Will property sale trigger debt collector lawsuits for credit card debt? – SJ
I have almost $200k in credit card debt on a mix of business and personal credit cards. Most of the debt was created during the real estate boon when I tried investing in property and it didn't go so well.
I live in Florida and made my last payments in May 2010. I have been sued twice, once in which I settled a couple years ago and another lawsuit that was recently filed for a balance of about $3k.
I currently have my homestead and one investment property in foreclosure. I have no income and no assets besides my car.
I was hoping to wait out the SOL on these debts without having to file bankruptcy. I understand in Florida the SOL is 4 years.
I have heard that debt collection companies monitor changes in your credit report. I am about to sell my two properties, but I will sell them for the price of the mortgage owed and therefore make no profit. I am doing this to avoid a deficiency judgement that might occur with foreclosure.
My questions is, in your experience, would the sale of these properties be enough to put me back on the debt collection radar? Are the lawsuits likely to start rolling in since I will sell property, even if I don't make any money from it?
I have some large balances out there $20K-$30K. I am trying to prepare myself for what might happen with these property sales.
Another question, how often do people actually wait of the SOL on most or all of their debts? Can it be done? Have you ever seen it?
Will property sale trigger lawsuits for credit card debt?
Debt collectors and debt buyers have some advanced tools to trigger certain collection activity. You are pointing out one that I do not see talked about much.
Debt collector technology can trigger credit report alerts.
It is not so much that the homes selling is going to trigger any fresh debt collector eyes on your files. Its more about the mortgage loans that are on your credit report reflecting a balance being updated to show zero owed and closed out. Debt collectors monitor for hard inquiries that show you are applying for credit and even when an account is updated after having settled.
Not all collection accounts are tracked with advanced methods and software. With as much debt as you have, I should think the mortgage pay offs would attract several to wake up and pay attention though. But does it matter?
I understand wanting to wait out the statute of limitations to sue you legitimately for the debts. But have you considered the emotional toll for the next 2 or so years? Have you set that consideration next to the fact that a chapter 7 bankruptcy (which you would clearly qualify for) puts you in a position of having wiped the slate clear of debt, and better positioned to buy a new home, car, re-establish credit in 2 years?
If you get to the SOL without further brushes with credit card debt collection lawsuits, you would not be in as good a position to rebuild and qualify for fairly priced credit products as you would had you file chapter 7 bankruptcy 2 years earlier.
Are there other considerations for not filing bankruptcy that you do not mind sharing in the comment section below?
How hard is it to just wait out the statute of limitations for being sued on credit card debt?
Over the years I have seen many people successfully wait out the statute of limitations on some or all of their defaulted credit card debts. In fact, that was a strategy I advocated in the 90’s. I will say it was a lot easier to succeed with this then, than it is now. I still see many people wait out the SOL on a few of their debts.
Things are changing with the debt collection space. More change is coming in the next year to two. Debt buyers sue a great deal more than in the past. Midland Funding is very aggressive with suits on debts they buy. Even the small balance accounts (perhaps even especially). The CFPB will start supervision of the larger debt buyers and debt collectors starting 1/2/13. I will have a critical report out on that in December that covers what I think will happen to the debt collection space as a result of this new regulation. For now I would say that credit card lawsuits brought by debt buyers will be increasing in the future.
Why go through all of the uncertainty and emotion waiting for the SOL to expire? What is more likely to occur based on today’s debt collection trends is that you are at a much higher risk of being sued in the last 6 months leading up to the expiration of the statute of limitations (say 18 months form now), than you are from the homes closing in the next month or two.