Credit report, paying balance on closed account that is almost seven years old?

Question

Charge account from 2000, will be off my credit report in 10/07. The pay status is listed as >Charged off as Bad Debt< and the remark is >Profit and Loss writeoff<. I have never received any calls or letters froms creditors or collection agencies, and 7 years is almost up. Should I even bother paying this debt at this point? Can a debt that is no longer in your credit report effect any future lending like a home loan?

Answer 1

Before you decide to pay or to not pay, you should check the collecting SOL for your state.
If you are past the legal SOL for collecting, you are not legally required to pay. You would only pay if you feel the need.

Even if you do pay now, the account will drop of at the normal time. It cannot be re-aged to run longer. But, if you pay now, it will be updated (updating is not re-aging) and until 10/07 when it falls off, it will look like a newer account than it actually is.

For credit cards, the date the reporting SOL is 7 years the first time you became 30 days late and never brought the account current leading to the charge off. Not from the DOLA or the charge off.

The only time it can have an impact is if a mortgage lender pulls a full factual report, which is rare these days. Generally in the past, full factual reports were pulled on people who borrowed several hundred thousand for their mortgage. But times have changed and now mortgages for a few hundred thousand are pretty common.


One thing to keep in mind, collection agencies love to throw kinks in the works when a person who has the debt starts mortgage shopping.
Even if it is past the reporting and/or collecting SOL, you may find them try to collect. Not saying that they definately will, but it does happen.
Since mortgage companies usually require charge offs to be paid, it's a prime time for collectors.

If you are past the reporting SOL and they throw it back on, you have a legal right to sue them for up to $1000
If you are past the collecting SOL and they file suit, you would answer with an affirmative defense of SOL and counter sue them for up to $1000 (and ask that they pay your court costs)

If you are out of SOL and don't pay, and they at some point start trying to collect - sending letters, phone calls, etc., send them a SOL letter. It will let them know the legal collecting SOL has passed and the debt is no longer collectible.

I don't mean to sound all doom and gloom, but many people mistakenly believe that a collection agency will not file suit on a time barred debt - when in fact they do it on a daily basis.

Most people do not know their rights and don't fight it, so the collectors usually get an easy default judgment.

If the people do file a counter claim against the collector for filing on a time barred debt - $1000 is a very small price for the collector to pay, especially since they purchase most of their debts for pennies and make huge profits off of them.

Okay, probably more info than you really wanted to know

More than likely, since it has been so long since you had heard from either the original creditor or collector, chances are probably pretty good you never will.

You might click on my profile and do some reading in the links I have listed. One of the links is where you can find the collecting SOL for your state.


edit+++++++++
"myth" buster >>> the FCRA and the FTC staff opinion letters
Great bathroom reading, but, by gosh - they do say 7 years.

As for the 7 years + 180 days -
The additional 180 day period accords a measure of flexibility to credit bureaus whose furnishers may provide them with the wrong date.

yep, 7 years or the CRA could and should be held liable.

Answer 2

First when a debt is charged off by a lender, they legally no longer own the account. If you attempted to pay off the debt they would return the money to you(and this may backfire by actually resetting the SOL).

Most likely it was sold to a third party collection agency. This should show up as another item on your report. If you are sure it is not another item on your report, I would just let the debt fall off. In most cases and states you are probably outside of the SOL so you may not even be legally required to pay back the amount anyways. Also, when it is sold to a collection agency that does not reset the counters. The aging begins from the date of your last payment no matter how many times they sold it. Now it may not fall off right on 10/01/07, as they Credit Reporting companies give about 6 months of leway in case they were reported wrong dates. So it should be off by early 08 if you did nothing, but you could dispute it in November if it was still on there.

Once it is off of your report, there is no way for other lenders to know of the debt. You might have a problem if you happen to apply for a loan at the same company that you had the Charge off with. That company may keep internal information on the bad debt, but it will not show up on any reports outside the company.

Answer 3

The seven years thing is a myth. Only bankruptcies are removed from your credit report after seven years. Don't be surprised if that old debt is sold to or picked up by a collection agency and reported as new.

As for your question: no, a debt that is no longer in your credit report will not affect any future lending like a home loan.

Good luck.

Answer 4

Close the department stores but keep the Capital One open. A large part of your score is based on how long you have been in the credit bureau, 15% to be exact. And how you have paid your accounts, another 35%. If you do charge anything on your Cap-1 card just pay it off when you get the bill. Thus avoiding any interest.

Answer 5

YEs!!! u have to pay it off, for it to be removed from your credit report.. IT takes 7 years from the date u paid it off..
and If don't pay it off then if will stay on there till u pay it...