Many debtors are under the mistaken belief that once they settle an old debt it is removed from their credit report. This is false. Information on your credit report can remain there for 7 to 10 years. This time frame is calculated by the date of last activity. For example: If you have a credit card account that has been charged off as of November 14, 2005, then the item would be removed from your credit report sometime after November 14, 2012 (7 years later). But if you decided to pay that credit card debt or to settle the credit card debt, that action would change the date of “last activity.” This is what would happen to the credit card account mentioned above:
If you paid off that credit card on October 20, 2009, your credit report reflecting the “last activity” as October 20, 2009, restarting the clock. Therefore, this credit card would remain on your credit report until sometime after October 20, 2016.
When you’re considering repaying a very old debt (one that is nearing the 7 year limit) you may want to allow it to “time out.” Of course, if a creditor is suing you or garnishing your wages/bank account, you may want to consider bankruptcy. Bankruptcy will allow you to discharge the debt. Contact a Dallas-Fort Worth bankruptcy attorney to discover more of your bankruptcy options.