SOL for Written Debt versus FDCA rules - can creditors get two bites at the apple?

[Anonymous]

My situation:

 In a car accident and did not have medical insurance. I was supposed to be covered under the liability insurance of the guy who caused the accident. So long story short, I spoke to the finance departments of the hospitals at the time and they said it was ok to wait, thus I never paid it. Fast forward a few years, and it starts showing up in medical collections. I call and they say they weren't paid and I'm ultimately the one on the hook for these thousands of dollars.  So it sucks, but I didn't want to reneg on something that I legitimately owed someone, so I asked to see line item bills so I know what I'm being charged for, and this collection agency cannot provide me with anything. I contest it to the credit bureaus and of course they all come back as having verified that the debt is accurate. This seems to be the m.o. for all three of them lately.

  So, it turns into a waiting game. I figure I'll just wait them out the 7 years and be smart enough to carry health insurance at all times moving forward.  

 My question is this: the state in which this happened has a statute of limitations on written debt of 15 years. The collections agencies got it roughly 7 years ago this fall. If it falls off my credit report for being time-barred, but then I am sued for the balances, lose on judgment and then have a judgment appear on my credit -- isn't that just a way for credit agencies to skirt the FDCA rules for old debts?

 I have bent over backwards to work with these guys and nothing short of full payment in one lump sum will do, and it's not a  small amount. Can I argue in court against a judgment because something is time barred under federal statute?

[Anonymous]

I unfortunately can't help you here with the legal questions, but just wanted to mention to others to learn from this as well. 

I was in an accident caused by a faulty airbag.  The manufacturer offered to pick up the $8000 hospital bill, but I told the hospital specifically to inform me of outstanding bills due.  I also wrote them after the fact, certified mail.

The manufacturer never paid the bill so after 30 days I had to hire a lawyer.  It took months but the lawyer made a lot of money on it and they ended up paying the bill but the entire time I had to pay attention to it because I knew I'd be held liable for it after the fact.

It's an ugly situation.  I'm not sure what the SOL is on you suing the driver -- but it's feasible you might have a case against him depending on your jurisdiction.  I'd go after the original driver if you aren't time barred.

[RobertEG]

A single delinquent debt can result in different types of adverse items occuring on efforts to collect the debt.

Monthy delinquencies on the account with the original creditor can report, and the creditor can also assign or sell the debt to a debt collector, who can then report a collection.   A collection represents the involvement of another party in attempt to collect the delinquent debt, and can appear in addition to monthly delinquencies reported by the creditor.  They are not the same thing.

Additionally, the current owner of a delinquent debt can, at any time, bring civil action to obtain a court order finding the debt valid and ordering its payment.  A civil judgment, if if it remains unpaid, can be used to force payment via attachment of assets or garnishment of pay.   A judgment can be reported and appear simultaneous with montly delinquencies and/or a collection.

Each type of adverse item of information reported to your credit report, such as monthly deliquencies, a collection, and/or a judgment, have their own individual credit report exclusion provisions under FCRA 605(a).  More specifically, monthly delinquencies must become excluded no later than 7 years from their dates of occurence, any collection or charge-off must become excluded no later than 7 years plus 180 days from the date of first delinquency on the OC account, and a judgment must become excluded no later than 7 years from its date of entry by the court if paid, or if unpaid after 7 years, no later than when the period of enforceability of the judgment expiires.

There is no "skirting" of the exclusion provisions of the FCRA if a debt collector obtains a judgment, and the judgment continues to report after exclusion of their reported collection.  A judgment is its own adverse item with its own separate exclusion provision.

Expiration of your state SOL on the debt is unrelated to credit report exclusion, and runs separately.

Expiration of SOL means the owner can no longer obtain a judgment on the debt.  It does not have any bearing upon credit report exclusion of a collection, which is based ONLY on the period of no later than 7 years plus 180 days from the DOFD.  

[Anonymous]

Thank you, Robert.