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Dave Says: Taking Care of Old Debts

8742   Dear Dave,

   I have some bad marks on my credit report.
   What’s the best way to handle them?

   Patricia

   Dear Patricia,

   There can be three types of nasty items on your
   credit report. There are errors, which shouldn’t be
   there at all. There are old payments that you paid
   late, and really, these are just a report of history.
   Then there are debts that have gone bad. This
   means you didn’t pay them. If these are the types
   of items you’re talking about, you’ll have to go
   back and clean them up. This will mean either
   making payment in full or settling them at a lower,
   agreed-upon amount.

Probably the biggest headache will be finding exactly who to pay. There’s a good chance some of them have been handed over to collection agencies. If this is the case, they’ll try to charge collection fees, and in some cases even double the amount owed. You’ll have to negotiate with them for a more reasonable settlement amount. So there’s going to be more than just a financial hassle attached to this endeavor.

But still, even if the debts have a date when they were supposed to “fall off” your credit report, I’d still pay them. Collectors will still chase you in an effort to collect even if they’ve fallen off your record. They aren’t supposed to do that, but many do. And it can hit you at exactly the wrong time—like when you try to get a mortgage.

I think this is a good idea, Patricia. Just expect a little work and a few headaches in the process. Getting this stuff out of the way will improve your quality of life, and besides, it’s your debt. It’s your responsibility to pay it, plus it’s the honorable thing to do!

—Dave

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