Do you still own debt if it gets cleared off credit report?

[Anonymous]

I have a queation. I have been working on clearing my credit. But I want to know if you dispute a collection and it gets removed from your credit report by the credit Bureau do you still have to pay or owe that bill, or is the debt completely gone?

[medicgrrl]

You still owe the debt. If it's within SOL they can still sue. It's also possible to have it put back on your credit report if the DOFD is less than 7 years.

[Anonymous]

You still owe it.  That's different from having to pay. 

There are basically two "clocks" to watch.  One is the 7-year clock for derogs falling off your reports.  (Or even better, getting it removed early.)  That prevents other creditors from seeing that you ran into trouble. 

The other is the SOL clock, or Statute of Limitations.  When this expires it prevents the original creditor or collection agencies from being able to win in court (as long as you note that the SOL has expired) should they try to sue you.

The two things are completely different.

But even when the SOL expires, it does not (according to a lawyer friend of mine) mean that you don't owe that money.  It just means that the lender/creditor no longer has the legal ability to force you to pay it.   Most people choose to mentally write off their debts, however, once the SOL has expired -- i.e. as if they no longer owed the money.  Which is fine.  Just observing that technically the two things are not the same.

[Anonymous]

CGID, 

If the collection falls off due to the 7yr age, do you still owe it under that circumstance? 

[Anonymous]

The debt that I had removed are accounts I had no knowledge of or the contract was invalid. How can I be responsible for the bill if the reason I disputed it was because I don't really owe. So will I still have to pay them if the reason thr debt was removed because the bills were false?

[Anonymous]

Hi Carynb and Rookie.  Would you mind glancing through what I said again?

There are two completely different issues that are handled via different mechanisms (and players).

One issue is "do I really owe this money and if so how can the lender force me to pay it?"  That's a legal issue handled by the courts.  For example, I could claim that you owe me money via a private transaction we had a year ago.  That claim if I insist on it strongly enough would ultimately have to be adjudicated by the courts.  But during the time that I am arguing with you about that, perhaps threatening legal action, the purported debt might very well not appear on your credit reports.  Associated with this legal/court issue is a "clock" called the Statute of Limitations.

Another totally different issue is "has a creditor reported to one or more credit bureaus a debt?"  The account or debt might not even be negative.  There is another set of rules and machinery for making sure that the information on your reports is accurate.  There's a law called the Fair Credit Reporting Act, there's rules for disputing inside the CRAs, and there's rules governing when negative information has to fall off your reports.  That last item is also a "clock" sometimes called a Seven Year Clock.

These two things are completely separate.  Thus information no longer appearing on your credit report does not in itself prevent someone from arguing that you owe the money and taking you to court over it.  (Though of course they might not win and should not win if the debt is invalid.)  Likewise, the fact that the SOL may have expired does not mean that the debts will leave your credit report. 

[Anonymous]

So even though the credit bureau to remove the collections from my account the debtors might still try to sue me for payment?

[Anonymous]

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@Anonymous wrote:
So even though the credit bureau to remove the collections from my account the debtors might still try to sue me for payment?

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Yes.  That's right.  Though technically they are not the debtors.  The debtor is the person who allegedly owes the money.  The creditor is the person to whom the money is allegedly owed.

Naturally it is possible that (in this particular case) the same process that has convinced the CRA to remove the negative information has also convinced the current holders of the debt that you don't really owe it or that pursuing you in court isn't worth their while. 

I am just saying that what does or doesn't appear on your credit reports does not in itself have anything to do with whether a creditor will attempt to sue you for it.  That's governed by the courts, not the CRAs, and the clock in question is the SOL, not the CRA 7-year clock.

[Anonymous]

So I just now received a letter from a collection agency stating that they receive my dispute they said that they had closed my account with their office returned the account to the Creditor so can I still be sued for that payment even though the collection agency is no longer pursuing me

[Anonymous]

They absolutely can sue you even if it's blocked from your credit reports.  Back in 2013 I disputed a TL that was reported totally incorrectly and it was removed from all 3 CRAs quickly instead of updated.   CA actually did file a lawsuit against me because the nice service processor visited me at home one evening and served me with papers.  I went to the county docket search website and did see it was filed in my county.

Thankfully for me, the CA also violated numerous laws which I took copious notes on, so counter-suing for violating the law was filed by me (pro se) in state court the next morning as well as my filed response with the court that I would appear for the lawsuit against me.

CA's lawyers decided to contact me about my suit and their suit and I told them "let's just meet in court because someone here will be paying the other party -- please stop calling me and if you need to contact me, due it in writing."

They sent a certified letter to me offering $500 (instead of the $2000 I was hoping to get) and closing the case and ending collection activity.  A few letters back and forth demanding that they not only stop collection activity but promise to never sell, assign, transfer or refile any collection activity on this account again.

Got that $500 check in the mail and they did in fact withdraw the case.  I was out my filing fee on my side -- wish I had asked for filing fees in my settlement, lol.

But, if you're scared to death of courts, be aware that you can be sued and if you are sued make sure you appear.

I've appeared in court only one time for an OC lawsuit against me (for 5 figures that I probably did owe) and ended up winning in court against their megacorporate lawyers because they had their heads up their rears.  No proof of debt, no paperwork whatsoever, just some basic "he owes us money".  Judge told us to attempt to settle and I told him and them no thanks, I am happy to take it to trial.  They dropped the suit and I pushed the judge to dismiss with prejudice since they're monkeys in suits, not real lawyers.  Wish I demanded damages in negotiation, ugh.  The things we learn.