Does Debt Expire after 7 Years?

Discussion in 'Credit Talk' started by humble, Nov 30, 2016.

  1. humble

    humble New Member

    Hey guys :) So Im helping my friend fix her bad credit (yea i know how that sounds but its true)

    She owes money to some institutions and its been over 7 years...
    My first thought of advice was to just pay it and start trying to build her credit again but then I heard somewhere that there is a expiration date on debt?? is that possible

    Question #1. Where can i check to see what she owes and where she has bad standings?
    (every time i google credit check a whole bunch of spammy websites pop up)

    Question #2. Does the debt expire?

    Question #3. What are the steps to re building your credit?
  2. jam237

    jam237 Well-Known Member

    Ok, there's the legal answer and the ethical answer, you can probably guess that the two are vastly different. :)

    1) Debt should fall off of the credit report approximately 7 years after the delinquency which resulted in the default of the account.
    2) The best option is for *HER* to go to Annual Credit - Home Page to request her three credit reports, it will show what is still visible on her credit report. This is the official FEDERAL FREE ANNUAL CREDIT REPORT web page. Note: for *HER* to go to the web site to request her reports, for her to print out, then she can show them to you for your assistance. It's illegal for you to request her reports for her; and all of the credit reporting agencies will probably go through and ask a number of questions to verify that it really is her who is requesting her credit report. Short of you getting her to write you a formal legal letter giving you permission to access her credit report, you can't legally obtain her credit report.
    3) The legal answer; the Federal Trade Commission has been aggressive with debt collection agencies who are attempting to collect debts which are past the Statutes of Limitations in the consumer's jurisdiction; even attempting to collect, unless the debt collector also clearly and conspicuously states this debt is past the Statutes of Limitations, we can't do anything to collect this debt, but if you pay us anything (or in some jurisdiction) even acknowledge the debt, you may make the debt fall back within the Statutes of Limitations, allowing us to actively work towards collecting this debt, even through judicial means. (Ok, the notice doesn't have to be that spelled out, but I really wish it did have to be spelled out that well.)
    4) You can probably figure out the ethical answer, if you know about a debt, and you know that it's valid, and for a specific verifiable amount...
    5) I would argue that because of the Statutes of Limitations, although debt may not legally expire; it essentially does... Especially when the original creditor's Document Retention Period expires, and obtaining validation of the debt, and verifying the specific amount can become problematic. Hence the caveats in the moral answer...
    6) Rebuilding Credit varies depending on the challenges involved; but I'll try to make it as general as I can.
    a) Get the current credit reports.
    b) Go through them with a fine tooth comb, comparing each one against each other, looking for any differences that you can find between them.
    c) If it's negative, and there are 1 or more differences challenge each one; for best results do the dispute via the 1-2 punch.
    - notify the data furnisher of the disputes at the address listed on your credit reports (there may be a different address for each CRA; send an identical letter to each one; if the letter bounces, and the data furnisher verifies the dispute with the CRA; your returned letter is proof that their reported contact information is invalid; and that is yet another dispute.
    - when you know that the data furnisher received the disputes, send the disputes to all of the CRAs that they are reporting to.
    d) repeat as needed.

    Concurrently; when the credit score starts to go up; begin looking for credit. Keep in mind, that you don't want to dig a hole. But you want to start showing a positive payment history, and positive credit usage.

    Some credit report sites like Credit Karma can guestimate your chances of getting a particular card so that you save the couple of points that an inquiry will cost.

    Generally; secured will be easier to get; starter non-secured will be next; traditional non-secured cards would be next; big balance rewards accounts will be a lot harder.

    If a bank allows you to pre-approve before running the full inquiry, it can be a big plus. :) Especially with banks that have all of the above, you can find out the best card that you are most likely to be approved for, before they perform the full inquiry.

    Some banks will have set reward credit line increases; i.e. on-time payment for 6 months; pay a certain amount for 6 months; etc. Others, you may need to request a credit line increase every 3-6 months just to see (beware, these could cause hard inquiries - but if you're not getting automatic increases, you want to weigh the power of the larger amount of credit with the couple of points that an inquiry could cause).
  3. humble

    humble New Member

    WOW ok thank you! I didnt know "she" can get a free report.

    Ok so I think i got my answer... Ill know if the debt is still alive if its in the report? and if not then I guess its gone

    So for the disputes and "cra" I dont know what that means??
    Im guessing its the institutions that would be owed money?
    and if there is a mistake in the address's of them or where "my friend" lives?
    Is that what we are disputing?

    And then finally start building credit with the steps you outlined (That part I understand completely)

  4. jam237

    jam237 Well-Known Member

    The debt reporting on the CRA doesn’t mean that it's valid, just that they are reporting it.

    CRAs are the three credit reporting agencies; Equifax, Experian, and TransUnion.

    The Data Furnishers are who are reporting that money is owed.

    Addresses would be disputed directly to the CRAs. Now, there are some CRAs that won't do anything if a company is reporting that address.
  5. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    Great response post from Jam once again. Did you pull her free credit reports yet humble? Any progress made so far? Would love to see an update from you on what steps you've taken to this point.
  6. humble

    humble New Member

    working on it Josh!

    will keep you guys updated. thanks for everything :)) idk how i would have got this info anywhere else
  7. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    No problem- good luck with everything! It's not rocket science...just takes time and persistence. Let us know how we can help!

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