Partial payments are almost always a bad idea on old debts. They (almost) never accomplish anything good for your relationship with the creditor or for your credit report. And they can cause massive problems for you because they revive the debt.
What You Should Do If You Get Called on an Old Debt
What you should do is find out who, exactly, is calling you. Find out the company and the individual. Then listen to what they say. If it is convenient, record the conversation. If not, take notes. Ask questions.
What You Should NOT Do
A 20 year old debt, not paid for 20 years, is beyond all statutes of limitations in all jurisdictions of which I am aware. However, you still “owe” the debt in some theoretical way. It remains a “debt,” and that turns out to be important. That’s because it can still be “revived” by any kind of payment.
You should know that they can’t sue you for such an old debt unless you revive it. They can’t hurt your credit report if you don’t pay it. And they can’t do anything good for you if you do pay it.
In my opinion, you should never pay such a debt. Unless you have a particular reason. A good reason might be that you need to do business with them and they have a policy of not doing so if you owe them money (utility companies are like this). So those situations might be different, but you still need to be careful.
Fair Debt Collection Practices Act
Just listen to what the debt collector says.
Let’s say he threatens to sue or tells you anything contrary to the above about hurting or repairing your credit. That would violate the Fair Debt Collection Practices Act (FDCPA). It is illegal for a debt collector to threaten you with action that he either does not intend to do or could not legally do. It is also illegal to deceive you about what he might do FOR you.
Suppose, however, he tells you that they can’t sue you, but that you still owe the money, and “wouldn’t it feel better” to pay it? Some people might say they have no money, and so the debt collector tells them, “No problem, you can just make a partial payment. Then, if you ever get any more money, you can pay some more…”
That also violates the FDCPA in my opinion because it is deceiving you and trying to take advantage of something most people don’t know. If you give someone a gift and say you’ll give them more later, that creates no obligation to pay. If you make a partial payment on a “debt,” you revive the debt and can be sued on it again. Even one that is many years past the statute of limitations and beyond causing you any harm,
Suggesting Partial Payments is Sneaky
Debt collectors are often trained to take advantage of people’s ignorance and to suggest partial payments on debts that are beyond the statute of limitations. If they try to get you to do that without telling you that you will revive the debt by doing so, they are misleading you. And that violates the FDCPA.
Partial Payments Revive Old Debts
By making the partial payment, you will revive the debt against you in its entirety, allowing the company to harass and sue you, and possibly even to damage your credit report again. Never, ever do it. Instead, take careful notes, and then go find an FDCPA lawyer to sue them.
If they get it all right and tell you that a partial payment would revive the right to sue you, tell them to go away and never call again. If they do, get a lawyer and sue them for that.
Other things to know
Partial payments will not just revive a statute of limitations after it has passed – it will extend it if it has not passed. Thus if the debt is five years old and getting close to the statute of limitations, your part payment will start the clock ticking again all over.
If you are being harassed or sued for a debt and need more information, be sure to check out our products and materials at Your Legal Leg Up. We have everything you need to protect your rights.