Strategy for old debts that have fallen off reports

[Anonymous]

Hello all,

This is my first post, but I've been lurking for a while.  

Recently 3 very large CO's have fallen off of all 3 of my credit reports, right at the 7 year mark (not 7 years + 180 days as I was expecting).  Anyways, now that they are off of my report, I'm feeling pretty good about applying for new credit.  

I still owe these debts and want to settle them in the near future. --a couple of questions:

1.) Is there anything that I should be aware of, or do any of you have a strategy for me (i.e. should I call them and negotiate)?  

2.) Will settling these debts cause them to reappear on my credit reports?  

3.) How much should I offer to pay (in percentage)?

4.) Any downsides to settling these old debts?

Thank you!

[Anonymous]

You have a major negotiation tactic here...the debt is well past CRPT and I would check your state's SOL as well. I would offer them 10% if you want to settle the old debt.
They cannot put the debt back on your reports after 7 years 180 days.
There is no downside as I see it to settle, you are taking care of what you owe.
Good luck!

[Anonymous]

Thanks for the reply!  I couldn't think of a downside either, so that's what I'll do.  It was a large amount of debt though, so 10% will still be $5K.

Does that also mean that I'll have to pay taxes on the ''forgiven'' debt ($45K), so roughly 20% on that, which is another $9K??  For a total of $14K....  I should have never married that girl......................and let her manage our finances!

[RobertEG]

When seeking a settlement on time-barred and CR excluded information, it is pruduent not to let the parties know that you are in the process of seeking a mortage, and thus need to pay.  That may cause them to hold out for 100%, knowing that you must settle.

Yes, if you settle for less, you run the risk of the cancelled debt becoming taxable as income if in the amount of $600 or more.

However, there are exemptions from the IRS liability for cirsumstances, such as insolvency at the time of the cancellation.

You should consult a tax pro prior to simply paying taxes on debt cancelled by way of a 1099c.

[Anonymous]

This was an enlightening thread for me as well. I have one medical bill that is like 6 months from being barred from being reported. It has somehow slipped through the cracks and not shown up on my reports. However I do plan on making good on this as it IS my bill. I have been waiting for the reporting time to expire so as to not run the risk of it being reported as a paid collection but then I intend to make good on it.