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After settling a credit card debt, is it legal to collect remaining debt?

After settling a credit card debt, is it legal to collect remaining debt?

Q: Can a debt collector restart the clock on my old debt?

Generally, a debt collector cannot restart the statute of limitations on an old debt simply by contacting you. However, if you acknowledge the debt or make a payment, it may reset the clock. It's important to understand your rights and the specific terms of the debt before engaging with collectors.

Q: Does disputing a collection restart the clock?

Disputing a collection does not restart the statute of limitations on the debt. However, it can affect how the debt is reported on your credit report. If you dispute a debt, the collector must investigate and respond, but it does not change your legal obligations unless the dispute is resolved in your favor.

Full question:

I settled a revolving line of credit back in 2003 with a collection agency for a lower amount then what was due to resolve the debt. On my credit report it states account settled. I just received a letter dated 04/09/07 from A Law office in CA that they are collecting on that very debt. it looks like it is for the remaining balance that would have been due if I had not settled my account. Is this legal? All my paperwork states the account has been settled. My credit report shows account settled with no balance due. I have even bought a house since all this has occured.

Category: Debts and Credit
Date: 04/07/2025
State: Minnesota

Answer:

Depends on the terms of the settlement and whether there was a default in the settlement terms. If you have something in writing and you complied with the terms, you should inform them and the attorney. Even if not in writing, if the agreement was verbal and you complied you should also contact them to determine why you are now being pursued. It could be a mistake on their part. You should attempt to document communications to them and follow up in writing.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can a collection agency open an old debt as new?

A collection agency cannot legally treat an old debt as new. Once a debt is settled, it should be marked as such on your credit report. However, if the debt was not properly settled or if there are remaining balances not covered by the settlement, the agency may attempt to collect. Always verify the terms of your settlement agreement and ensure that the debt is accurately reported.