This outstanding debt raises the question: if faced with a similar debt, after determining that it is legitimate, could it possibly have a negative impact on your credit score?
$73 Outstanding Debt a Miscalculation
The outstanding debt was a direct result of human error. In 1976, 17-year-old Alice Mainville was out of work when her union asked employees at her bakery job to not cross the picket line of another union that went on strike.
Since she didn’t work for a few weeks, she was eligible to file for and receive unemployment benefits. The state, however, miscalculated the amount she should receive on her unemployment check, so 35 years later — long after she’d moved to Massachusetts to start a new life — the state of New Jersey tracked her down for a $73 debt.
Last fall, she received a notice from the New Jersey Department of Labor that explained she owed the state money due to its own miscalculation.
Mainville assumed the debt was for her mother since it listed no Social Security number and used her maiden name, which was changed 12 years prior. It wasn’t until she replied with her mother’s death certificate and received another notice with her own Social Security information that she realized the debt was her own.
Impact on Credit Score
So how will the debt impact Mainville’s credit score?
Brian Murray, spokesman for the New Jersey Department of Labor, told ABC News that he believes the outstanding debt won’t impact her credit score, because it is so small. If she refused to pay, the debt would still remain active, but it would not accrue any interest.
Of course, this doesn’t mean other old debts have little effect on credit scores. Depending on who is owed the debt, whether it has an expiration date and how large it is, it could hit your credit report and have a negative impact on your score.
Murray explains that the department is “obligated, under the law, to follow up on these matters, regardless of the amount of the debt or the age of the case.” There is no expiration date for debts like overpaid unemployment funds, which means the state can continue to pursue its money until it’s paid.
The bill that was sent to Mainville is not uncommon. The state is owed $376 million in debts from people who were overpaid unemployment benefits and now owe repayments and penalties, according to Murray.
The best way to avoid a lowered score in this circumstance is to open all mail to ensure you don’t overlook bills and check your credit report regularly. Also, like Mainville, when you’re alerted to an old debt, check it’s validity then pay it off right away.
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