Please take this, not as a criticism, but as just helpful advice. Not paying the CO is NOT such a simple issue.
I also certainly wont advise you what to do with the unpaid CO, but will only offer some things to chew on in making that decision:
1. Unpaid debt never goes away, …. ever. While the CO may drop from your CR at some time, credit reporting is not the only future creditor evaluation. A potential creditor may ask you for a full financial statement, including disclosure of any unpaid debt. The unpaid CO is still legitimate debt. And the OC may refer it to a CA soon, adding another major derog to your CR.
2. The FCRA drop of dates for COs (normally expiring at a date certain of 7 ½ years from the DOFD on OC account) is NOT absolute. FCRA 605(b) provides that if you later apply for any credit transaction involving a principal amount of $150,000 or more, the drop off date provisions of FCRA 605(a) are totally exempt, and thus the CO can still be reported to the potential creditor. The CRA is then required to provide them the account history regardless of expiration of the 7 ½ years.
3. Even if the CO drops from your CR in a year and a half, the 130% util is killing you until it does. Do you plan to apply for any new credit in the next 1 ½ years? An unpaid CO, particularly that is reporting an unpaid debt with the OC that is above your CL with them, will, IMHO, probably totally kill your chances for any new credit upon any manual review of your CR in the next 1 ½ years.
4. Statute of Limitations issues. Are you sure of the DOFD on the OC account? (You state falloff in 6/2012, which would be 2 1/2 years from now, not 1 1/2 years). That raises my concern that you may not have a clear DOFD.. The DOFD usually governs SOL date in most states,, but some states provide for reset of the SOL after the original DOFD with the OC, so be totally sure of your state SOL before you decide not to pay. Refusal to pay, followed by intent to sue them for, I don’t know upon what grounds, has probably not endeared yourself much with them, so make sure you KNOW that your SOL has expired, and just as importantly that expriration of SOL does not prohibit them from ever suiing you. You may be enticing them to sue. You must still go to court and prove your defense, if they do sue.
5. The AU account will clearly help in your FICO scoring, but wont impress many lendors upon manual review of your CR until the CO is gone. Lendors know that FICO sore inflation based on AU acccounts is not based on your proven credit history.
In summary, where are you heading in your application for new credit in the next couple of years? As has been said, your decision. Just make sure you know all the facts in advance.
Message Edited by RobertEG on 12-06-2009 11:36 PM
Message Edited by RobertEG on 12-06-2009 11:47 PM
Message Edited by RobertEG on 12-06-2009 11:53 PM
