Pay it because you owe it

Dear Dave,

I got a department store credit card, using my real age at the time, when I was 17. I ran up a debt of $150, and the balance has grown to over $350. This was 10 or 12 years ago, but a debt collection agency started calling again the other day wanting the money. Hasn't the statute of limitations run out by now? What should I do?

Elizabeth

Dear Elizabeth,

There is a statute of limitations, but there are a couple of other things to consider, too. First, the debt is not collectible because a minor alone cannot enter into a legally binding contract in any state. The second thing is they can screw up your credit report for a very long time, and it sounds like they're in the process of doing that right now.

Here's my advice. Call them and explain that they are past the statute of limitations, and that you are considering suing them. After that, remind them that you were a minor when someone approved you for the card, which means the store you signed up with can be sued as well.

However, since you did take stuff from the store, offer them the original $150 to settle the deal. Get it in writing that the account is settled in full by this amount, and don't give them electronic access to your money. When you get the settlement offer in writing, keep a copy of the letter and a copy of the cashier's check you'll use as payment.

Pay it because you owe it, Elizabeth. It's a moral issue. And hopefully as a result you can get these kinds of people out of your life for good!

-Dave

Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.