I had a car reposessed in 1996. The car was apperently auctioned off. It was sold and there was still an outstanding debt of $4000. I never knew about that outstanding debt. Well now I want to buy a house so I contacted the Collection agency and now they want 7k. THAT'S CRAAAZZYYY!!. They claim my debt accrued 3k in interest. I told them to fax this info over to my lawyer because I was going to file ch7 BK (BIG FAT LIE). And they did, however the letter has today's date and at the bottom of it it says that I have 30 days to dispute this debt. If I do not contact them they may file a judgement. OH MY GOD! Not Again!! I have worked too hard on cleaning up my credit this is the only bad thing on my credit. What should I do? Can They really file a judgement if the SOL expires in 2years. And if they do file a judgement will that reage the debt and stay on my credit for another 7 years? Please ANY ONE OUT THERE!! HEEEEEEEEEELLLPPP!!!
Look up SOL at the following website: www.cardreport.com They have a list of the SOL by state and category of credit.
You may have reset the SOL if you acknowledged the debt. Maybe you could offer a settlement for less.
Don't panic: (1) It doesn't sound as if you offered to pay or settle the debt. I don't think you've reset the clock yet. But be careful not to do so from now on. (2) I think they're bluffing. If they haven't filed a judgment yet, why would they do so now? Because you called attention to yourself and your otherwise perfect credit? I'm sure they tell everyone that they may file a judgment. (3) Your threat to file bankruptcy (also a bluff) you may want to keep in reserve just in case they do file and win a judgment. It would ruin your credit again, but I think you would avoid paying the judgment. So use it as a bargaining chip to keep them from filing.
(1) "Offering" to repay a debt does NOT reset anything, nor does paying off the debt completely or paying a lump sum settlement as full settlement. What DOES reset the original delinquency date is if you begin a PAYMENT PLAN to repay the debt (actually pay them or sign something that binds you to a payment plan). Essentially, a payment plan "re-ages" the account -- brings it back 'up to date' based on renegotiating the original contract. (2) Why would they file a judgement now? Because they probably know (or have an idea) that the debtor is trying to buy a home. Result? They know that the debtor is employed with income, and they can find this info out from their credit history. Hence, they have CURRENT information for a judgement and resulting garnishment. Note to original poster: You said "b{Can They really file a judgement if the SOL expires in 2years. And if they do file a judgement will that reage the debt and stay on my credit for another 7 years?}" CAN they? Absolutely -- that's the law and that's (part of) the reason the SOL is in place - specifically giving them time to get a judgement. If they obtain a judgement, it doesn't reage the EXISTING trade line -- it creates a NEW record (under the 'Public Records' section of your credit histories) that will remain for anywhere from a number of years to indefinately (depends upon your state and/or their state). b{Well now I want to buy a house so I contacted the Collection agency and now they want 7k. THAT'S CRAAAZZYYY!!. } Yes, they can add interest and collection costs to an unpaid account, month after month, year after year - it's the law. It has to be REASONABLE interest, but reasonable can mean upwards of 18/19/20 percent or more, depending again upon the state(s). (3) A threat to file BK is not going to deter a creditor from filing for a judgement. The go into court every day, and one more judgement is just that - one more judgement. They don't have anything to lose except a few hundred bucks. On a 7,000 debt, that's meaningless. File BK because of a potential $7000 judgement? IMHO, that would be stupid. Work with the creditor. Try to negotiate a settlement (i.e., start @ 30 cents on the dollar and work your way up). I settled two accounts, years later after interest & collection costs, and settled for .50 on the dollar as full settlement. Try to negotiate removal of the history from your reports, but sometimes they won't do that (be persistant, get everything in writing FIRST, before paying a dime). What's better? A five year old PAID (or SETTLED) account, or a five year old unpaid account listed as INC IN BK, plus an unpaid judgement (7 years on your history) listed as INC IN BK, plus a bankruptcy (7 to 10 years on your history)? I've been through it. I'd rather settle or pay the account BEFORE it goes to judgement. Even if that means putting that home purchase off for another 6 months or a year, it's a much better situation in the long run.
If you haven't taken action yet and assuming there's no judgment, request a Validation of the debt and (you use a letter and a creditor disclosure statement). Basically, you make them prove it or lose it. 99/100 they can't and unless you have made an agreement with the collection company, you didn't agree to do business with them anyway (a little known fact.. you actually don't owe a collection company even if they did buy the debt). This is an amazing tactic I just learned and I got rid of entries/ accounts with balances because if they can't validate the debt, it disappears. Not just the credit entry, the entire debt goes away. If the original creditor ever tries to get a judgment and the collection company/or original creditor didn't validate the debt you have a VERY strong defense that there is no debt at all. Look at www.dueprocess.org for the letter also, this website saved me lots of money! and the basic info is free and it works!!!http://www.primenet.com/~kielsky/credit/credit.html and for extra help the Yahoo group credit-repair answered lots too! Hope this helps!
They probably don't know she wants to buy a home, unless she told them. So what incentive do they have to file now that they didn't have before? The cost has always been a few hundred dollars, but that was enough to deter them before. Also, the CRA's require no evidence to report a balance on a repossession, but somewhere in this great land, a judge may actually require evidence before issuing a judgment. Hence, reported debts are far more common than successful judgments. My point about threatening to file for bankruptcy was not that she should actually file, or even threaten to file, now. The point was that the threat should be reserved for a later time, and not exhausted prematurely.
