We can all agree that being completely debt-free is a worthy goal. For those of you who have achieved such revered status, congratulations on a job well done! The rest of us are doing our best to catch up.

Many people find themselves in debt and worse than that, falling behind on their bills to the point they are being hassled by creditors or debt collectors. What to do? Ignore the phone calls and collection notices and hope it will all go away at some point? That’s one way to handle it, but it’s not really the best answer. You might think the bad debt will eventually fall off your credit report and then you can move on. But what really happens? Here are a few tidbits to ponder. This is by no means an exhaustive review of the subject, but hopefully, it will give some helpful input if ever needed.

If you default on a loan, credit card bill, medical bill, or even utility or other bills, you run the risk of having your account sent to a collection agency. Previous late or missed payments leading up to this point will likely already have negatively impacted your credit score. Once the debt gets turned over to a collector, they will report it to the credit bureaus which means more bad news for your credit.

It’s not exciting to pay off a collection notice and you probably have other plans for the money, but it will stop the debt collectors from hounding you and will have several other positive effects as noted later.

The Ohio Attorney General’s website hassome FAQs you may find useful. A coupleare reproduced below. See the full list at http://www.ohioattorneygeneral.gov/FAQ/ Debt-collection-FAQs.

Can a debt still affect my credit even if it’s several years old?

Even if your debt is several years old and the deadline for filing a lawsuit to collect it has expired, your debt may still be reported to the credit reporting companies and will negatively affect your credit score. Accurate negative information may stay on your credit report for up to seven years; bankruptcies stay on your credit report for ten years.

My debt is several years old. can debt collectors still collect?

Yes. Debt does not expire or disappear until you pay it. If a debt is valid, you still owe it until you pay it off, no matter how much time passes. However, the law limits the amount of time during which a debt collector may take legal action to collect a debt. Statutes of limitation vary depending on the type of debt.

Still not convinced you want to tackle paying off all that old debt? Take a few minutes and peer into your future.

• Bad marks on your credit may cause other applications for new credit to be turned down, or they may be approved at higher interest rates because you’re deemed a higher risk for nonpayment.

  • Prospective employers may do credit checks on potential employees forfinancial positions, upper-managementlevel jobs, and security badges. Those bad credit marks may cost you a new, higher paying job.
  • You increase your risk of being sued
    by collectors. Never ignore a lawsuit summons even if you believe the statute of limitations has expired on your debt.
  • Finally consider the wisdom of Paul’s words in Romans 13:8 (NIV) which advise us to “Let no debt remain outstanding except the continuing debt to love one another….”«