreeing to Pay Collections Restart the SOL?

Hi Lee,

I have two negative reports on my credit report, they are both supposed to fall off in 2 years. I made the mistake of calling both collection agencies, and agreed to make payments in the next couple of months. I can certainly pay them, however, I am worried that paying the full debt may reactivate the 7 year negative credit history. 

Can agreeing to pay the debt restart 7 year negative history? These accounts are so old, I have no record of any paperwork, and no one can seem to tell me the exact date of first delinquency. 

Should I just pay the full debt, have them agree to report to credit bureaus as 'paid in full?' Will this help my score and to have it removed from my report when the 7 yrs is up?

Thanks for any advice you can offer.



You're confusing the statute of limitations for lawsuits with the credit reporting period. The statute of limitations is the amount of time a collection agency has to sue you and the credit reporting period is the amount of time an item can remain on your credit report. These are two entirely different time periods.

Making a payment on a debt that's in collections does NOT restart the 7-year credit reporting period. The clock starts when the debt first becomes 180-days delinquent. Although you may not know when the date of first delinquency occurred, pulling your own credit reports should show you when the negative entries are scheduled to be removed from your credit report. If it were me, I'd pull my credit report right now and print it out. That way, if the collection agency (or any other debt collector that may purchase the debt in the future) decides to "re-age" the debt and reinsert it onto your credit report, you'll have rock solid evidence to provide to the credit bureaus proving that the debt in question is obsolete and should be removed.

Unfortunately, making a payment on your debt does have one very negative effect: It restarts the statute of limitations in most states (in some states you must agree in writing to make a payment before the SOL begins anew). Once the statute of limitations is back in force, the collection agency regains the right to sue you. You don't mention which state you're in (the SOL differs by state) but you did mention the debts are old. Thus, its likely the statute of limitations has already expired.

Agreeing to pay collections--and then following through with that promise--can be a very risky prospect if you're not paying the debt in full all at once. This is because, unless you have a written agreement with the collection agency that says otherwise, the company has the right to file a lawsuit against you as soon as the statute of limitations kicks back into gear--even if you haven't missed a single payment. As it stands, if the SOL has expired, the collection agency's hands are tied. They only get the money if you pay voluntarily.

So don't panic. It's easy to become intimidated by a debt collector and agree to pay a debt when you can't (or shouldn't), just to get off the phone. The good news is that agreeing to pay won't likely hurt you. If you weren't merely intimidated and you genuinely want to take care of your debt, make sure that you secure a solid agreement, in writing, with the collection agency that stipulates the company agrees not to sue you unless you miss a payment.

Wanting to take care of unpaid debts is admirable, but be warned: paying off collections does NOT improve your credit scores. Collection accounts have the same negative impact on your scores whether they're paid in full or you've never paid a dime.

In my opinion, paying this debt is pointless. It doesn't help your credit and the credit reporting period doesn't change. Whether you pay it or whether you don't, it will still remain on your credit report for another two years.

Best of Luck,



  1. I guess she shouldn't pay without a fight; I intend to show up and take the statute of limitation defense (I received a "Notice to debtor"-NJ) after so many years! Can I do it?

    1. Sure you can (I'm assuming that since you said you intend to "show up" that means the CA is suing you). Just make sure you bring documentation with you proving your case. And make sure you respond to the summons with your intention to show. They can refuse you otherwise. Don't be surprised if the collection agency suddenly drops their case once they receive notice that you will be fighting it and using the SOL as a defense.