This may seem silly, and I have to say my gut instincts tell me that this must be an urban myth.
More than a few people have told me that many legal debts “expire” after something like 7 or 10 years (I have heard both). This simply cannot be true- it would be incentive to “stick it out” and avoid the bill or mail/telephone until this period expires!
Many urban myths, have a grain of truth in them somewhere which is usually exaggerated, lending credence and providing “proof”.
So,
Is this true? Do some debts legally “expire”? ie., after a specified period of time the lender/ower no longer lends/owes-
and, assuming in advance that this is not the case,
Is there a grain of truth in this idea?
-Just had to say that I love this place, I have settled a couple things which…sort of kept me up at night.
Not sure about credit card debt, and other types of and personal debt, but debts recorded as judgements against real estate can survive decades and more until the liens are satisfied.
Most “debts” are contracts. All states have a statute of limitations for actions based on contracts. If the statute runs before the creditor sues you, then the debt becomes unenforceable, with some limited exceptions.
Under the Fair Credit Reporting Act, a debt cannot be reported when seven years have elapsed since the time the debt was written off to profit and loss or placed for collection by its owner. People sometimes confuse this concept with the statute of limitations concept.
If a creditor sues before the statute of limitations runs, the creditor can get a judgment. Judgments are good for a long time.
Under the Fair Credit Reporting Act, a judgment can be reported for seven years from the date of their entry.
People do this regularly. But the big flaw in their plan is, it’s next to impossible to secure further credit. Unless one’s independantly wealthy or bequested items or willing to drive beaters and rent their whole lives, they’ll never pull themselves out of the American third world without credit.,,
*Granted I guess there are places (NYC?) where people don’t own personal vehicles and pretty much are expected to rent – but you know what I mean.
**And renting’s good for a lot of people that could purchase but have good reasons for not doing so.
***Oh, come on – you know what I mean! Credit’s important.
Balthisar’s kinda right, but it goes further than that. EVERYTHING checks your credit nowadays. He suggested renting, but all the complexes I’ve lived in have checked my credit report. I think some employers check credit records, too.
I’ve always needed a credit check to rent an apartment, unless it was a sublet. The requirements to rent a place in NY can be ridiculously difficult to meet.
So, what happens when the credit report lists an entry which has a “Date Opened” date of, say, March of '98, and a “Date Reported” date of August of 2003? Is the “Date Reported” just an update? Does the 7 year count begin from the earlier “Date Opened” date?
Also, would there be any reason for an entry to be listed on a report ten years after its open and close date (which happened within a month of each other)?
It looks like, then, the old debts should be soon clearing off (within this year or next year). Is it safe to assume that the latter dates, the “Dates Reported”, were just updates which don’t take away from the 7 year count?
It’s an old school loan for which I signed but of which I never took possession. The open date was in 08/94, and the close date was 09/94. I withdrew from the school to which I was going before the term even started, so the money never went anywhere. It’s fairly simple, the loan was for just a couple grand, so I’m not sure why it’s still there. I’m disputing it, so I’ll be interested in seeing what happens.
Legally those dates do not extend the 7-year period. I wouldn’t make any assumptions. Wait the 7 years, get a fresh credit report, and if they are still there, take action.
So what happened to the money? You never got it. Did the school keep it? Hmmmm . . . Yes. Send a validation letter on that baby. How is it described in the tradeline?
Oh, I didn’t mean to imply that a credit record wasn’t necessary to get an apartment; I meant to head of complaints that owning a home isn’t necessarily everyone’s idea of the American style of life.
Yeah, it can be pretty tough. I usually recommend going the non-institutional private landlord route for people with bad credit. Actually, though, Skipmagic’s credit scores might not be that bad. He could probably get a mortgage with little trouble, though it would cost more.
Yes, but it happens all the time. Dispute it, and it will 99% go away. The credit companies claim this happens purely due to “clerical errors” but I also think that do it on purpose sometimes. The chance of a penalty being incurred against the company if they take it off after you dispute it and claim it ‘was just a clerical error" is pretty close to nil.
Balthosar make one critical error- "your while life’. Nope, they go away after 7 years- except bankrupty which lasts for 10 years. So if you have the worlds crappiest credit, but tough it out for 7 years- or declare Chpt7 and wait for 10- then you’re 100% free and clear.
Note- don’t do this unless you really have to, and if you can- declare bankruptcy. But if things are really really grim- if you just stop digging the hole deeper, you’re out in 7 years. If they ain’t gonna actually sue you and get a judgement, you can just destroy all CC, and tough it out for 7 years. If they could repo things that are nessesities, or they might sue or garnish your paycheck- you need to go for Chpr 7. Again- only if things are very very grim, and plain old belt tightening or those “debt counseling & consolodation” agencies (and check those out first- some are scams and some are bad deals) is not enough.
Really, 7 years isn’t all that long. I had to declare Chtr 7 because of a stupid lawsuit (and I had a bunch of CC debts at high interest also- but the suit broke me), and after 3>5 years they were offering Credit again, after 7 that Bankruptcy is often ignored, and after 10- you’re free!
Now one thing- don’t repay a very old debt that was already “written off”. Sometimes it can makes things worse- it’s not supposed to, but it still does.
Final note- check your credit report once a year. Many errors creep in it if you don’t.
This point touches on the only thing I have to add to Gfactor’s excellent posts. Statutes of limitation* do not begin to run on the date of the contract. They begin to run on the date of default, which is usually the date a payment is due (and is not made). Also, in some states, it is possible to reaffirm a debt and thereby restart the S/L.
{I just spent 15 minutes with the search engine trying to find a thread I know exists which had a long discussion on the reaffirmation issue, but could not. Damn.}
*There are such things as statutes of repose which do run from the date of the event and not the date of the default/injury, but they’re less common and generally don’t apply to contract claims.
You know, back when I used to work for a bank, this issue came up repeatedly. People kept insisting we shouldn’t be reporting any debt seven years after it was made, rather than when it went into default.
I never understood it. I mean, most mortgages these days are for 30 years. You don’t think it should show on your credit report for those last 21 years?
And it can be more complicated than that. If it is an installment contract, the statute can run from the date each instuallment was due. It depends on a number of factors including the state you live in, the terms of the contract, and whether the contract has a choice of law clause in it.