Handling Old Debts

Did you know that if you have had an outstanding debt for a very long period of time, this debt can in some circumstances become “stale”. If the outstanding debt in question meets certain tests, which would classify it as stale debt, then you may not need to ever repay that debt and do debt consolidation.

Handling Old Debts

When is a Debt Considered Stale?

If you have an outstanding debt against which you have not been making any payments for over six years, and the creditor did not have a judgement issued against you to have this debt paid, then the debt is considered stale and does not need to be paid.

If a judgement was issued by courts for you to pay the debt, but this judgement is older than 12 years, then the debt is still considered stale.

Can the Situation Change?

A debt that is by all definitions stale can be refreshed by a common trick used by debt collectors. They will contact someone whose debt is effectively pass the use-by date and ask them to make a payment. Most people will say that they can not afford to make a repayment and that is why the debt is unpaid. They may say, surely you can afford to pay at least $1. If you agree and make this payment, the debt is refreshed and is due and payable for another six years.

Therefore if you owe money on old debt and are uncertain as to whether you should be making payments or can ignore the debt collectors, it is best to seek the professional advise of a debt councellor. We at our company work with a team of very experienced and professional debt specialists who can answer these and other debt questions for you.

What if you Wish to Borrow Money in the Mean-time?

Unfortunately when it comes to borrowing money, lenders may  credit report. If you wish to apply for a loan and you have some unpaid debt on your credit report, even debts that go back a few years, you may find that your loan application is declined unless you repay the debt. The debt may be 4 or 5 years old and you are hoping that if you wait a little longer it does not need to be paid at all. However in most cases lenders have a different view. Even non-conforming secured lenders want to see that all outstanding debts listed on your credit report are settled before they advance you any  money.

Therefore the decision to treat the debt as stale or to pay it back ultimately needs to be made by you, however if the debt has not been paid for over six years without a judgement, or over twelve years after a judgement was issued, there is no longer a legal obligation for you to pay.

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