Home > Managing Debt > Reader Question: How to Handle An Old Debt That’s Resurfaced

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We received the following question from a reader about an old credit bill that has resurfaced:

I work in an industry where travel is mandatory and is integral to the job. Therefore, I must carry a corporate credit card. This was never an issue until recently, when my employer switched corporate card vendors to American Express.

Approximately 12 years ago—in the summer of 1998, after a very traumatic accident—I defaulted on my credit cards.  It was a horrible nightmare and it was anguishing not to be able to take care of my obligations. I spent the next 10 years trying to come back from that horror.

At the time, 12 years ago, I did walk away from my two American Express cards because they would not work with me or help work out some type of payment plan. I never looked back. There was nothing I could do. They did slam my credit for 7 years and also tried several times to re-age the defunct accounts.  I would gladly have worked with them, if I could have worked out a plan with them.

After battling American Express about the re-aging of the accounts, I knew I never wanted to deal with them again—ever. However, my employer recently switched to American Express as the corporate travel credit card.  Even though the DOLA (Date of Last Activity) was in the year 1998, and I went through debt prison for 7 years, they want me now to pay off a reduced sum … but they will report this to the credit bureau as a “newly” satisfied debt and this will slam my credit for another 7 years.  On the credit report, it would appear to be a “newly” delinquent account that was satisfied.  I was told to run away and not touch this “offer.” It would “start the clock” over again in terms of the delinquency and statute of limitations.

I feel “stuck” because my employer has chosen them as the vendor versus another travel credit card.  Do I have any rights regarding this since the original debt was written off in 1998 and it is now 2011?  Is there anything I can do about this?  My credit report is actually “clean” at this point and my FICO is approximately 730.  I am also looking to buy a house very soon—in the next 6 months, hopefully.

I hope my question makes sense. My current employer is trying to work with me … because I have been a good employee. However, I have been personally paying my own travel expenses until something can be worked out with AMEX.  I feel like it is a type of financial extortion.

Thank you,

Kate

Kate, you are well aware that you are in a difficult situation here. You don’t say how much you owed and how much American Express is trying to get you to pay, but I am assuming it’s a sizable amount that will not be easy for you to come up with to just put the matter behind you. And even if you can, you may not want to, as I explain in a moment.

I asked Rick Flume, a bankruptcy attorney from San Antonio Texas to weigh in on your questions regarding your rights.  He agrees completely with the advice you were given to “run away and not touch this offer because it would start the clock over again in terms of the delinquency and statute of limitations.”

[Related: How to Order Your Free Annual Credit Report]

Flume also pointed out that once you reopen the debt you also reopen the possibility that American Express could try to sue you to collect. You’ve had a bad experience with them in the past, and there is always the possibility that it could get ugly again.

Flume also weighed in on the questions: “Do I have any rights regarding this since the original debt was written off in 1998 and it is now 2011?  Is there anything I can do about this?”

In that regard, Flume says you have the right to simply ignore the creditor.  “Although the Statute of Limitations can be used as an affirmative defense to a lawsuit, there is no prohibition against the creditor making contact by phone or mail to demand or request payment,” he said.  “My advice would be for her to remind the creditor that she is aware that the date of last activity on the account was several years beyond the limitations period, and that she has no desire to pay or “re-age” the debt.  If she makes a payment or even sends in a letter to the creditor acknowledging that she owes the debt and intends to pay it in the future when she is able, then the limitations period is restarted.”

What about the fact that American Express refuses to issue you a corporate card unless you agree to pay off the old debt? Unfortunately, credit isn’t a right, it’s a privilege and as long as creditors don’t illegally discriminate (based on race or gender, for example), they do have the right to refuse to extend credit to you.

[Featured tool: Get your free Credit Report Card from Credit.com]

Flume agrees. He said, “Another issue is that the Statute of Limitations is a one-way shield: it can be used as an affirmative defense to a debt collection lawsuit, but it cannot be used to force a credit card company to extend you credit. If the credit card company does not want to deal with her, then she will have to simply use a different credit card company.”

Kate, it sounds like your employer appreciates the job you are doing. Can you come up with another solution here? Perhaps you can get your own credit card with another issuer, and ask your company to simply pay that card issuer for your travel expenses. Or perhaps you can submit an expense report and get reimbursed. As long as you file your expense reports promptly and your company pays promptly, you should be able to avoid interest on those purchases.

© Feng Yu | Dreamstime.com

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  • charles

    I have a old that is back in 2001 and did not hear from them for 7 yr now they are calling me for payment it is over 7yr can they keep calling me or can I see a lawer and put a clame in on them for harrisment pleas let me know what I have to do to clear this up

    • http://www.Credit.com Gerri Detweiler

      What state do you live in Charles?

  • Vicki

    Dear Gerri, I have a question?
    I just received a bill from an Ohio Court of Common Pleas for services 18 years ago.
    This was in relation to my ex-husband being delinquent on his child support. I had a
    lawyer at that time that never mentioned the fees. I paid the attorney for his work on my case. Shouldn’t these charges have been in with the costs of the attorney?
    I have never received a bill from the court through these last 18 years. I am now laid off
    and can not afford to pay this bill of a little over 100 dollars. Is there some statute of
    limitations?

    Thank you for your answer
    Vicki

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