Do collection accounts age off your credit report after 7 years?
So I have debt from store lines of credit to a bank credit card. I haven't paid on them since at LATEST December 2007. Chase, citi financial (store line of credit) and Sears line of credit all have it showing closed but I am getting reporting from some debt collector companies.
I live in Arizona and just ordered my actual credit report today. I viewed the information online through a credit score tracking website. I read a lot of comments and researched online somethings. My questions are can any of them take me to court still because from what I read some debts are 3 years and some are 6 here in Arizona, I am not sure what they fall under, also at 7 years they have to stop reporting to my credit so I am told. Does this mean that it will show the old reports but they cant continue to report and since the original lenders have the accounts closed can the debt collector who purchased the debt also show up as a closed account or do they just disappear forever?
Any information to better understand when or if this will ever not be an issue for me would be helpful, as these debts were ran up by my ex and are thousands of dollars I cant and haven't been able to afford to even attempt to fix.
Do collection accounts get removed from my credit reports after 7 years?
—Jennifer
Short answer
Yes, but the clock is not the one most people count from. Negative items stay on your credit report for up to 7 years measured from the first missed payment to the original lender, and every entry tied to that same debt should age off on that same date.
Key points on this page
- Original lenders and creditors show payment default for up to 7 years from when you stopped paying.
- The 7 years starts at the first missed payment to your lender, not at the date a collection agency or debt buyer picked up the account.
- All negative trade lines related to the same collection account should age off at that same 7 year mark.
- Only one entry for a bill should show an unpaid balance. If a debt buyer reports a balance owed, check that the original lender no longer shows one.
- A collection account reporting a newer date of last activity prolongs the credit damage, so compare that date against the original lender’s.
- If the debt is still inside the statute of limitations to sue, a dispute can wake a collector who was not bothering you. Weigh that before sending one.
Original lenders and creditors show payment default on your credit reports for up to 7 years from when you stopped paying on the account.
When you first miss payments to a creditor or lender, you will see late pays show up in 30 day blocks of time on your credit report. If the accounts remain unpaid long enough, those 30 day incremental late pays turn into a charge off reporting on your credit. With credit cards, charge offs normally occur within 180 days of consecutively missed payments (they can happen sooner than 180 days).
The 7 years the negative item stays on your credit report starts from the first missed payment to your lender.
When your accounts get this far behind, it is standard to have the account placed with outside collection agencies, and often repeatedly. Many creditors have a practice of selling off debts that remain unpaid long enough to debt buyers. They are legally transferring the rights to the debt to someone else, as is often laid out in your original contract with them.
Collection Agencies and Debt Buyers Showing Up on Your Credit Report
When an additional entry from a collection agency shows up on your credit report it is important to look for some key items:
- Is the new entry showing a balance due? A debt buyer who reports a collection account to the credit bureaus with a balance owed should be matched with the original lenders negative credit reporting to be certain that the original lender no longer shows a balance is owed to them. You should not have more than one credit entry showing an unpaid and due amount on your report for the same bill.
- Does the collection account show a date of last activity on your report that is different than the date your original lender is showing? Collection accounts that are reporting separate from, but related to an existing negative item on your report, should not show a newer date. If a newer date is used by a collection agency reporting, it prolongs the credit damage and will take longer for you to improve your credit.
All negative trade lines related to the same collection account should age off of your credit report at the same 7 year mark you use to calculate your first missed payment to your original lender. The exception used to be when people got sued for collection and ended up with a judgment over one or more of the debts – which would show in the public records section of your credit report for 7 years from the date judgment was entered in the court.
Most judgments obtained in state courts were taken off our credit reports with Equifax, Experian, and TransUnion as of July 2017
What to Do If You Need to Dispute a Collection Account on Your Report
I will have an upcoming article about disputing incorrect information on your credit report, but for now, it is important to consider the following:
If your debt is within the SOL (statute of limitations), to legitimately sue you for collection, you should carefully consider whether or not to send a dispute about a collection account on your credit report, even if it is showing incorrect information. When there is still room on the clock to sue you, sending a dispute may wake the collector to the fact that you are:
- Still an unpaid account.
- Care enough to start cleaning up your credit report (usually for some credit goals, which means you are more collectible).
If your debts are beyond the SOL to sue you legitimately, you should have less concern about waking a sleepy debt collector who may not have been bothering you, with disputes about getting your credit reports corrected.
Legislation was passed in 2011 that changed the SOL from 3 to 6 years in Arizona. Given the information you shared about 2007 being the earliest date of last payment, your debts may/may not be off of the current debt owner’s radar. You would need to be certain about the date each of account was last paid. Any of them you know were paid last in 2006 would be clear of the SOL.
Reviewing your credit reports for accuracy when you know you have old collection items is important. Staying on top of when and how to get your credit reports corrected will help you plan for future access to credit at fair prices.
If you have a particular issue or question you can post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi, Michael
I edited the last post and please consider this is the correct one. Thanks a lot.
First of all, thank you for your efforts to help people to deal with their credit issues and hope you can give me some suggestions on my cases.
I am living in California.
On my credit report which I got it from Transunion yesterday, in the Public Records Section, there is state tax lien $6,525;
Date filed: 08/20/2012
Date Updated: 09/19/2012
Responsibility: Individual Debt
Court Type: Recorder of Deeds
Estimated month and year that this item will be removed:07/2022
In Adverse Accounts Section, there are two accounts both with Chase bank
Home Equity Loan
Date opened: 09/27/2006
Date Updated: 01/31/2010
Dated Closed: 01/27/2010
Last payment Made: 07/23/2009
Pay Status: Charged off
High Balance $182,000
Credit Limit $182,000
Remarks: >Unpaid Balance Charged off
Estimated month and year that this item will be removed: 08/2016
Conventional Real Estate MTG
Date opened: 08/31/2006
Date Updated: 07/31/2009
Date Closed: 07/31/2009
Last payment Made: 09/02/2008
Pay Status: Account 120 days past due dateForeclosure Initiated Foreclosure Collateral Sold In Collection<
Responsibility: Individual account
Account type: Open account
Original Creditor: WaterStone At Millbrae CA (rental/ Leasing)
Loan type: Collection Agency/Attorney
Remarks: Placed for Collection
Estimated month and year that this item will be removed: 05/2020
Another one which is no on my Credit Report yet, the Collector has been calling me. and it is Ambulance bill of $2,600.
My debtors seem to update the info every year so it seems that I can never get rid off my debts.
My Questions are, does the state tax lien relate to my property that has been foreclosured already? Or is it property tax? Do I need to pay the property tax?
If it is worthy for me to pay the rental and Ambulance bills in portion to settle the two cases?
Right now I have a job with $2000 income after tax and I also have one credit card with $2000 limit. And it is very hard for me to save much money to pay off the debt if you live in CA.
If you were me, what would you do to settle the debt?
I may not even look at settling the debt as an option. Not unless there were some compelling reason I should avoid bankruptcy.
The tax issue could be related to the foreclosure, but call and ask for more details.
How much is owed on the Water Stone collection account?
Do you have any lump sum of money saved up currently? If so, how much?
Thanks for your reply. The waterstone bill is $1,760 . And I have $2000 cash on hand now.
You may be able to settle the medical bill and WaterStone for 2k right now, but a few hundred more than what you have on hand today would be more realistic. The balance on the Chase home equity loan is going to haunt you for a long time. That leaves the tax lien. If you can discharge that, along with all of the other debts, through chapter 7 bankruptcy, it could provide the fresh start you need. If the tax debt is of a type that is not easily discharged, using BK to free yourself from the other bills, and setting up an affordable payment plan for the tax lien, will still get you there.
Find out what type of tax debt it is that led to the public notice of lien on your credit reports.
Talk to a bankruptcy attorney if you have not already. If you have, what stops you from filing? If you have not, you can call 877-278-8117 to talk more about the option.
If bankruptcy is just off the table, post more about that, and lets go from there.
Thanks Michael!
Actually, I talked to a bankruptcy attorney 5 months ago and she told me charpter 7 can removed all of my debits including the tax lien. The reason stopping me from filing Charpter 7 was I really not sure filing a bankruptcy is really a good solution for me or not! Is there any bad outcomes incurring in my future life? I am an immigrant with limited English and knowledge. So, I really don’t know what is a better solution for me. What will happen if I don’t take care of the debts? Will it be really gone after certain years? Will my life be different if I negotiate with my debtors and settle the debts? I really don’t know what should I do right now!
If you have not been sued yet, and the time allowed for in California to sue in order to collect expires (generally 4 years from the date you last paid), you just wait a few more years for the debts to drop from your credit reports. If you are sued, pursuing bankruptcy would be the most affordable, and complete route to debt relief. You could file now, and along with the fresh financial start, quit looking over your shoulder for debt collectors. There is a different kind of value in that.
You could probably be in and out of the bankruptcy inside of a few months, and the cost would likely be less than 2k.
As far as bad outcomes go with bankruptcy, it can vary from person to person. Most people are concerned about how bankruptcy shows on your credit reports, and how that impacts your credit scores. Read more about those concerns here.
Do you work in financial services?
Require security clearances for work?
Yes, Michael! I mayjor in accounting and now I am working in a bank!
That is the one area I would be concerned about with bankruptcy in your situation. Most focus on the credit reporting aspects of bankruptcy and the 7 or 10 years it can stay on credit reports. You can learn more about why that is not a great way to evaluate the benefits of chapter 7 here.
Thank you, Yes showing 3 repoting agencies. Credit report printout indicated potentially negative? (Seriously past due date/aasigned to attorney,colection agencym or credit grantor’sinternal collection department)
As i recalled this bills was during emergency room stay. My late husband had a medicare and medical insurance…Medicare paid all charges from this doctor except a small amount (below
$ 100. dollars ) share for medical to pay. Reason that the G.I. doctor is not accepting medical insurance..
My husband died 71 y.o. with no money and no assets. I am in the process of building up my own credit. But because of this 2 negative reports it drop down my score to 601… I was doing find with my score 4 months ago until just this month it was reported to 3 agencies…
COACHELLA VAL COL SV, I dont know his doctor’s name. My late husband said that was during hospitalization only. He doesn’t like the doctor because he was arrogant to him. The sad part is i dont have any documentation now since i destroyed it last month.
Hope by disputing this it will resolve my negative credit.. Thank you so much for quick reply.
California, As I remember it was on my husband name , collection agency tried so many times that was on his name. My late husband told me that the doctor was so mean to him reason for not paying. My husband doesn’t care about his credit history. I was wondering why is it on my credit report ?..How do I fix this problem hurting my good credit..
You can send dispute letters to the credit reporting agencies as “debt not mine”. Have you checked your credit reports to verify the collections are showing with all three?
I would try to dispute them as not yours first. Send the disputes in writing, and send certified mail return receipt requested. Post an update with what happens and lets go from there.
What is the name of the medical billing company, or debt collection agency, showing on your credit reports?
Do you recall the name of the doctor/service provider?
Hi Michael,
I just pull my credit report and noticed that I have past due medical Bills on my credit report. (account open 11/1/10 and 12/1/10). These medical bills was for my late husband who passed away recently 12/9/14. I was unaware of this medical bill. I was in Asia when my late husband hospitalized. Now collection agency trying to after me with these two accounts ($129.00 and 113.00)
These 2 medical bills hurting my good credit. What should I do first? Can I dispute these two negative accounts? Thanks
Do you recall why these bills were placed in your name and not your husbands? What state do you live in?
hi michael. i read through a lot of your advice and have a question myself.
I recently obtained a copy of my credit reports, and saw that there are 2 medical charges late as of 08. It was sold to a debt collector, and I honestly don’t ever remember being contacted about them. I had multiple addresses in a couple states over a 2 year period. I only know about them from looking at my credit report. Anyway, still to this day no one has contacted me about the debt. It says, between a couple reports, that it will fall off early to mid 2015 ish.
Is this something i need to worry about being sued over or renewing itself? Or would it be safe to just wait it out and let it disappear?
You are at risk of being sued on old debts until the SOL expires in your state. What state are you in?
Texas, honestly I would have taken care of it years ago had I known. But I was in school and not paying attention. Now that the damage is done, and I’ve already been punished for non payment, and it’s so close to falling off id like to just wait it out as long as there are no adverse effects. If that makes it worse in any way I would reach out and pay it. Considering I haven’t been contacted in 6 years is it safe to assume it will disappear quietly?
I think you are making a safe assumption that the debt will disappear from your credit reports as scheduled and quietly. The SOL is passed in Texas to use the courts (at least legitimately). The only hiccup would come if you were to be turned down for some form of loan or financing because the debts are showing on your credit reports as unresolved.
If you have no financing or credit goals in this year time frame, may just want to let things lay.
Hello Michael,
I have an old credit card from BOA my last payment was in july of 2006 the balance left was $3600 it was charged of in about October of 2006 with a balence of about $4900 in my credit report it shows it was sold seberal times but with different balances the last one being $8800 also shows that I made a payment of $85 in which I never did. I don’t understand why the balance keeps changing and why they report payments I didn’t make. Can I dispute this account? The account is in Massachusetts. Thank you
Madelyn – I would dispute this as too old to be on my credit reports (over 7.5 years since last payment). Is it a debt collector, and not Bank of America, reporting a more recent payment of 85 dollars? If so, who is the collector?
I would send my dispute certified mail return receipt requested. Wait for the credit reporting agencies to respond, and if not removed, post an update and lets go from there.
I have a debt from 2007 with cities financial for 16,000. My credit report is showing that LVNV funding purchased the debt and they are reporting it as 2009. They are also reporting late payments on the debt and have increased the dollar amount to over 32,000. My experien report says the debt should be removed July of 2014. Is this a true date and also what can I do to make them stop reporting as new every month. I am trying to buy a house and the ” new” reporting is keeping me from getting approved. Please help!
If your credit reports are showing that the debt is set to fall off in a few weeks I am wondering how any “freshness” is being added. The debt showing unpaid would hurt your chances at financing more based on the new ability to repay rules, and your debt to income being affected.
Is there some reason you have to try to finance now, as opposed to waiting for July?
We are in a rental with a purchase agreement. The lease is up and I don’t have time to wait for July. The 2 banks turned me down because of this particular charge off. They said my debt to income ratio was good and my credit score was a 647. They said with the new mortgage regulations they weren’t able to help even though they could see the original date of the debt it was being reported as new. I don’t understand why? My income is over $3200 a month and all I have is a car payment of $540. My mortgage with taxes and insurance was estimated at $730 a month.
I cannot know with the limited view I have, but my guess is that the credit reporting from LVNV is being characterized as “new” in error, but by the loan officers at the banks.
You could dispute the debt and possibly get a result you need in order to get the loan approved. My guess is that it will be mid June before you know the result of that.
You could call LVNV as see what gives. If it is a problem on their end, tell them to fix it. In the alternative, file a debt collection complaint with the CFPB. The CFPB complaint is the quickest way to get eyeballs on this by people who care about the issues, both there and at LVNV. I am just not convinced LVNV is wrong here.
I have 2 open bad accounts in South Carolina, but I live in NJ. They are both on a real estate deal that turned out to be a scam and everybody lost their units. The first mortgage was with Chase and the second mortgage (HELOC) was with Tidelands Bank. I stopped paying on March 2010 on both accounts. Chase filed for foreclosure but dismissed the case on April 2012. At that time they also stopped reporting lates. I can still go to my account online and it shows zero balance and zero amount due. Tidelands never responded to the lawsuit nor they ever contacted me, but they continue reporting lates to the credit bureaus. Those accounts will stay in my credit reports until 12/2016. I understand that SOL in SC is only 3 years, but some tell me that they can still sue me under installment payments contract law, and that is much longer. Is that true? Can they sell the debt to someone in NJ and them use NJ SOL instead of SC SOL? I am tempted to think I am on the clear now, but I am not 100% sure. What do you think?
Eduardo – I would recommend you sit down with an experienced consumer law attorney and go over all of this. The SOL in South Carolina has passed (to sue you, not to report on your credit). The SOL to sue in order to collect on a debt like this in New Jersey is not passed.
If you need help locating an experienced attorney whose practice is focused in this area of consumer law, post a comment with the name of a nearby larger city, and I will email you contact info I find.
Trenton, NJ.
Is there anything that states that the SOL to follow is the one in the state where the debt is originally taken? Or no such thing?
There can be. The jurisdiction for dispute resolution is often outlined in the original loan agreement, and can also be part of developed case law and legal strategy, even when outlined in the original loan.
I sent you an email with contact details to an experienced consumer law attorney that can best advise you.
I have a Cap One credit card that I have been paying $30.00 per month through automatic bill payer for a couple years. The account shows charged off on my credit report, but the balance goes down each month, they are not charging any more interest. Am I hurting my self and that this now will not age off my credit report until 7 years from the last payment or will it go off after the first missed payment because the creditor as charged it off.
If I am understanding what you shared correctly, the Capital One account will fall off your credit reports within 7 years of them having charged it off a couple years ago.
I lived in an apartment complex in college in 2006. Our rent was paid every month on time. As far as I can remember, we did not get our deposit back because they said the carpet was dirty. There was no damage to the property. I got a letter yesterday from a financial group stating that I owe almost $7000.00 in “past rent due, property damages, related fees and any eviction fees’. I do not believe this claim to be true and would like to contact them to dispute it within the 30 day time frame given in the letter, but I fear that responding to this letter will just open a bigger can of worms. The letter also states that they “will furnish at your written request, a verification of the debt, or the name and address of the original creditor”. The SOL in my state is 4 years for debt that is generated from a contractual agreement. Do you have an advice on how to proceed with this matter? Should I respond in writing or contact an attorney?
Lady – It is always a good idea to talk things over with an attorney. That said, you are dealing with a zombie debt collection effort. The debt cannot be sued on (not legitimately), and it is more than the time to show on your credit report. They have zero leverage were you to write a letter requesting all communications to stop, as is your right under federal debt collection laws. If you do send something like this, keep a copy and send certified mail return receipt. Keep the green card you get back, and the letter, in a safe place. If anything pops up with this collector afterward, you will want to have them.
Michael, great work by the way, I’ve been reading through this massive list of other people’s concerns and such, and didn’t really see what “I” was looking for, so hoping you can help me out;
My GF and I are coming into a small chunk of money, and while we both made plenty of mistakes financially over the years; both being older and much wiser now, our goal is to pay off all our delinquent and outstanding debts, medical bills, get our mortgage back into good standing (it is currently in “forebearance”) and basically we want to come back to “zero” if you will, and rebuild; once we’re squared away with what we owe, our initial starting plan then is to both open small secured lines of credit just to pay for gas in the cars and groceries, things we already pay for routinely, and thus stay on top of those payments; ideally just rather then paying like we normally would with cash/debit, we would be paying for those same things with credit instead, and then paying off the credit balance every month as we go, so our budget remains exactly the same, just essentially a new starting place to begin rebuilding current and positive credit, once we can get the negative squared away; and then as that is the starting place, after which we can re-evaluate our overall finances, where we stand, adjust the budget, etc. and continue on in regards to savings, investments, ultimately refinancing the house down the road, maybe buying another (more gas efficient) car mostly cash in-hand, and having just a very small and managable car loan to further build positive credit, but all in all ultimately going forward with planning for the future…
so all that said, you now got a nutshell of where we’re at and what we’re trying to do, fix and re-establish; we’re currently doing ok, our heads are above water as is, even with the increased mortgage payments due to the forebearance, we have a very strong living budget in place that we intend on sticking with even when we can cut our expenses down, but my concern is that when we both ran our credit reports, not all our debts and/or debtors are listed… one example is, i and had a car repoed after a divorce in ’08, the original debt is listed (Santander Consumer USA; bought out for $16,815 / current balance $0 and “charged off”), but there is no agency listed as having acquired that debt, nor have i recieved any notices in years, and wouldn’t know where to look to try to find an old one… it hasn’t been 7.5 years “yet” either, it’s been about 6… There are some others that are in fact listed, but also some others that “should” be there, but aren’t, and now that we do intend to pay them, like an old directTV debt, an old personal loan that was charged off, how do I/WE go abouts finding out “who” we all still owe, in regards to those accounts we know are still out there, or at least should be out there still, but aren’t listed on our credit reports… And 2nd, is it worth tracking down debtors that we owe? Because to my understanding, while after 7.5 years it will be off the credit report, it doesn’t mean the debt just went away am I correct?
We are in our 30’s now and with a family of our own, and find ourselves in a blessed position to “Get out of the hole” that we dug for ourselves, I just want to make sure we get ourselves all the way out, and not leave something unresolved that should/could be resolved, and/or also though, to not go out stirring up the bee hives that don’t need distubed, if you know what I mean… any help would be greatly appreciated, thanks.
Thanks for all of the details. It helps me get a grip of the situation set beside your goals.
What state do you live in?
Add the totals of all balances that appear on your credit reports as collections. What is the total? Add the totals of all that do not appear on your credit, but you know should. What are the totals?
Are all of the collection accounts 6 years old (since a payment was made)?
You may be at a place where more of your goals can be accomplished by not stirring things up.
we live in Pennsylvania; her grandfather, a true patriarch in every sense, and a self made man, he recently passed and thus left her a house in which we plan on moving into while renting ours out once it’s back in good standing with the bank, plus a decent sum of money in IRA’s (which we plan to keep in the IRA’s) as well as some decent life insurance and other accounts in which we plan on using for fixing our credit and household repairs, improvements, etc…
i’m honestly not sure of all the exact numbers of what’s NOT on our reports, because it’s honestly stuff I haven’t thought of in a few years since my divorce… hasn’t been anywhere near my priority list, but I have rough estimates.
listed ON HER report – $5582 would get all accounts back into good standing incl. the current mortage;
not listed, a repoed car plus some other store accounts, estimated to be around $10-15,000 total
listed ON MY report – just a $547 currently in collections,
then there’s the repoed car; listed as “charged off”; payment recieved – $16,815; with a note saying “PURCHASED BY ANOTHER LENDER; TRANSFERRED TO ANOTHER OFFICE”, but there is no “other office” listed has having that account against me currently…
projected date to be removed – 11/2015
other balances NOT LISTED on my report, estimated total around $2-5,000
so ON OUR REPORTS RIGHT NOW combined; $6129 puts us to good standing with all debts listed;
we both have repo’d cars not appearing, estimated between $25-30,000 combined
(i know those oftentimes could be settled for much less with a full payment)
and then probably around $5-10,ooo in miscellaneous debts not showing up…
so should we go looking for them in order to pay up what we owe, because as i understand it, even if they fall off the reports, we do still owe them right???
or should we just pay what’s on the reports, keep some money aside for “just in case”, and then wait and see what sleeping dragons wake up when we start paying other stuff???
also, a secondary question, once all in paid off to good standing, her credit score is currently 560 because of the mortage mainly, how long till that is back up over 600? and how long till we can get another bank to consider refinancing the current mortage at a better %rate ($70,000) considering she’ll have over $30,000 equity in the house being mortaged at that price + over $200,000 in additional equity in the 2nd inherited house which has no mortgage + upwards of at least $20,000+ left over after all is said and done, in liquid assets remaining in the bank, with proof of income in the $40,000/yr range… would we be able to refinance “right away”, say a month or 2 after all the debts are cleared back to good standing? or would we still have to wait a year or longer until the credit score comes back up???
Thanks again.
So I took another in depth look at my report(s), and I noticed that on the experian report, the car loan that I had repo’d is listed as last balance $7714, I disputed it in 2010 cited as “due to long term unemployment”, (I left the military in early 2008, couldn’t find work till late 2010, last payment was 2008, car was repo’d in 2009), and it says it was last reported 9/2012, and listed as “Transferred, Closed, $7714 written off”…
so what does that mean exactly, if it specifically says the last known balance of the account, was “written off”, does that mean they chalked it up as a loss??? i don’t exactly understand…
AND ALSO, i ran my actual scores just now, and T/U = 652, Exp = 632, and Equifx = 645, so not near as bad as i thought it would be, and certainly in a MUCH better place to build up from, so of course paying that delinquent directTV bill is priority, but after that, what suggestions do you have for rebuilding and bringing the score up?
Don;t get hung up on the charge off reporting. Lenders have to do that in order to be in compliance with accounting rules and regulations set by the federal government. It does not mean they wrote off the debt, as in forgot about or forgave it (there is such a thing as forgiven debt, just not in the context of your comment).
Your scores are good all things considered. You could pay the direct TV bill if it is more recent than the others, but consider not doing so if it is the same age on your credit reports as the others (following the thought process outlined in my comment above).
I would suggest using the free credit report card at http://www.credit.com and looking at the suggestions that system will make to you about improving your credit. But some of what you can do may not make sense to start this year, but would next.
Sammy – What you shared suggests that all of these debts, hers and yours, are passed the 4 year SOL for you to legitimately be sued in Pennsylvania. When you combine that with the age of these collection accounts that are set to drop off the credit reports next year, it may be best to leave things lay.Follow my reasoning:
Settling the collection debts will bring a certain amount of recency to them. You get the needed result of the credit reports updating to show these old past due bills are now no longer owed (you get the same result whether you pay in full or settle for less, so at this stage, not settling means tossing money away for the most part). But you also bring a freshness to what are otherwise collection accounts. While new versions of the Vantage credit scoring models do not factor paid collections, FICO still does. You could see a bit of a credit score drop for a few months, rather than an immediate bump. So if it takes several months to negotiate and round up all of the settlements, and several more for the new updates to your credit reports to “season”, you are bucking right up against thetime for these to fall off anyway. That is a lot of work, and many thousands of dollars later, just to get to your goals a few months early.
Does that make sense?
One other thing. While some of the collections are not appearing on the credit reports, the collectors or debt buyers that may now own them could still bepaying attention, and have periodic alerts set. Settling with one creditor may cause them to start reporting and seek payment from you, where they were not reporting collections prior, or blowing up your phone and mail box with calls and notices. It does not always work like that, but it can and does often enough.
If it were me in your shoes I would weigh the cost and benefits of settling, and what I might save if I refi the mortgage a few months earlier, or even a year earlier. My guess, knowing what little I know now, is that holding tight would for the next year until these collections drop off would provide the larger benefit.Of course you would bring the mortgage current, pay any city, county, federal (tax) debts, and anything less than 6-ish years old.
Michael can you please furnish me a ceast and disest letter so I can send it out. I have stopped paying Delbert services and received a rather nasty call on Friday. I have paid back all of the money that I had requested, which was 2600.00. I have paid back 3256.00 and do not intend to pay anymore seeing that they are illegal in the state of Rhode Island. I had told them that the loan was illegal and they told me that “you signed a contract and you need to pay it”. I need a copy of a letter that I can send them so they will not bother me anymore until all of this is settled. Thanks
If you are referring to a cease and desist letters consistent with your rights to request Delbert Service quit calling and writing under the FDCPA… a simple sentence would do it.
I might send something like:
Dear Delbert Services,
I am writing to demand you cease and desist from making any further collection calls to me, or sending any more collection notices too.
If you want to, you can refer to your request being made pursuant to your rights found in federal debt collection laws.
Keep a copy of whatever you do send, and be sure to use certified mail return receipt requested. You may need proof that you sent, and they received, later on.
Good Morning,
I had a collection account removed from my credit reports recently. I have been disputing it and then all of a sudden it is off my credit reports. I verified with all the credit reports that it has been deleted. Is there a chance that they will put it back on? If so is there a time limit that they have to do that?
If it was a legitimate collection account that got deleted by your disputing it, yes, it could pop back up later. If there were valid reasons for your dispute, and the deletion, it can still show back up, so be watchful and monitor your credit. If it pops back up you may have to take your issues a step further, so post any update and I can offer some feedback from there.
I have 2 chase accounts that I attempted to settle with beginning in March of 2012 totaling approximately $9000. Chase would not respond. In March of 2013 I received 1099’s from Chase stating the debt had been written off. I now discover that Chase continues to report me late on these accounts. How long can or should Chase continue to report me late each month on accounts they wrote off over a year ago?
Steve – Chase writing off accounts is an accounting and/or tax activity. That activity is separate from credit reporting activity. The 7 to 7.5 years from the date you first missed your payments is the timer that is running on your 2 Chase collections.
Can you tell me what it is showing on your credit reports as a balance owing for these accounts? Does it say zero?
I recently went through a credit repair process in May of 2013. I had a few credit accounts that went delinquent in Sept/Oct or 2008. I received letters from Transunion throughout the credit repair process and since then all of the negative accounts have been removed from my Transunion credit report. However there has been no change in my Experian or Equifax credit reports. I spoke to someone who does settlements (because I thought that was the route that I should take). He informed me that once one agency deletes the negative accounts then generally the other agencies should have done it as well. Its been almost a year and the information just says disputed. I live in Florida and I believe the statute of limitations is five years. Any idea on how I could go about getting Experian and Equifax to update my report. Or maybe I’m thinking about this all wrong.
Sasha – The SOL for collections to remain on your credit report is typically going to be 7 to 7.5 years, not 5. It is common for credit reports to contain the same information, but that does not extend to how each agency will handle disputes you file with them.
What are your credit goals over the next 18 or so months?
HI Michael,
The statute of limitations I was referring to was in regards to when I could be sued for the delinquent debt.
As far as my goals over the next 18 months I am looking to purchase a home. The cost of renting a small two bedroom apartment is not that much for than buying a three bedroom house in my area. I got a preapproved for a mortgage about a month ago and began looking for a home. After weeks of no luck I finally found the perfect house. We made an offer and started the process of finalizing the loan. I got a call from the lender saying that the underwriter would not approve the loan because I had too many accounts on my credit report with “dispute” comments. I double checked and they use Experian when they pull credit reports. I asked how I should handle this and was told that I needed to contact the credit bureaus and have them remove the dispute comments from my reports.
Now I thought this was simple enough process and that I would give them a call; but before I jumped the gun I started doing some research online to try and figure out how stating that “I am no longer disputing these accounts” would impact me. The lender said she was not sure what removing the dispute comments would mean. I looked through a few blogs online like ficoforums and there was a lot of details about how to go about removing the dispute so that you could get approved for a mortgage; but no one was clear about what the impact of removing it is. One thread I came across mentioned that having them removed would lower your score.
So I guess my question is what does it mean when you have a dispute comment removed from your credit report? Would I be acknowledging that you owe this debt that is 6 years old? Does removing the dispute information now re-age the date of last activity and will the debt now be on my credit report for another 7 to 7.5 years? Would I now have to pay the collection agency?
My lender said that she had never had a loan not be approved for situations like this. However according to my research online it seems like it is fairly common. I decided to hold off on getting a home until next year. I am not in a rush to move nor do I want to jump the gun without knowing what the consequences would be.
Thoughts? And thanks in advance.
Your removing disputes from your credit reports do not breath any new life into how long they can report. Those disputed entries will still fall off as scheduled.
I do not think you will impact your credit scores overly much with fresh activity related to really old debts.
If you have put your home purchase plans on hold for a year, and will wait for the collection accounts to drop off from age, that should get you where you need to go. If you were doing something earlier, and relying on the dispute removal, be aware that the collection balances themselves are often the cause of underwriting hiccups. Those balances do often impact your debt to income ratios, and can hold up approval until the collections are resolved (paid or settled). In this instance, it is not your credit scores that hurt you, but the debt being there at all.
If I were not in a hurry, I would do what you are doing… wait.
Hello Michael, Great advice in this thread. I am currently trying to purchase a home and the mortgage company is holding me responsible for a debt that has aged off of my credit report (all three). They insist on telling me that the debt is still on my report when I have spoken with a representative from all three bureaus and each has said the particular debt is not on my record. Is it legal for a lender to make me pay a debt that is no longer on my credit report? Thank you for all of the great advice you’ve given.
Corey – Is the debt a court judgment, or some other type of public record (tax lien)?
No Michael, the debt is similar to a personal loan. Not a student loan. No court judgement or anything like that. The mortgage company (USAA) is trying to make me pay this debt in order to close on a house. I really don’t think I should be made to pay this debt as it has legally timed off of my report. It almost seems as though they are in cohoots with the collection agency.
If the loan officer from USAA is looking at a recently pulled credit report, and can see what others cannot, it could somehow be related to the provider. USAA may use a tri merge credit reporting product specific to mortgages. Find out who they are pulling their reports from and let me know. I may have some additional feedback.
As far as USAA wanting to see collection accounts resolved before getting your loan through underwriting, that may have more to do with new “ability to repay” rules for home lending, than lender cahoots. All debts, paid or unpaid, can impact your ability to qualify for a loan.
When I was 11 or 12 in 2008, I took a book from the library and never returned it. I accrued over $100 of debt. A collection agency started to pester my family but I hide the letters from my parents. Can this collection debt affect my credit now? I’m now 17 and want to start building my credit but I am apprehensive about this problem. Would it be on my credit now?
I doubt it, but you should come clean with your folks. It might be on theirs if they are part of the account with the Library.
I recently have been served with papers for a court appearance due to a debt i owed from 8 years ago. I purchased merchandise paid on it then gave it back when i could no longer afford the payments. After 8 years i get served with papers is there no timetable for someone to go after a debt like this???
Eric – What state are you in? When was the date you last paid? Is what you were just served with an initial summons or complaint, or were you served with something more like notice of an asset hearing regarding an existing judgment?
Hi Michael well I had a a question back in 2002 I got credit cards some store cards and some bank cards like Bank of America and chase I was first making payment then got laid off so I completely stop paying them I went to collection but since them I have not hAd a credit card for about 9 or 10 yrs but I recently went on credit karma and I check my credit score which was very bad 588 to be exact and it shows I had 12 cards from different place but 11 are closed and it says I have one open account from capital one with a ballance of 2k but I’m wondering why if I never had one from capital now and why is it still on my credit if it’s been more then ten yrs since I ever had a credit card should it be gone or should I call them and pay it
Did you have an HSBC card?
You may be able to dispute this collection account successfully, so try that first.
It sounds like your credit score is so low partly due to lack of establishing new credit, not just the fact that there were things sent to collections.
When you say creditkarma shows 11 closed accounts, how are those appearing exactly? There might be more problems with your credit profile and rating than just the CapOne account.
Hi! I am hoping you can answer a few questions for me. I apologize if these are repeat questions.. In 2008 I got divorced and became a displaced homemaker/mother. I ended up using credit cards to make it through some rough times. Eventually, I made it through nursing school and found a loving fiance with whom I live and we now have 2 more wonderful children.
So while in school,and while a single mother, I ran up lots of debt that I could not pay. I even had a car repossessed. Late fee’s and overage charges piled up and snowballed out of control. I had hoped to repay everything once I got out of nursing school and started a good job.
Now, I have a job but it doesn’t pay what I had hoped – I am trying continually to get something better but in the meantime I am on a tight budget. I don’t know what to do. Should I file bankruptcy or ride it out until the SOL runs out? All of these debts are from 2008-2009. I have been afraid to marry my fiance because I wouldn’t want anyone coming after him. Would they be able to do that? I also have a judgement from a major bank’s credit card in which they have been garnishing my wages for over a year now.
I guess I am just not sure of what steps to do at this point. It feels like such a burden and I’m a little lost. Any advice would be very much appreciated!
Kristen – I can offer the best feedback if you post a reply answering the following:
What state do you live in?
What is the name of the plaintiff in the collection action that you are now being garnished for?
List the rough balances of all collection accounts, and the collection agency you last heard from on each?
Sure!
I am in Arizona
Plaintiff named is Unifund CCR (original creditor was Citibank) amount I owed was $2,218. after judgement it is$ 4,754.26. I have paid about half of the judgement balance off through my garnishments.
Rough balances:
Wells Fargo $10,000 – Equifax estimated removal 02/2016
Credit Union (from car repossesion) shows balance of $6,000 est removal 02/2016
Utility Company $275 est removal 01/16
Bank of America $20,000 (ouchy) est removal 02/16
Amex $475 est removal 07/15
Medical Bill $291 – est removal 08/2016
Old cable bill $141. removal 02/2016
– all of the cards where opened during my previous marriage. Also should mention that our house foreclosed during the divorce as well. It is to be removed 07/2015.
I also have about $20,000 in student loans that I owe Sallie Mae. I have been able to defer them so far….
Such a mess! Thank you for your time and advice! My fiance is wanting to plan the wedding but I am scared – I don’t want him directly affected by my past mistakes! And I really want to clean up the wreckage that is my credit history and start fresh.
Unifund is not likely to budge if you tried to settle with a lump sum offer while they are garnishing you. You may be able to impact that ability to garnish by requesting a hearing to show that the garnishment is creating a hardship, and getting it reduced or eliminated, if the numbers add up according to a set parameter. You could also land that better job you are looking for, and that would mean your current employer would stop paying, giving you a settlement opportunity.
Wells Fargo is likely sold to a debt buyer by now. I would estimate you need 4k to settle the Wells account, regardless.
The car repo may be sold off too, but many credit unions hold their nonperforming accounts. Let’s assume you can settle this collection account for 50%.
Utility company collections is pretty low. You may have difficulty saving much through negotiating a settlement. Ditto on all of the smaller balance accounts. That said, they are all likely either sold off to debt buyers, or are assigned out to a collection agency. Are there any collection agencies appearing on your credit reports? If so, can you associate the debt collector with the accounts you listed?
You need more than 9k to settle all of these collections. Doing that would help get collections shown as paid, and a zero balance owed on your credit reports. That could help with a home purchase. Is home buying something you have as a goal in the next two years? What about a car purchase?
What are your options for pooling together the cash you need to settle the debts in collection? How long would it take to pull that together? If you need to do these one at a time, what would the cash flow look like over 12 months (saving up from paychecks, sell a personal item etc)?
You can file chapter 7 bankruptcy, and it would be quite a bit less cost than settling, say between 1500 and 2k. And you can do it separate of your fiance. But you are looking at the damage to your credit from chapter 7 for a whole new, and longer set of years. So… affordable, but not necessarily in line with your credit improvement goals.
Depending on your answer to what your financing needs and goals are, it may be better to lay low, and only address debt collectors if there is a clear indication that you are at risk of being sued for collection.
Thank you for the advise!
There is only one collection agency showing on the report at this time and it shows a date of 2011. I do however get random phone numbers calling me that I do not answer – assuming they may be collectors and I have been advised before to never talk to collectors.
My fiance owns our home and our cars are in his name as well. We are in no hurry to move or make any major purchases.I am just embarrassed that my credit is in shambles and that I owe money to so many places. It looks like trying to ride it out and stay low may be the best way to go unless I am sued again. I am currently only working part time but doing all I can to get a better job. Saving up 9k would actually take me a really long time unfortunately.
So last thing – if we were to marry this year – he and the house/cars would be safe from the collectors right? Since they are my debts before marriage? Would getting married flag my credit and cause the collectors to start looking at me again?
Thank you so much Michael!
Kristen – Given the info you have shared so far, I would not consider your getting married as a reason for collection companies to target you any more than they are going to already. Keep your financial affairs separate for the next year if you like. Once the collections are either passed the SOL to sue in Arizona, and certainly once the accounts drop off your credit, it is business as usual.
Arizona is a community property state with the provision that what you each bring to the marriage (assets and debts) can be viewed as separate. Anyone suing you, but including him, would have a really hard time overcoming arguments your attorney would make in defense. I do not see it happening to begin with though.
Hi Michael!
Again many thanks for all your wonderful advise. Quick update on my situation. Apparently the credit union that repossessed my car back in 2009 reported the debt as written off to IRS in 2012 – to the amount of $6,000.
I got a nice letter from the IRS stating that the $6,000 then counted as income and I now owe $2,700 in back taxes! I don’t even have a clue what to do with this. Do I have any options? I don’t understand how they’ve come up with that number! The IRS is the last people I want to be in debt to.
Thanks again for any help!
Kristen
Do you file your own taxes, or hire out?
You may be able to show that you were insolvent at the time the credit union wrote the debt off, or at least partially. It would be a great benefit if you have all financial records from that year, in order to tally up all debts, and compare that amount to the value of all assets. Remember that all of those unpaid bills are a liability/debt. This may be an issue where you can benefit from your debt (sounds weird… I know). Read this article about debt forgiveness and taxes for more info: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/