Dear Liz: About two years ago, I bought a new car but was lied to about how much it would cost. After a year I simply could not afford the car and could not refinance as I was incredibly upside-down. The auto lender wasn't willing to help, so I did a voluntary repossession. Nissan came after me for the balance remaining after auction but eventually wrote it off as a bad debt (this shows on my credit report). The debt has been sold twice to collection companies that call me on my cellphone and at work but don't leave messages. I can see they're checking my credit but they haven't reported the debt on my credit report. Is this legal? I feel if Nissan wrote the debt off (and I am suffering from that via credit reporting), there should no longer be debt to collect.

Answer: When a lender charges off a bad debt, the debt itself doesn't disappear. The lender is simply declaring that it doesn't think it will be able to collect. The debt can be sold to collection agencies, which can post the collection account on your credit reports.

The charge-off is what typically does the most damage to your credit scores, although the collection accounts increase the toll.

There are limits to how long creditors can pursue you in court over debts. The limits vary according to each state's statute of limitations. There is also a limit on how long bad debts can show up on your credit reports (typically seven years and 180 days from when the account first went delinquent).

But debts only disappear when you pay them or have them legally erased in U.S. Bankruptcy Court.

One of the things you should learn from this experience is not to trust a lender to tell you how much you can afford to borrow. The other is that you should always arrange financing in advance before you venture onto a car dealership lot. If the dealership can beat the deal you get from your bank or credit union, great. Otherwise, you've got financing you know you can afford.