Acct's that fall off after 7 years

[Dani62384]

General question here- is there a price limit on what can fall off after 7 years? I am trying to fix fiance's credit- but he has some very high totals in collections...every single thing on his report is set to fall off this year (2012)...I am trying to decide whether he should file bankruptcy, or if these things will actually fall off this year- they're almost all for vehicles. Any thoughts/suggestions?

[laz98]

Hi!  As far as I know, there's nothing special about auto loans that would keep them on your credit reports longer than necessary...Being collections, though, I think you are looking at 7.5 years & not just 7, but I might be mistaken.  But if you said they're supposed to come off already, then hopefully they will! 

Just keep in mind that even though the information won't be on his credit reports anymore, they can still bug you/him about it if they choose to be persistent about it.  You said it's a high amount, so it might be worth it to them to pursue it.  I don't know how active they have been up to this point in terms of collecting.

[pizzadude]

I would be more concerned about the possiblity of being sued than the credit reporting implications ~ before you decide anything, check the SOL for written contracts for your state of residence to know where you stand.

[RobertEG]

+1

The time periods for credit report exclusions of adverse items, with the exception of unpaid tax liens, are all pegged to the date of occurence of the adverse item.

The date an adverse item occured doesnt change, thus its CR exclusion date doesnt change.  Collections, for example, are pegged on the date-certain and unvarying DOFD on the OC account, and are excluded after 7 years plus 180 days from that date. 

Expiration of items from a consumer's credit report does not make the debt expire.  It lives forever until paid.  Thus, the issue is what the creditor/debt collector can do at any point in time to continue to attempt collection.  If the statute of limitations has not expired on the debt, they can resort to legal action to attempt collection.

[Anonymous]

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@RobertEG wrote:

If the statute of limitations has not expired on the debt, they can resort to legal action to attempt collection.

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Just to add some clarification (and, maybe a ray of hope as well), if the debt IS BEYOND SOL (statute of limitation), is is called and referred to as an old "time-barred debt" and, because they can no longer legally sue you for the debt, they will usually move on to someone else and leave you alone. 

If the debts are shown on the credit reports as falling off the reports this year -- AND -- the debts are beyond the statute of limitation, hang in there until 2013 and see what the credit reports look like then.  They should be looking good!  

[sooner63]

A few years ago I had a couple of accounts that were beyond my states SOL for accounts of that type, yet a CA still began litigation against me. I was panicked, knowing nothing about SOL or really anything having to do with my rights concerning credit. I frantically search the internet for any and everything, not having funds for a lawyer or to pay the old debts.

During the pre-trial process I had to respond to lots of paperwork which included a request to outline my defense and what documentation/ information I intended to use. In responding I let them know the SOL had run it’s course, making litigation to pursue any debt in violation of the Fair Debt Collection Practices Act.. A couple of weeks later I got a letter from the court saying the case had been dropped.

Those accounts have since fallen off my CRs.

Just thought I'd throw all of that out there to show SOL can be a life saver, as long as you know your states statutes. And anyone who has bad debt should know them.

[RobertEG]

Good point, Sooner!

While many believe that a debt collector is free to bring legal action with impunity even if SOL has expired, what Sooner stated is based on a solid and growing body of federal court precedents.

They do so at their peril.

The key is whether their civil action was brought with actual knowledge that the SOL had tolled.  In such cases, the courts have held that bringing, or in some cases even threatening to bring,  action is knowlingly taking legal action that cannot prevail, and is thus a violation of the FDCPA.

Thus, the attention to SOL might even by grounds for a counter-suit against a debt collector who threatens or takes legal action on a knowingly time-barred debt.

That begs the question whether, in the course of dealing with a debt collector, it would be wise for the consumer to advise the debt collector if the debt is clearly outside of SOL.

The case law suggests that making them clearly aware of expiration of SOL could build a basis for a possible counter-suit in the event they commence any legal action.

[Dani62384]

Thanks everyone. I do believe that since this judgement was put on his reports in 2010, it was within the SOL, but he never received knowledge of a lawsuit nor was ever summoned. Is there any defense there? Another question I wonder, is if we pay this judgement, then wait for the old collections to fall off, and we apply for a mortgage next spring/summer, will these old collections (even if they are aged off of the reports) reappear due to applying for a mortgage? And will a paid judgement hurt the loan process?

Sorry, does anyone know if a car loan is considered a promissory note or a written contract? My states SOL's are very different for the 2.

[pizzadude]

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@Dani62384 wrote:

Thanks everyone. I do believe that since this judgement was put on his reports in 2010, it was within the SOL, but he never received knowledge of a lawsuit nor was ever summoned. Is there any defense there? Another question I wonder, is if we pay this judgement, then wait for the old collections to fall off, and we apply for a mortgage next spring/summer, will these old collections (even if they are aged off of the reports) reappear due to applying for a mortgage? And will a paid judgement hurt the loan process?

Sorry, does anyone know if a car loan is considered a promissory note or a written contract? My states SOL's are very different for the 2.

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Car loans are generally considered written contracts.

Judgements stay on your reports from 7 years from the date they were issued ~ if you were not served properly then you could likely file a motion to vacate the judgement.   Talk with an attorney to get specifics for your jurisdiction.      Whether it is paid or unpaid a judgment will hurt your FICO score equally.

Collections have a way of "magically" appearing when you apply for a mortgage thanks to the CRAs selling collection triggers to CAs.   So it is certainly possible that an old collection might pop up on your reports.   Your best defense at this point would be to clearly document the DOFD so that you can fight them if they come back.

[Dani62384]

That's what I am afraid of, the SOL for written contracts in Illinois is 10 yrs, and i believe the DOFD was in 2005...so they still have awhile to sue...and that's what worries me about applying for a mortgage, even if it isn't on the CR, that might instigate a lawsuit.