Best Plan of Action

Anonymous · ‎03-11-2010

Hi Guys,

When I was younger (just out of high school) I made some stupid mistakes by thinking that since I had a nice job that paid well I should drive fancy cars and spend like crazy. Needless to say I got myself into some debt collection issues and finally a voluntary reposession after a layoff in the IT market. After this incident, I cut all my cards, canceled the accounts and bought payed off vehicles for the years following. This led to basically no active credit activity for quite awhile. The debts would be considered small (under $5K total for everything).

I have matured over the years, now run my own business, and am taking the time too truly learn and care about managing my credit and setting goals to see greener pastures along the lines of interest rates. I have one vehicle loan that is about 18 months old with perfect payment record. I opened my first credit card account last month that I have had in years. I don't need the credit card, but was told it would be good to show that I have some small activity, but pay on time.

My question has to do with the fact that I have most of my collections (8 total) dropping off within the next year or two, including the voluntary repo. I have started to get quite a few offers to settle these accounts for pennies on the dollar. Should I pay them or will this start entire 7 year process over again? I am one who is now committed to paying all outstanding debts and would love to do this, but I also don't want to shoot myself in the foot for another 7 years. Even paid in full these are small amounts (a total of $2,816), minus the voluntary repo ($10,582).

One other quick question, I was told that reposessions have been extended to remain on your record for 10 years now by a local finance office at a dealership. Is this the case?

JoeBJay20 · ‎03-11-2010

Welcome to the forums!

You are starting to get those offers because most likely, the statute of limitations (SOL) has expired on those accounts, meaning that creditors and collection agencies can no longer use legal means (i.e., lawsuits) to successfully collect on delinquent accounts. This doesn't mean they won't try to sue, only that you will win just by showing up and proving that the SOL has expired. Repaying the debt will not restart the 7 year clock, those accounts will fall off regardless of whether they are paid or not. This includes the voluntary repo. The first thing you need to do is determine your state's SOL, which you can find in the State Resources thread. If it's past SOL, repaying them is a matter of your personal choice. If you do decide to repay, make sure you're negotiating pay for deletes (PFDs) on those accounts. Otherwise, they will just update to paid as settled or paid in full. If you haven't already, read through these threads for more information on credit rebuilding and navigating the boards.

Credit Scoring 101 Common Abbreviations Where do I start? DOFD, DOLA, SOL

Anonymous · ‎03-11-2010

Thanks for the input. It looks like SOL is 4 years no matter what the debt is in Texas. Is my score going to come out better working towards PFD's or should I just wait and let them drop? My assumption is it shouldn't lower my score, correct? It is amazing the amount of misinformation floating around on this exact topic. In fact, I have a book in front of me that states paying would restart the date of last activity.

RobertEG · ‎03-11-2010

One basic fact of credit reporting is simply this.

Congress amended the FCRA back in 1998, when it enacted FCRA 605(c).

It made it legislatively clear as crystal ice that only one date-certain governs how long a collection (CA) can remain in your credit report.

That date is 7 1/2 years from you date of first delinquency on the original creditor account that may have led up to the collection.

No collection agency can ever, ever reset this date, by ANY action they may take, or ANY reporting they do. Period.

Your SOL date is usually, but not always, the same as your DOFD on the OC account. Most state SOLs are much shorter than the 7 1/2 year period for credit report deletion set forth in FCRA 605(c), so good chances your SOL has also expired. TExas does not provide for reset of SOL beyond the date of initial "cause or action," which is your first date of delinguency. Your DOFD with the OC.

No mystery of why you are being innundated by requests for your money. If SOL has expored, and they can no longer hold credtit reporting as an incentive for you to pay, they are making a futile, last-ditch effort for your purse or wallet. They are relying on your ignorance.

I dont think you are ignorant of the facts.

Message Edited by RobertEG on 03-11-2010 10:09 PM

LIGHTNIN · ‎03-11-2010

No they can not report for another 7yrs.The 7yrs starts from the DOFD from the OC account.

Credit scores reflect how well you repay your debts.Thats why it is important to have a paper trail,by that I mean the CR.

Opening the CC was a good thing.So kept paying on time, that is what makes up a big part of the FICO score.

Collections really ding your score,so if are removed your score should improve.

Check out the link Freq Req Threads and there you will find how to do the PFD letters,sample pfd letter is there also.

Happy Reading and Good Luck to you. Oh and BTW let us know how everything goes.

FICO's May 2015 EQ764 ~~Live below your means and always keep an emergency fund -Love Everybody ~ Big Kenny ~ Big and Rich ~~~~~Credit Scoring 101 - Common Abbreviations - Freq Req Threads - Free Credit Reports - What Steps Do I Take?DV? PFD?

Anonymous · ‎03-12-2010

Thanks for the updates guys.

I am currently going over my equifax report working on PFD letters. I see a debt from Arrow Financial that I have no clue what it is. How can I verify that it is even mine?

Secondly, if lets say there is a Charge of with "Bank A" and it is listed as sold/transfer and then the same debt shows again on the same report from "Credit Agency B" for the exact same amount, is this legal? Can I dispute one and have it removed? What if the date shows a DOLA as one year later than "Bank A" and there was no reason for this?

Anonymous · ‎03-13-2010

@Anonymous wrote:

Thanks for the updates guys.

I am currently going over my equifax report working on PFD letters. I see a debt from Arrow Financial that I have no clue what it is. How can I verify that it is even mine?

Secondly, if lets say there is a Charge of with "Bank A" and it is listed as sold/transfer and then the same debt shows again on the same report from "Credit Agency B" for the exact same amount, is this legal? Can I dispute one and have it removed? What if the date shows a DOLA as one year later than "Bank A" and there was no reason for this?

Yes, it's legal, as long as "Bank A" reports a zero balance. You can only dispute inaccurate information, and it sounds like both the original creditor and the collection agency are reporting correctly. What you'll want to do, if you're going to tackle this before the CRTP compliance date, is to offer a PFD to the CA, and send goodwill letters to the OC.