Hi - After racking up sizable debt with my ex-fiancee (she: sometimes co-applicant, sometimes authorized user, sometimes just a mooch), we have separated. She refused to contribute $ after the split, so I paid the minimums for as long as I could. (I paid 10s of thousands - she paid zero.) Since then, the accounts have been unpaid, and now list on the credit report as "charged off". I have several questions that I hope you can help with. 1) Does the charge-off disappear from the credit report after 7 years if it remains unpaid? (Or does it renew the 7 year window each month?) 2) Does "charge-off" mean that the bank no longer holds the debt? (And that a Collection Agency does?) 3) What is the likelihood in this financial climate that I am sued for the debt? (Can I ride out the 7 years?) 4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.) 5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window? 6) If I settle with the Collection Agencies for a lesser sum, does that benefit my credit? Is there any other benefit? 7) Any other ideas? What would you do? Thanks a ton!
1) The CO lasts for the 7 years (with the rest of the trade line) there are some limited examples of reports that may show data older than that, but for most people and most reports, they wouldn't be there. 2) CO is an accounting term, that's it. It simply means that the account has been charged off to a profit-loss report for their taxes. They may or may not have assigned the account or sold the account to a debt collector. 3) Well, no one can give you a specific likelihood of suit. Think of it as a ratio of two factors. 1) time 2) amount. The newer the account and the higher the amount, the more likely it will be that they would file suit. The older and lessor the amount, the least likely that they would file suit. But there are always exceptions. 4) You can try passing the buck, but if you are the holder or co-holder of the account, they can still collect from you. 5) Nothing restarts the 7 year window, except for bringing the account back to current, and the account being reopened (which post-CO should be unlikely). 6) Paid CO, even a SETTLED notation doesn't improve your credit; sometimes people are forced to do so. It also faces risks, say you make a lessor payment, or even an agreement to pay, in some places that can restart the SOL for them to sue. If you choose this route, you need everything in writing. (Another thing that some have noticed, XYZ CA says the account is settled, they give the remainder of the account back to the OC who knows nothing about the settlement, and they hire a new CA to go after the unsettled amount of the account. If you don't have it in writing that it was settled in full for the lessor amount, you're on the hook for the remaining balance.) 7) What would I do, from day 1, make sure the CA's play by the rules, and file a suit against them the first time that they don't. BUT that's me. For me, I can have a FDCPA/FCRA suit drafted ready to file in Federal Court within 10-15 minutes.
Thanks, jam for the insights, especially #6 and #7. ( I wish I were a lawyer...) (fwiw, I sued my ex, and in court, the judge believed her defense that I promised her she would never have to contribute to the debt, and the judge asserted that a couple determines who owes what percentage of a debt. In this case, he said she did not have any explicit obligation to pay any more than 0%. I was stupefied.) ----- One further question: the credit report reads as follows: Does this mean that it leaves my credit report in 2019? Or is it 7 years from 2014 --> 2021? So, how's this for a plan? A) I contact Credit Collectors and provide them with ex's contact info, in hopes that it pressures her to make some payment. B) I sit and wait, and hope that I do not get sued over the next 7 years. C) If I do get sued, I can then negotiate to pay the debt at a discount. (Hopefully, a deep one by then.) D) When the resulting 1099-c is filed, I will declare insolvency in order to avoid being charged for it. E) In all cases, my credit is equally ruined. What do you think?
First, I'm not a lawyer, I don't play one on TV. I am a lowly consumer who had nothing better to do than spend 18 hours a day researching the FDCPA and FCRA a few years back when a 'lawyer' decided that he was going to try to sue the painfully unsophisticated consumer. (I really should have everyone who has come against me since send him a thank you note. ) 2019, the date is determined by the Date of First Delinquency (Resulting in Charge Off), so it appears that the account first went delinquent in 2012. Well, if she's already had a judge say that she owes nothing of the debt, she could simply provide that to them to put the debt back onto you. Insolvency isn't easy to prove as it sounds for the IRS. Essentially ALL ASSETS, including your home, car, anything that you own; have to be worth less than the amount of the 1099 that you are trying to have forgiven.
Self-taught experts are my favorite kind of people. 2012 sounds about right. Re: court -- the suit never reached judgment. I could tell the judge was predisposed to rule for me on only the most symbolic level ($1000, maybe), so I dropped the claim with prejudice, thus retaining my right to bring the suit again later. So, the practical impact is that she cannot use the judgment as a defense. Re: insolvency -- my debts are much greater than my assets. No property. Old car. Small 401k. On the other hand, a large student loan balance.
Ok, as long as there isn't a piece of paper saying that she had zero responsibility for anything, you're ok on that front. The important thing to remember about insolvancy is that you are only exempt from reporting up to the exact amount that you are under water. So if you are underwater $1,000.00, you can only withhold $1,000.00 from your taxes, the rest is still income. They don't just look at larger assets, they include literally every piece of clothing, book, appliance, EVERYTHING that you own. If you had a yard sale selling off everything you own, at fair market value, what would be the amount that you would have after selling everything at the end of the day.
OK, so, is it better for me to negotiate with Debt Collectors now, or in few years if/when they decide to bring a suit?
Everyone needs to make those decisions themselves. If the individual account is high enough, and they think that they have enough documentation to prove it to a judge, the OC will file the suit as quickly as possible. The most important part is not to forget about the validation process. It's not only to prove that the debt is yours, but that they aren't trying to add fees that aren't allowed to the account.
