Q: Do I have to pay any debts owed on credit cards that have not been paid at all in the past 5 years? Are credit card companies allowed to sell your account and can those companies come after you? Also, is there a time limit on when a credit card company can collect or take you to court? I want to know how these things will affect my credit history and credit score because I’m thinking about taking advantage of the $8,000 first-time home buyer tax credit and buying a house.

A: The simple answer to your question is most credit card companies can come after you for an uncollected debt for as long as permitted by law. You need to know what the statute of limitations is for your state to determine if a company can still come after you. In some cases, companies can come after you for up to ten years. The statute of limitations doesn’t necessarily tie into the last time you paid the debt. It takes into account how much time has passed since the creditor attempted to collect on the debt.

And, yes, credit card companies (and in fact most creditors) can sell their right to collect the debt from you to another company. The companies that typically buy those rights are called collection companies or collection agencies. If a collection agency buys the rights to collect a specific credit card debt, it can then chase you for the amount you owe plus extra fees and interest on the debt.

While many times collection agencies are trying to collect a legitimate debt, you need to be careful. There are times that debts are no longer collectible but companies will try to collect anyway. The Federal Trade Commission (ftc.gov) carefully regulates debt collectors and publishes the Fair Debt Collection Act on its website so that you’ll know what a debt collector can and cannot do in trying to collect from you.

For example, if your state has a statue of limitations of four years and in the fifth year a collector comes knocking on your door, you can refuse to pay. But what you shouldn’t do is admit that you owe the debt. If you admit the debt, you might give that collector the right to pursue you for the debt for another four years, or longer.

You should also not make a part payment on that old debt. If you take any action that renews the debt can give that creditor the right to go after you.

June 3, 2009