Settling old debts...

Factual Questions
#1

This info is not for me. My own credit is messed up good, and will remain so for some time. This question is for my best friend who actually tries to keep her shit together.

She has some debts from the past. A credit card bill and a cell phone bill about 5 and 7 years old respectively.

Recently, she decided she wanted to up her credit score, which right now, is average. Credit card offered to settle with her for six hundred and something, and so did the cell phone company. I think both bills were originally a thousand or something like that.

Will this help her? I’m not asking about her moral obligations to pay her bills…those are her own ethics. I am asking about whether or not this will benefit her credit.

#2

It probably will not fundamentally improve her credit score. Only deleting the info will help. Some creditors will do “pay for deletion” - some consider that unethical.

If you do a search for the creditors name along with “pay for delete” or “pay for deletion” you probably will be able to find forums that discuss that specific situation.

She will need a letter with them agreeing to do this. Don’t trust what they say over the phone.

#3

BTW - the seven year one should be off her report soon. She doesn’t “have” to pay that. It may already be off.

#4

Thanks, DataX. Damn. Seems impossible to get a good score once you’ve messed up.

#5

Really??

#6

Yes - absolutely - most bad credit is removed after seven years. If you make a partial payment on it - that can rest the clock (long story - but see “reageing” . Do not do this obviously without a letter.

She should get her reports - from trans union, trw, and equifax. They usually have some sort of notation as to when the bad credit items will drop off.

#7

DataX, thank you so much. I had heard tale of such things, but thought folks were just spinnin’ yarns! No idea why I’m speaking in an old white Southern lady’s dialect.

#8

Yeppers, states have Statutes of Limitation for different kinds of debt. Pay a penny on that debt and it starts aging from day one again.
Have you got the vapors, Nzinga?

#9

Well, pah’haps I do, Nawth! I’ll sip this heah sweet tea an’ if I can’t calm my lil’ ol’ self down.

So, she hasn’t paid anything. She has only agreed to pay. I hope that doesn’t mean anything.

#10

Bear in mind that the Statutes of Limitation vary, state-by-state . . . as shown in Nawth Chucka’s link.

I hope your friend doesn’t live in a state like Ohio.

#11

NYS.

I’m a bit confused. It is saying the Statute limits the time you can be sued. But won’t it still be a bad mark on your credit report?

#12

Yes.

Statute of limitations is how long they have to sue her.

Bad credit can stay for 7 years.

Both can be “reaged”

Most people don’t realize that basically your “bad” credit comes down to:

  1. How long ago your most recent “bad” account was.

That is it. I’m not including stuff like inquiries and high debt to credit ratios - they are bad too (in many cases).

Plenty of people think that if they have four bad accounts - and get rid of two - it will help their score. It won’t (at least by much). Unless the two accounts are more recent. The older it is the less it matters.

Also - anything other than paid on time is bad. Paid 90 days late, charged off, settled for full amount, settled for partial amount - all are bad - you would think “settled, but paid in full” would mean something - but it really doesn’t. You will probably need to do this if applying for mortgage, but not for same reason.

#13

Ok. This is all great info. Thanks so much.

#14

THIS IS IMPORTANT!

What is being referred to above is the “Statute of Limitations” on collecting debts.

This is entirely different than credit reports.

Once you default on a debt, the creditor has x years to collect - after that they cannot use the courts (e.g. sue you) to collect.

That clock starts running when you make the last payment. NOTE THE WORD: LAST

If you EVER make a payment on that account, the clock resets.

(the term is “activity” - either a purchase or a payment). The statute of Limitations runs from the date of the last “activity”. Once the Statute has expired, that debt (it is still out there, being sold for 5 cents on the dollar to collection agencies) cannot be enforced - no suits, no garnishment, no seizure, nothing.

Here is where the collection folks try to make that old, dead debt good (yes, the dead CAN be raised):

“Look, we understand sometimes people just can’t make a payment (for 5 years!!!); we’d like to help you get this off your record - just send us a few dollars - 5 or 10, to show you really want to be done with it”.

If you send them even a penny, that is “activity”, and that old, dead debt is now alive they can once again use the courts (and these people will) and all the tools allowed in your state (garnishment, seizure, etc.)

Don’t pay a debt that is past your state’s SOL unless you really do want to get them calling you every day, and most importantly, putting it back on your credit report.

You credit score is you these days - I know VERY well (currently in Chap 7). Do not take unnecessary chances - that debt will live forever*, but it will be off your credit report and it will be unenforceable.
Please see a lawyer (bankruptcy lawyers know this stuff in and out, and usually give free 30 minute consultations). And have your credit reports in hand when you do.

You are entitled to one free copy of your report from each of the agencies once a year - look at the google results carefully - a bunch of people will try to look like the oneayear - they will offer a free report to get you to sign up for a monthly-fee “service” of questionable value.

Maybe someone can offer the link to the real site? Tip-off - if they say “ALL 3 at once!” they may be a con - the real one makes you submit individual queries - smart people use that to get 3 reports/year - since they all have the same info, get one in Jan, one in April, and one in Aug - unless you have ones ready to fall off, and want to see if it has (or are talking to a lawyer)

    • this is where bankruptcy comes in - it kills them all, dead, buried, and cannot be resurrected.
#15

Annualcreditreport.com is the 3 a year free; I do one every quarter spread out over the year.
Keep in mind your credit report/score and the laws regarding debt are only linked tenuously. Things don’t automatically fall off your report b/c the owner of that debt’s required to remove it by law; most of the time it has to be pursued, sometimes one credit reporting agency at a time.
Your friend would do well to acquaint herself w/ the highlights of the FDCPA; it doesn’t only apply when debt collectors are on the phone w/ you, it also applies when they report anything to the credit bureaus. And violations are money in her pocket if she can prove it to the FTC.
Sorry, missed this the first time - agreeing to pay doesn’t mean anything. It doesn’t reset aging, it can’t be used against her in court, it’s simply words. Who’s she speaking to: the original debt holder, a third party debt collector or a debt collector who now owns the debt?

#16

As others have said, after 7 years they will disappear from her credit (or they are supposed to and can be deleted with a challenge). If they haven’t sued her yet, they likely won’t even if they are still within the SOL of your state. If they do end up suing, then that changes the strategy.

But if it were up to me, I would only pay such small amounts if I had a written agreement to delete the negative trade line.

#17

Sigh. As soon as I think I have everything down pat, someone posts something to throw me off. Now, jtgain, you seem to be saying there is a benefit in paying small amounts. Negative trade line?

#18

Tangential question: I’ve been getting reports exactly this way for several years now. (It happens that I fill out the paper form and snail-mail it in. But I could do it on-line just as well.)

I would like to order a report, to include my credit score, every once in a while. How the fuck do I do this? Neither the paper form nor the on-line form have a place where one can request that the credit score be included.

I should think there would be one little box to check, and I could send it with a check or money order (or use a credit card to order on-line). But no. And these forms don’t seem to have any instructions on how to order a credit score either, except for an inconspicuous mention of some phone number I have to call. Is that really it?

How do I order one to these annual credit reports, with credit score included?

(ETA: And if I call that phone number on the form, do I get connected to somebody who speaks English, or does it go to some unintelligible call center on the far side of Uranus?)

#19

Sorry, the negative trade line is the entry on your credit report. I didn’t mean to contradict what others have said. There is very little benefit to your credit score by paying off these amounts unless the creditor agrees to remove all information about them from your credit score.

#20

When you do the online version there’s a box you tick to buy your credit score. If you have concerns about online security, use a prepaid Visa/Mastercard/AmEx you can pick up at the grocery store to pay for it.

Nzinga, what **jtgain **means is to pay OFF the small amounts to have the negative removed; that could either mean paying the entire amount (if it’s affordable) or making a settlement for .XX/dollar w/ the creditor. Either way, not ‘paying on’, per se but rather ‘clearing’ the debt.