Comments on: Paying Off a Debt in Collections

By: Sheldon

Sheldon — Wed, 09 Sep 2009 20:17:46 +0000

Read the Fair Debt Collection Practices Act. Second party debt collectors have to sue you in your venue (state of residence). This costs them money that they CANNOT get reimbursed for. In addition, they cannot charge interest or other fees. It is possible that a second tier collector bought this debt for pennies on the dollar. They will stop at nothing to harrass you into paying. Legally they cannot do so.

Check your state law for statute of limitations. In all likelyhood, it has run out and they are out of luck in trying to collect. Consider it a gift. Most states SOL run 4-7 years. Typically second tier collectors buy the old debts after first tier collectors have stopped trying to collect a debt.

Finally, see Eric the Lawyers reply.

By: Dolly

Dolly — Sun, 20 Apr 2008 04:45:28 +0000

I recently found a misreported collections account that shows closed by creditor and paid in 2002. Should I ask the creditor to delete this deragatory or will the request hurt my score?

It is actually a credit card account that, both I and the creditor concurred, was never opened by me, nor did I receive a card or invoice by mail. I only discovered this account by looking at my credit report in 2002 and was surprised to see such an account # and a delinquent amount (the annual card membership fee plus late fees. In 2002, this account and the unpaid fees were eventually written off by the creditor and closed.

By: golfgirl

golfgirl — Tue, 30 Oct 2007 19:00:44 +0000

Similar situation – however, I was not aware until they sued……Now the lawyer wants me to prove SOL have expired. How do you prove a negative – I can provide bank statements; however, they could come back and say I used another way to pay…. I do have a credit report that shows the last payment was May 2000

By: asw

asw — Mon, 24 Sep 2007 21:16:21 +0000

DO NOT PAY THESE THUGS… I was in exact same situation as u are, and i did the mistake of being nice, and paid them off (way more than my original amount) and guess what happened?… My score went down drastically but like 60 points. It opened a new debt and that decreased my score. DO NOT PAY THEM, and dont even think of them. Just move ahead with ur current credit and keep paying active ones off. dont even touch these old ones.

By: Erik

Erik — Sun, 16 Sep 2007 20:08:32 +0000

I am a lawyer, and have dealt with consumer debt issues. I can’t give specific legal advice, but want to explain two points:

1. If the statute of limitations has passed, there is NOTHING they can do to collect the debt. No lawsuit, no garnishment, nothing. They’re screwed, period. The statute of limitations varies by what state you live in; a few quick searches should turn it up. There is one catch here. That is, if you pay on the debt after the statute has run, the debt becomes valid again. Some collections agencies will try to get you to send just $1 on the debt. That’s because they know it will start the clock again.

Also, don’t confuse this with actual judgments. Those are different and I can’t sum them up in a few lines. Simply put, each state has different periods judgments are good for and how to renew them. Also, if you’re trying to enforce a judgment from one state in another, there are many different rules. For stuff like this, it really helps to ask a lawyer. It really is complicated.

2. After 7 years, bad debt drops off your credit record. Earlier credit histories can be accessed for security clearances, certain background requests, etc., but not if you’re trying to get a car loan or a credit card.

So, if it’s past the statute of limitations and off your credit record, well, why would you pay them? Politely saying, “no, I am not going to pay it” and repeating that (always politely) will usually make them go away. They know they won’t get anything.

By: cornell

cornell — Mon, 30 Apr 2007 20:14:55 +0000

A bill collector has agreed to erase my debt if i agree to a settlement offer that was half the orginial bill. If i agree to the settlement when it gets listed on my credit report. Is it considered a negitive and does it hurt my credit score?

By: larry ghent

larry ghent — Fri, 23 Mar 2007 20:01:04 +0000

I was told by a collection department for a credit card I have that they cannot sue me because they are going to write off my credit card debt as a bad debt. She acted like she had just made a slip up and would not repeat the info. She said that because I live in South Carolina, they could not sue me. Then I found out that SC will not let anyone garnish my wages. Right now I have no job and no money. In the future, I will be imployed and will want to pay off my credit cards. Could some one help me with this info ?

By: Mark

Mark — Sun, 25 Feb 2007 22:22:35 +0000

Yuck. I too had a difficult situation involving a past business. Anyways, the SOL issue is a interesting one. However, there are several anomalies in your situation, which might be cleared up by a posting on one of the more technical legal websites. First, even though the SOL may have passed (depends on the state, and the type of debt), the creditor (which in this case is the collection agency) can still ask for money. He just cannot sue you. There are many reasons why a debtor might pay a debt that is out of the SOL. For example, an expired debt can still be reported to a consumer reporting agency (Transunion, Equifax). So if you wanted to buy a home or a car with credit, clearing up the credit issue would be to your advantage; that is why they may try to discuss a “stale” debt with you. Second, a judgment resulting from a lawsuit can be extended if it is expiring, so it may not be subject to SOL if it is a judgment. Also, the date of the SOL may run from a particular moment in time that is different than what you think: the date it is written off, or the date it went into collections, as opposed to the date of your first delinquent payment. Third, some private collection agencies are more…careful, tenacious, aggressive, whatever. Even though Asset Acceptance is talking to you, the other ones may not be.

Finally, private collection agencies sometimes buy the debt for themselves, and sometimes they collect it on behalf of another financial institution. Just because they are calling or writing you does not mean that the others will also. Just because they have contacted you does not mean it is the harbinger of a new round of super-aggressive efforts to collect the old debts.

PCAs pay pennies on the dollar for old debts. In fact, in times past, I spoke to a guy in Ohio who used to buy old bad judgments from the Resolution Trust Corporation (failed S&Ls). He paid one dollar per thousand of the debt’s face value and was pleasued to collect anything. Consumer debt is less costly, and it depends on the age of the debt. A 10 yo debt will not have cost them much, so they may well be pleased with anything you offer; but if you make an offer, it will increase their interest in you. If you can’t tell, I have a background in the industry, and was later on the other side of the table when my own business experienced problems.

Anyways, several things to remember at this stage —
1. Don’t get yourself down. You remember the dark days when your business failed, and the creditors seemed the least of your problems. Others have been there, too, and the worst thing to do is to pretend your problems don’t exist. Face them and you will feel so much better — at least that worked for me.
2. You should probably just explain to them that you are 58 years old and nearing retirement. You cannot afford to pay them the full amount. Use the other debtors as leverage. Perhaps they will accept a nominal payment to settle the account. If not, I doubt you need to do anything. Yes, you will have to put up with phone calls or letters, but they cannot do too much to you. And let me tell you: if they ever sue you, imagine going in front of a judge and asking him to seize $40k from some 60 year old’s retirement accounts and garnishing his Social Security. Believe me, not many collectors would go this far. More liekly, they will call and write to you, expecting a brushoff on such an old debt. So give them a brushoff.
3. The collectors are people too, who understand what you have gone through. Be honest with them and you may be pleasantly surprised.

By: Ralph

Ralph — Fri, 23 Feb 2007 18:34:25 +0000

I wanted to ask for help. In 2001 I openend an account with Sprint PCS. I then had to cancel it because I had lost my job. The bill ended up at $758.08. Since I was young and dumb and could not pay the bill I ignored and it disappeared. This month I decide to look at my credit report and notice a judgement (thru Asset Acceptance) which I did not know about. I called them (played dumb just in case) let them know that I was not sure this was my account. The rep was extrememly rude. I told him I wanted proof he then kept harrassing and hung up on me. I then called Sprint and asked them if I pay the balance with Sprint will the bill collection company stop collecting the balance after constant holds she said that they shouldn’t since the balance would be at zero. Does anyone know if this is true? Will the collection company still try to collect the collection, court fees and interest fees?

By: Tim

Tim — Thu, 08 Feb 2007 20:38:46 +0000

there is more to learn from the note on exactly what happened in the intervening period. However, a useful link about Statute of limitations on debt is here

http://www.fair-debt-collection.com/statue-limitations-explained.html

By: Kevin

Kevin — Thu, 08 Feb 2007 03:01:02 +0000

The statute of limitations is probably up (however I think this is an affirmative defense, meaning you have to actually go to court if they sue). Either way, I second Rob. Don’t listen to anyone here. Doing the wrong thing could start the statute of limitations clock ticking again. Go to http://creditboards.com/forums/ and get advice. They know what they are doing when it comes to credit repair.

By: Yves

Yves — Wed, 07 Feb 2007 18:46:34 +0000

The statute of limitations has expired. You do not owe anything.
I advise you: not to speak with the collection agency nor the credit card company, if you do they will destroy you credit.
If they bother you, just send them a registered mail asking them to prove and source the amount they try to collect from you. They will not be capable to prove it or it will be over the statute of limitations and will be a proof that the debt is extinct.
After that, if the still bother you, tell them that you will go to the court and file a small claim (you do not need any lawyer for that.) If they continue then file the small claim and ask for a few thousands for damage (stay below the small claim maximum).
If you have a record in your credit file, dispute it as erroneous with the 3 credit bureaus.
If you feel guilty not paying the $300 and / or suing: once everything is cleared, you can give that money to a good charity, the money will be then better used than in the hands of the collection agency.

By: Rob Carlson

Rob Carlson — Wed, 07 Feb 2007 16:00:13 +0000

Best resource for this is http://creditboards.com/forums/

By: Vic

Vic — Tue, 06 Feb 2007 23:43:19 +0000

The statute of limitations has expired, but it will remain on you’re credit file for about 7.5 years. Don’t offer anyone anything this will start things over again, and there are agencies that try to collect on old balances that have expired!

By: Lisa H

Lisa H — Tue, 06 Feb 2007 14:53:10 +0000

Since the statute of limitations has almost certainly passed I would say it won’t be affecting your credit. If you start paying the debt now it will restart the statute of limitations all over again. I would be weary of paying this debt-Definitely do not make a payment arrangement. If you feel you must pay this debt I would make the payment in one lump sum. Making a payment arrangement now can actually hurt your credit score.