Advice on paying debt collection?

I’ve been counseling a friend not to pay an outstanding debt that dates back over 12 years ago.

It was originally a missed final payment of $114 to a phone company. She wasn’t aware she’d missed that payment until years later when the debt was sold to a collection agency. In the many years since, with interest, fees, and other charges, the amount due has ballooned to over $2,700.

Now, the collection agency calls her regularly as well as sends letters demanding payment of the outstanding debt. They also offer an opportunity to settle the debt for less than the total amount. The offer is usually for several hundreds of dollars… but today she received an offer to settle for only $99. That’s less than what she originally owed in the first place. (And I gotta think it’s less than what the collections folks have spent themselves in mail and phone calls over the years.)

I still counsel her to not make the payment. It won’t help her credit nor does her credit even need help. But she sees two benefits:
– hopefully stopping the collection letters and calls
– paying something towards what she originally owed as a matter of personal honor.

I’m pessimistic that the collection attempts would stop. I expect them to redouble their efforts if they actually collect money from her.

Nor do I think her personal honor would truly be satisfied since the phone company she owed money to won’t be receiving the payback.

What do you think?