Rachel fell into financial trouble in 1990 when she went through a painful divorce. She was unable to pay one of her credit cards. The balance was approximately $2,300. Eventually the credit card debt was charged off. In the fall of 2005, Rachel started receiving harassing calls from a debt collector stating she had to pay the $2,300 balance plus interest or they were going to sue her.

It is important that you know your rights as a consumer. For example, each state has a statute of limitations for delinquent debt. Once a debt passes that time limit, a collector can no longer sue you for payment. In Rachel's circumstance, her home state of Arizona prohibits creditors from suing for a debt that is more than six years old. So the collector would not be able to sue over the debt.

Contact your state Attorney General's office to find out the statute of limitations in your state. You should be aware that even if an item is no longer being reflected on your credit report (there is a seven year time limit), you may still be legally responsible for the debt if it is still within your state's statute of limitations.

If a collector contacts you to collect on a debt that is past the statute of limitations, consider hanging up the telephone. You are not obligated to talk to the collector. Follow up by writing a letter to the collection agency requesting that they stop contacting you. Send the letter certified mail.

The Fair Debt Collection Practices Act protects consumers from creditor harassment. This law came into effect because of ?evidence of abusive, deceptive, and unfair debt collection practices that have contributed to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to the invasion of individual privacy.? You can receive a copy of this act by writing the Federal Trade Commission, visiting the Web site at www.FTC.gov, or by calling toll-free at (877) FTC-HELP (382-4357).

The decision to pay an old debt is up to you. It is important that you understand though that if you make any payments on the old debt ? the account will be reactivated. Not only will the statute of limitations start over (in some states), but the item will also be reported on your credit report for up to seven years.