Seven-year Debt Cancellation

[Anonymous]

Hi,

Recent college graduate here, seeking debt payment advice. If the same collector bought your debts from two completely separate accounts/companies and you pay on one account (the most recent) will you be legally bound to pay the older account (its nearly at the seven-year mark)? Ideally, wouldn't it be smarter to let the older one just fall off? 

Again, if I pay the more recent of the two from the same collector, will I be legally bound for the other (meaning will the seven-year payment start over by paying the collector)?

Please help! I have some holiday money and want to pay my debt, but want to be smart about it.

Thank you in advance for your advice

[compassion101]

No, they are 2 different debts so paying one doesn't affect the status of the other one.

How old are they? What state are you and do you know the SOL in your state? I doubt you are liable for 7 year, though the debt collector certainly would love you to think so. Also I can't see a moral obligation here as most likley the money would not go to the original company who loaned you the money/services.

[SCF]

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@compassion101 wrote:

 Also I can't see a moral obligation here as most likley the money would not go to the original company who loaned you the money/services.

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Legitimate collection agencies either purchase the debt outright, or pass along a portion of what they collect to the original creditor.  The fact that the debt has changed hands legally shouldn't suddenly disolve any obligation you have to pay your debt.  Obviously, there is an important distinction between your legal obligation (which expires with the relevant statue of limitations) and your moral/ethical obligation to pay for the goods and services you received.  I can't see it as morally correct to declare any debt that has been passed to a collection agency as not neccessary to pay.

[RobertEG]

The FCRA exclusion periods do not excuse debt.

Collections can no longer be shown in a credit report issued by a CRA after 7 years plus 180 days from DOFD, but that does not excluse or negate the debt.

Payment or non-payment of debt has no effect on credit report exclusion, which is pegged only to the reported DOFD on the OC account that led to the collection.

FDCPA 810 pertains to multiple debts under collection by the same debt collector.

It prescribes that the consumer can, upon submitting payment to the debt collector, direct which debt the payment is to be applied to.

However, they remain separate debts, and paying one does not affect the status of the other.

[Anonymous]

Hi, 

Thanks for the help so far. I live in the state of Georgia. One account is seven years old and the other is a little more than a year old. 

Also, on my credit report, the collector does not list the "original" creditor. Only when they call do they state the old company. Does that mean they don't have enough paper work to prove debt ownership?

I'm trying to raise my credit and be more financially responsible. So i'm thinking to negotiate a lump-sum payment (just for the older one).

Thoughts?

[RobertEG]

Repeating..... the 7 year credit report exclusion provision under the FCRA has nothing to do with cancelletion of the debt.  Debt does not become excused, only the ability of one to become aware of its continued presence by a simple pull of a consumer's credit report.

As for identification of the original creditor, dunning notice does not require disclosure of the original creditor, only the current owner of the debt.

If the consumer wishes disclosure of the name of the OC, they can do so by way of separate and specific request in a DV.

Lack of naming of the OC does not mean the debt collector has no records from the original creditor, or can no longer obtain them.

[Anonymous]

You have the right to determine which debt your payments get applied to. On the older debt, its beyond SOL for the state of Georgia. That means you cannot be sued for that debt - it is 'time barred'. You have to option to tell them to cease and desist contacting you regarding that time barred debt but that does not erase the debt. OTOH, you can offer to 'settle' on the time barred debt in order to remove it completely or report it 'satisfied' (or paid). I personally would offer no more than 10% of the original amount for 'satisfied', or 20% for deletion on a time barred debt. Your choice. If making a settlement offer, make it clear to them that you KNOW it is time barred debt. Tell them the only payment they will get is for deletion or marking it paid. Be firm and ignore any counteroffers they make. Tell them the settlement offer is good for xx days, and any future offers will be for less.

[Momof5]

Although RobertEG is correct that no debt is cancelled after 7 years, in *some* states, it is illegal to collect debt after that state's SOL expires.  In GA, the SOL is 4 years for open acct and 6 yrs for written. The CA can, in GA, still sue you but the SOL is an affirmative defense you can raise to get the case dismissed.  If you don't fight it, you will end up with a default judgment that would last for years.

That being said, you are under no legal obligation to pay the debt that is 7 years old.  Some may feel you have a 'moral' obligation to pay it.....but that is a personal choice.  Some will, some won't.  In many cases, if the DOFD is just shy of 7 yrs, you simply dispute it as obsolete and most CRAs will delete it. 

[MarineVietVet]

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@Momof5 wrote:

Although RobertEG is correct that no debt is cancelled after 7 years, in *some* states, it is illegal to collect debt after that state's SOL expires.  In GA, the SOL is 4 years for open acct and 6 yrs for written. The CA can, in GA, still sue you but the SOL is an affirmative defense you can raise to get the case dismissed.  If you don't fight it, you will end up with a default judgment that would last for years.

That being said, you are under no legal obligation to pay the debt that is 7 years old.  Some may feel you have a 'moral' obligation to pay it.....but that is a personal choice.  Some will, some won't.  In many cases, if the DOFD is just shy of 7 yrs, you simply dispute it as obsolete and most CRAs will delete it. 

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Do you have a source for that information?

Which states have such a law?

[gdale6]

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@MarineVietVet wrote:

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@Momof5 wrote:

Although RobertEG is correct that no debt is cancelled after 7 years, in *some* states, it is illegal to collect debt after that state's SOL expires.  In GA, the SOL is 4 years for open acct and 6 yrs for written. The CA can, in GA, still sue you but the SOL is an affirmative defense you can raise to get the case dismissed.  If you don't fight it, you will end up with a default judgment that would last for years.

That being said, you are under no legal obligation to pay the debt that is 7 years old.  Some may feel you have a 'moral' obligation to pay it.....but that is a personal choice.  Some will, some won't.  In many cases, if the DOFD is just shy of 7 yrs, you simply dispute it as obsolete and most CRAs will delete it. 

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Do you have a source for that information?

Which states have such a law?

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Wisconsin & MS have laws that make it illegal to attempt to collect on a debt past the SOL. The debt is still there they just cant try to collect on it anymore.

Wisconsin law prohibits any collection efforts on accounts where the statute of limitations clock has expired. This rule applies to original creditors and collection agents.

Under Wisconsin § 893.05, a creditor may not file a lawsuit on a debt after the Wisconsin statute of limitations expires. If a collection agent or original creditor attempts to collect expired debt create a cause of action under Wisconsin law as well as under the federal FDCPA because any collections actions misrepresent the legal status of the debt. This consumer-friendly rule is an exception only Wisconsin and one other state share (Klewer v. Cavalry Invs., LLC, 2002 U.S. Dist. LEXIS 1778 *7 (W.D. Wis. 2002) and Gervais v. Riddle Associates, 479 F. Supp. 2d 270 (D. Conn. 2007)).