# Can charged-off debts be bought and pursued again? **URL:** \ **Category:** Factual Questions\ **Created:** [February 22, 2006, 5:29am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597 "2006-02-22T05:29:08Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![dnooman](https://avatars.discourse-cdn.com/v4/letter/d/839c29/32.png) [@dnooman](https://boards.straightdope.com/u/dnooman)\ **Post date:** [February 22, 2006, 5:29am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/1 "2006-02-22T05:29:08Z")
Let’s say you have a credit card debt that gets charged off, can a company buy that debt and then hound you for the money? Would you still legally owe anyone the money? Would it be legal for a company to do this? ---
**Author:** ![dnooman](https://avatars.discourse-cdn.com/v4/letter/d/839c29/32.png) [@dnooman](https://boards.straightdope.com/u/dnooman)\ **Post date:** [February 22, 2006, 5:57am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/2 "2006-02-22T05:57:27Z")
It seems they can. Shoulda googled first. Mods, feel free to close this. ---
**Author:** ![cwthree](https://avatars.discourse-cdn.com/v4/letter/c/9de0a6/32.png) [@cwthree](https://boards.straightdope.com/u/cwthree)\ **Post date:** [February 22, 2006, 5:59am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/3 "2006-02-22T05:59:36Z")
> [@dnooman](#): > > Let’s say you have a credit card debt that gets charged off, can a company buy that debt and then hound you for the money? Would you still legally owe anyone the money? Would it be legal for a company to do this? Usual disclaimer: I am not a lawyer, and this is not legal advice. I can’t tell you if it’s legal anywhere, and I can’t tell you if there are exceptions to what I will describe. My understanding is that this is common practice. Creditors sell debts in order to relieve themselves of the burden of collecting or servicing the debt. Basically, it’s a way of turning the debt into money without actually collecting on the debt. Basically, the original creditor sells the right to collect the debt. The new creditor purchases that right for a fraction of the value of the debt, and in exchange it has a chance to collect the full amount of the debt. Debts may be sold and re-sold several times in this manner. If you have a home mortgage, you’ve probably also been part of this. Mortgages are routinely sold from one lender to another. This is more or less transparent to the borrower, who may see no change besides a letter from the new mortgage holder. The amount owed does not change because that’s a function of the original mortgage agreement, which is between the homeowner and the original lending institution. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [February 22, 2006, 6:06am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/4 "2006-02-22T06:06:28Z")
I am pretty sure the answer to this question is yes…someone can come after you for a debt even if the original creditor already wrote it off as a loss. I say this because I am pretty sure it happened to me once. A company “writing off” a debt is merely internal accounting to them. You still owe the money. The company has just decided, for whatever reason, that it is a debt they will not collect on. If somewhere down the road someone offers to collect on that debt for them they may figure why not? Heck…if they have written it off even $0.10 on the dollar is more than they figured they’d see if they just let it fade away. That said there is a statute of limitations on how long a debt can sit before no action can be taken at all. IIRC this varies from state to state. Even then though it can still haunt you. Personal example: Apparently Cingular bought out some company (no idea who) with whom I had an outstanding debt. This debt was incurred in 1992. I have never done business with Cingular ever. I went to get a new cell phone from Cingular and they told me I owed them $600. I had no idea what they were talking about and how they figured I owed them that. After pursuing the issue it turned out they essentially bought my debt along with the rest of some other company. The statute of limitations has passed (and I honestly do not remember owing that anyway) but Cingular refused me an account till a ponied up $600. Needless to say I did not want their cell phone that bad. I considered that having just given them all sorts of personal info they may well chase me down for that money again but, as mentioned, I checked and found I was beyond the statute of limitations for collection (and doubtless my credit history already got dinged to hell for it). ---
**Author:** ![The\_Swan](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@The\_Swan](https://boards.straightdope.com/u/The_Swan)\ **Post date:** [February 22, 2006, 6:13am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/5 "2006-02-22T06:13:46Z")
> [@Whack-a-Mole](#): > > That said there is a statute of limitations on how long a debt can sit before no action can be taken at all. IIRC this varies from state to state. Even then though it can still haunt you… > > The statute of limitations has passed … > > but, as mentioned, I checked and found I was beyond the statute of limitations for collection (and doubtless my credit history already got dinged to hell for it). Are you sure there is a statute of limitations on an outstanding debt? I though that was not the case, though I really don’t know. I thought a statute of limitations only applied to the government. Do you have a cite, by chance? ---
**Author:** ![Common\_Man](https://avatars.discourse-cdn.com/v4/letter/c/f1d935/32.png) [@Common\_Man](https://boards.straightdope.com/u/Common_Man)\ **Post date:** [February 22, 2006, 6:18am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/6 "2006-02-22T06:18:08Z")
> [@The Swan](#): > > Are you sure there is a statute of limitations on an outstanding debt? I though that was not the case, though I really don’t know. I thought a statute of limitations only applied to the government. > > Do you have a cite, by chance? > **[Statute of Limitations for Debts, Credit Cards & Judgments](https://carreonandassociates.com/statute-of-limitations/)** > > Find the statute of limitations for debts, judgments and taxes for all states.  The SOL is a civil code to determine expired debts. ---
**Author:** ![The\_Swan](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@The\_Swan](https://boards.straightdope.com/u/The_Swan)\ **Post date:** [February 22, 2006, 6:19am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/7 "2006-02-22T06:19:35Z")
> [@The Swan](#): > > Are you sure there is a statute of limitations on an outstanding debt? I though that was not the case, though I really don’t know. I thought a statute of limitations only applied to the government. > > Do you have a cite, by chance? Google to the rescue, again. It seems as though a statute of limitations for debt only applies to the period of time during which a company can file a lawsuit. They are entitled to recognize the debt, and attempt to collect on it, for as long as they wish. Also, the statute of limitations does not apply to credit reports. In other words, they can report a delinquint payment to the credit bureaus many years after the statute of limitations on the lawsuit has passed. ---
**Author:** ![Common\_Man](https://avatars.discourse-cdn.com/v4/letter/c/f1d935/32.png) [@Common\_Man](https://boards.straightdope.com/u/Common_Man)\ **Post date:** [February 22, 2006, 6:22am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/8 "2006-02-22T06:22:12Z")
> [@The Swan](#): > > Google to the rescue, again. It seems as though a statute of limitations for debt only applies to the period of time during which a company can file a lawsuit. They are entitled to recognize the debt, and attempt to collect on it, for as long as they wish. Also, the statute of limitations does not apply to credit reports. In other words, they can report a delinquint payment to the credit bureaus many years after the statute of limitations on the lawsuit has passed. They can attempt to collect forever. But after the SOL runs out there is nothing legally they can do. No lawsuits, no garnishments, no nothing. ---
**Author:** ![The\_Swan](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@The\_Swan](https://boards.straightdope.com/u/The_Swan)\ **Post date:** [February 22, 2006, 6:26am UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/9 "2006-02-22T06:26:36Z")
> [@Common Man](#): > > They can attempt to collect forever. But after the SOL runs out there is nothing legally they can do. No lawsuits, no garnishments, no nothing. They can reduce your credit score. I would call that a very serious something. Otherwise, you are correct. ---
**Author:** ![racer72](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/racer72/32/3075_2.png) [@racer72](https://boards.straightdope.com/u/racer72)\ **Post date:** [February 22, 2006, 12:41pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/10 "2006-02-22T12:41:02Z")
> [@Common Man](#): > > They can attempt to collect forever. But after the SOL runs out there is nothing legally they can do. No lawsuits, no garnishments, no nothing. Not true. Many folks have found themselves owing money on judgments when they ignore the summons to appear in court. The statute of limitations on the debt is a valid defense to have the lawsuit dismissed, it does not stop attempts to collect on the debt. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [February 22, 2006, 12:45pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/11 "2006-02-22T12:45:41Z")
> [@The Swan](#): > > Also, the statute of limitations does not apply to credit reports. In other words, they can report a delinquint payment to the credit bureaus many years after the statute of limitations on the lawsuit has passed. Statutes of limitations for enjoining collections on debts vary on a state-by-state basis; there’s nothing in the federal law that I’ve ever found that limits this, although there are federal regulations for getting creditors to leave you alone. However, _there is a federally mandated_ reporting period for credit reports, too, after which the deficiency can no longer be reported. This is seven years after the date the original debt went bad. It doesn’t matter if a debt is sold or given to a new collection agency or anything; it’s seven years from the original date. Last time I checked, the statute of limitations for collection in Texas was 6 years, so it would only be one more year on your credit report. As it is, if you have four years of excellent credit, and a charge-off that’s five years old, it probably has very little effect on your score anyway. And even if it does, it’ll only hurt those stupid instant approvals at Best Buy anyway. For something as important as a car loan or mortgage, a real, live person will look at your report and not rely on _just_ the FICO. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [February 22, 2006, 3:00pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/12 "2006-02-22T15:00:44Z")
> [@cwthree](#): > > . > > If you have a home mortgage, you’ve probably also been part of this. Mortgages are routinely sold from one lender to another. This is more or less transparent to the borrower, who may see no change besides a letter from the new mortgage holder. The amount owed does not change because that’s a function of the original mortgage agreement, which is between the homeowner and the original lending institution. We are on our 12th mortgage company in 16 years :eek: I should amend that, i _think_ we are still held by midland mortgage, but i cant swear to it. We were sold 4 times back in 97 ☹ ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 22, 2006, 3:23pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/13 "2006-02-22T15:23:13Z")
> [@The Swan](#): > > They can reduce your credit score. I would call that a very serious something. > > Otherwise, you are correct. There is a limit on how old a debt can be for purposes of reporting it on a Credit report- and that is (not counting Bankruptcies) only 7 years. Which is also the standard SOL on debts. However, it’s 7 years from the time where you missed your payment/went late and thus SOMETIMES a credit grantor will try to “restart” the 7 years all over again if you start paying a very old debt. Thus, it is my advice IANAL to not go and pay off debts where they reported you as delinquent more than 4 or 5 years ago. Let me make that clear- if you stopped paying some 5 years ago, they had reported you as delinquent then, and you haven’t had any other payment activity on that old bad debt for those 5 years- then just tough it out for another two. Some dudes sometimes get a decent job and decide they want to fix their credit report by paying off soem very old debts- some of which have been written off for many years. This can make things worse. Of course, if they get a judgement or soemthing, or if you can make a deal where they promise to take off all derogatory bureau information and maybe pay only the prinipal, then that’s differnt. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [February 22, 2006, 3:48pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/14 "2006-02-22T15:48:44Z")
A creditor can only sue on a debt until the statute of limitations has expired. With respect to reporting a debt on the credit report, the debt can be reported for up to seven (or seven and a half, really) years: > [@15 U.S.C. § 1681c](#): > > Requirements relating to information contained in consumer reports > > **(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:** > > ``` > (1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years. > > (2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period. > > (3) Paid tax liens which, from date of payment, antedate the report by more than seven years. > > ``` > > \*\* > (4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.(1)\*\* > > ``` > (5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.1 > > ``` > > (b) Exempted cases. The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with > > ``` > (1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more; > > (2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or > > (3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more. > > ``` > > \*\* > © Running of reporting period. > > ``` > (1) In general. The 7-year period referred to in paragraphs (4) and (6)(2) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.** > > (2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996. > > ``` > > (d) Information required to be disclosed. Any consumer reporting agency that furnishes a consumer report that contains information regarding any case involving the consumer that arises under title 11, United States Code, shall include in the report an identification of the chapter of such title 11 under which such case arises if provided by the source of the information. If any case arising or filed under title 11, United States Code, is withdrawn by the consumer before a final judgment, the consumer reporting agency shall include in the report that such case or filing was withdrawn upon receipt of documentation certifying such withdrawal. > > (e) Indication of closure of account by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(4) [§ 1681s-2] that a credit account of a consumer was voluntarily closed by the consumer, the agency shall indicate that fact in any consumer report that includes information related to the account. > > (f) Indication of dispute by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(3) [§ 1681s-2] that information regarding a consumer who was furnished to the agency is disputed by the consumer, the agency shall indicate that fact in each consumer report that includes the disputed information. (Emphasis added). Statutes of limitation are typically a year or more shorter than this. [http://www.bankrate.com/brm/news/cc/20040116b1.asp](http://www.bankrate.com/brm/news/cc/20040116b1.asp) If you make a payment or acknowledge the debt after the statute has run, you risk, re-starting the statute of limitations. [http://www.stikeman.com/newslett/BaJan04.htm](http://www.stikeman.com/newslett/BaJan04.htm) Welcome to my 3000th post. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [February 22, 2006, 4:49pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/15 "2006-02-22T16:49:04Z")
> [@Gfactor](#): > > If you make a payment or acknowledge the debt after the statute has run, you risk, re-starting the statute of limitations. [http://www.stikeman.com/newslett/BaJan04.htm](http://www.stikeman.com/newslett/BaJan04.htm) But that’s for Canada; specifically it’s for Ontario. I know they’re only a few miles from us, **Gfactor** , but their funny and strange customs don’t apply to us yet. > [@](#): > > Welcome to my 3000th post. I see “3002.” 😉 Really, though, it’s illegal for anyone to restart that clock! The Philster should be around shortly to resolve that one. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [February 22, 2006, 6:47pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/16 "2006-02-22T18:47:58Z")
> [@Balthisar](#): > > But that’s for Canada; specifically it’s for Ontario. I know they’re only a few miles from us, **Gfactor** , but their funny and strange customs don’t apply to us yet. oops. Sorry about that. The same basic rule applies in the US. Acknowledgement of a lapsed debt is a defense to a statute of limitations defense. _E.g._, [http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=5th&navby=case&no=9630692cv0;](http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=5th&navby=case&no=9630692cv0;) [http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ny&vol=085&invol=0001;](http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ny&vol=085&invol=0001;) [http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=11th&navby=case&no=973286man;](http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=11th&navby=case&no=973286man;) [http://www.oscn.net/applications/oscn/DeliverDocument.asp?citeID=39](http://www.oscn.net/applications/oscn/DeliverDocument.asp?citeID=39) The FTC has ruled that a consumer payment does not restart the Fair Credit Reporting Act clock. [http://www.ftc.gov/os/statutes/fcra/amason.htm](http://www.ftc.gov/os/statutes/fcra/amason.htm) But that is different. ---
**Author:** ![racer72](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/racer72/32/3075_2.png) [@racer72](https://boards.straightdope.com/u/racer72)\ **Post date:** [February 22, 2006, 7:30pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/17 "2006-02-22T19:30:12Z")
> [@Gfactor](#): > > A creditor can only sue on a debt until the statute of limitations has expired. Again, not true. I can point you to many threads at [Creditboards.com](http://www.creditboards.com) and [Free Advice Forums](http://forums.freeadvice.com) where folks have been successfully sued for consumer debt after the SOL has expired. In virtually all the cases the respondants failed to answer the summons they were served and default judgments were granted. Many of those assumed that the SOL defense was automatic so they did nothing till after bank accounts were siezed or wages garnished. The folks that answer the many of the posts at the above referenced sites claim that there is no law that prevents collection attempts, even suing in court, on debts that have exceeded the SOL. The people being sued need to answer the summons and appear in court using the SOL as a defense, it does not just happen. ---
**Author:** ![racer72](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/racer72/32/3075_2.png) [@racer72](https://boards.straightdope.com/u/racer72)\ **Post date:** [February 22, 2006, 7:33pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/18 "2006-02-22T19:33:14Z")
Correct link to [Free Advice Forums.](http://forum.freeadvice.com) ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [February 22, 2006, 7:36pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/19 "2006-02-22T19:36:22Z")
> [@racer72](#): > > The people being sued need to answer the summons and appear in court using the SOL as a defense, it does not just happen. A good point. You can’t simply ignore a complaint. And sometimes people get sued even though they have valid defenses. If you get sued, you need to talk to a lawyer. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [February 22, 2006, 8:05pm UTC](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597/20 "2006-02-22T20:05:11Z")
> [@racer72](#): > > Again, not true. BTW, while it is true that statute of limitations is an affirmative defense that must be raised in an Answer, it is equally true that most statutes of limitation prohibit the filing of time-barred claims. E.g., > [@](#): > > 600.5807 Damages for breaches of contract; specific performance; fiduciary bonds; deeds; mortgages; surety bonds; appeal bonds; public obligations. > > Sec. 5807. > > **No person may bring or maintain any action to recover damages or sums due for breach of contract, or to enforce the specific performance of any contract unless, after the claim first accrued to himself or to someone through whom he claims, he commences the action within the periods of time prescribed by this section.** > > (1) The period of limitations on actions charging any surety on any bond of any executor, administrator, guardian is 4 years after the discharge of the executor, administrator, or guardian. > > (2) The period of limitations is 10 years for actions founded upon bonds of public officers. > > (3) The period of limitations on actions founded upon bonds executed under sections 41.80 and 41.81 of the Compiled Laws of 1948, is 2 years after the expiration of the year for which the constable was elected. > > (4) The period of limitations is 10 years for actions founded upon covenants in deeds and mortgages of real estate. > > (5) The period of limitations is 2 years for actions charging any surety for costs. > > (6) The period of limitations is 2 years for actions brought on bonds or recognizances given on appeal from any court in this state. > > (7) The period of limitations is 10 years for actions on bonds, notes, or other like instruments which are the direct or indirect obligation of, or were issued by although not the obligation of, the state of Michigan or any county, city, village, township, school district, special assessment district, or other public or quasi-public corporation in the state of Michigan. > \*\* > (8) The period of limitations is 6 years for all other actions to recover damages or sums due for breach of contract.\*\* (Emphasis added.) [Next page](https://boards.straightdope.com/t/can-charged-off-debts-be-bought-and-pursued-again/345597.md?page=2)