I have been receiving letters from a collection agency demanding payment for a debt that was incurred almost 8 years ago. Do I still owe this debt? On the letters is says S2/R4/46 - what does this mean? The debt was a promissory note to a school and not backed by a bank but was supposed to be paid directly to the school and I did not attend this school and the school has since closed down. SK
Dear SK:
Since you have not paid this promissory note, yes, you still owe this debt. The question now becomes, is the debt legally collectable or is it barred by the statute of limitations meaning the creditor waited too long to sue in an effort to collect.
By law, you can stop this collector from contacting you anymore by writing a letter to the collection agency telling them to stop. Once the agency receives your letter, they may not contact you again except to notify you if the debt collector intends to take some specific action. If they say they will sue you in an effort to collect, you might be able to file a written defense to the courts based on the limitations. You will need to seek the services of a private attorney for further legal advice on how to handle this issue. Good luck.
Dear Susan & Co.,
I have been to court in August for a credit card bill, from 1993 that I have already paid. My only defense are my credit reports from 3 different bureaus stating that the said account has been paid. The lawyer for the other side has a copy of the credit card bill, from 1993 and on it it states charge off. The lawyer insists that the credit reports, all 3, are wrong. The judge didn't agree with him but said that she will give me more time to find more proof. I have found some checks but not all, which was expected, being as I have moved and this is over 5 years old. What can I do? Can all 3 reports be incorrect? - Stacy
Dear Stacey:
This is a legal question and issue and since I am not an attorney, I cannot give you legal advice. You will need to seek the services of a private attorney for a legal opinion.
When you contact an attorney, ask the attorney if this debt can be thrown out of court because it is past the statute of limitations meaning it is too old to be legally collectable. If this debt is barred by limitations, you will probably have to file a written defense based on limitations. You will need legal assistance to pursue this action further. Good luck.
Dear Susan & Co.,
I am interested in finding out more about how I may be able to use your service to clean up some old issues that may be outstanding. Michael
Dear Michael:
What I strongly suggest you do is contact your closest CCCS office and schedule an appointment to speak to a financial counselor. During your counseling session, your counselor will review your overall financial situation, discuss possible solutions and make recommendations for you to consider.
Your counselor will explore the possibility of a Debt Management Program (DMP) which assists you in making payments to your creditors. It serves the dual role of helping you repay your debts and helping creditors collect money owed them. You agree to deposit funds with CCCS each month which CCCS will then distribute to your creditors until you become debt free. The DMP also seeks to help you maintain your good credit or reestablish your credit.
To locate the closest CCCS office, call 1-800-388-2227. If it is inconvenient for you to visit a CCCS office, call our affiliate Money Management International (MMI) at 1-800-762-2271. MMI offers the same service as CCCS except MMI counseling is done over the phone, by mail, fax and the Internet. Counselors are available 24 hours a day, 7 days a week. Good luck.
Dear Susan & Co.,
We voluntarily had our car repossessed in 1990 due to financial hardships. Today an agency that bought the contract from the original holder contacted me today and said we owe almost 7500.00 because they bought the contract from the original person. And stated if the money is not paid, an attorney will be assigned to my case and they will garnish my wages. Is this possible after years of destroying our credit??? Your response is and will be greatly appreciated.
YOUR HELP is needed. Worried Monica in South Carolina
Dear Monica:
Each state sets a time limit on how long a creditor can legally sue to collect on a debt. This is known as the Statute of Limitation. If a creditor waits too long to sue in collecting on a debt, the case can be thrown out of court because the statute of limitations has run out. This time frame is set by each state but generally runs around four or five years.
I suggest you contact the Office of the Attorney General in Columbia and ask them what is the Statute of Limitation on a debt in South Carolina. Their phone number is 803-734-3970.
Another assurance you have is this agency cannot enter this account in your credit bureau file. The statute of limitations on this happening is seven years from the date of last activity on the repossession. You appear to be well past this date.
Dear Susan & Co.,
In 1988, I had credit card accounts that were written off, and have fallen off of my credit reports. All of a sudden, I receive a phone call from a collection agency saying they bought the loan and they want to collect. What can they do legally? Can they put it back on my credit reports? Can they sue and obtain a judgment after ten years? I cannot afford to pay this debt. They wrote a letter giving me 30 days to answer them about what I intend to do. Is there a statute of limitations on things like this? I have no paperwork with which to dispute/agree with the amount they say I owe. Help!!!!! Linda
Dear Linda:
What has happened to you is becoming a common practice recently. Credit card companies are selling their old charged-off accounts to collection agencies for pennies on the dollar. The collection agencies are figuring some consumers will pay on these old accounts and the collection agencies will end up making a profit. All of this is perfectly legal.
Your legal rights are; if the account has been charged-off over seven years ago, the collection agency cannot re-enter this account on your credit bureau file. Each state has a statute of limitation on how long a debt is still considered legally collectible. Generally it is around four years from date of last payment.
Tell this collection agency you will pay them only if you are taken to court and a judgment is obtained against you. Otherwise you have no intent to pay what you feel is a legally uncollectible debt. If they continue to contact you and demand payment, write to them demanding they stop contacting you. The Federal Fair Debt Collection Practices Act states that once the agency receives your letter, they may not contact you again except to say there will be no further contact. Good luck.
Dear Susan & Co.,
I think that I may have a bad check written in FL about 3-4 years ago. I want to open a checking account here in Tennessee (Direct Deposit as I receive Social Security Disability payments) and I am wondering if that check will show up when I open the account here.
I would like to make the check good but I don't know how to find out IF I bounced a check, and if I did, HOW do I get the information needed to pay it off?
Any help you could give me in this matter would be greatly appreciated.
Thank you for your help. Sincerely, Tammy
Dear Tammy:
At this late date, the only way I know of to find out if you have a bad check outstanding is to (1) apply for a checking account at a bank and see if the reporting agency that the bank uses shows you with an outstanding bad check, (2) get a copy of your credit bureau file to see if the bank reported you with a bad check.
I would try option (1) first. If you want to pursue option (2) and get a copy of your credit bureau report, you need to contact one or all of the primary credit reporting agencies. They are: Equifax at 1-800-685-1111, Experian at 1-800-422-4879, Trans Union at 1-800-888-4213.
If there is an outstanding bad check noted, the agency showing this notation should be able to identify the bank that reported the bad check. If neither one of these entities report you with a bad check, you can safely assume there is none outstanding at the present time. Good luck.
Dear Susan & Co.,
I have a terrible credit history, after many years of having excellent history, due to a divorce and a forced sale of a business. Anyway, I am now in the position of cleaning up a lot of items. How do I go about establishing again, cleaning up, paying up, etc. Help???!!!!??? Thanks, Diana
Dear Diana:
The only way you will be able to 'clean up' your derogatory credit is through time. All creditors and credit reporting agencies abide by the Federal "Fair Credit Reporting Act" (FCRA)that states once an account is 'charged off' as uncollectible, this derogatory notation will remain on your credit bureau file for seven years from date of charge off. Even if you pay the balance in full, this derogatory notation will remain for seven years.
To explore further provisions of the FCRA and what your options are, you need to speak to a CCCS financial counselor. The counselor will discuss possible solutions for you to consider and answer any questions you might have about resolving your past credit problems and reestablishing your credit.
Dear Susan & Co.,
I desperately need some advice and help. About six or so years ago, like many college students out there, I got credit cards. I soon maxed out on them, and pretty much did not pay all of the debt (yes, now I know I was stupid). Now I have graduated college and gotten a good job with a decent salary. I want to rebuild my credit, so I asked for a copy of my credit report. The good news is I am only a little less than $2000 in debt. The bad news is, most of that is in chargeoffs, and some of it has gone to collection agencies (and, I assume, is still active). Is there a way for me to pay chargeoffs? Or is it too late? And how shall I deal with accounts that have gone to collection? I don't want my name being sold from agency to agency, years after I have paid off the debt.
Finally, I would like to get a secured credit card. Would having all of those chargeoffs, which are a couple of years old, get in the way of me applying for one? Please help! Thanks, Molly
Dear Molly:
Yes, you can pay on charge off accounts but this will not help clear up your bad credit. Only time will do this; specifically seven years. Let me explain further how 'the credit system' works. There is a Federal law, the "Fair Credit Reporting Act" (FCRA) that all creditors and credit reporting agencies operate under. The law is designed to help and protect the consumer, the creditor and the credit reporting agency (CRA).
The FCRA states the length of time information remains in a consumer's file on accounts charged off or placed for collection prior to January 1, 1998 is 7 years from the date of last activity. This date is generally the date the creditor charged off the account. If you received a copy of your report, there should be a date of last activity noted. If you subsequently pay the balance in full on the charged off account, this derogatory notation will still be noted. It will then show a zero balance but still note that it was a charged off account. The same scenario applies to accounts that have gone to collection. Also, as long as you owe on an account, you cannot stop a creditor from transferring this account from one collection agency to another. After the balance is paid in full, there is no need for the creditor to transfer your account anymore.
To obtain a list of credit card issuers that offer secured credit cards contact: CardTrak's Secured Card Report, P.O. Box 1700, Frederick, MD 21702, phone 1-800-344-7714. CardTrak charges $10.00 for this survey. This survey gives basic information on secured cards and phone numbers to call to get more specific information directly from the creditor. In this way you can see which secured account meets your criteria. Good luck.
Dear Susan & Co.,
I was married in August of '95. I found out later that my husband had some serious bad debts, and a foreclosure, all due to his divorce.
My questions is, can creditors take what we have now? We want to get these debts cleared up, but we just don’t have the money right now. Thanks for listening. Jana
Dear Jana:
Since I'm not an attorney, I cannot advise you on what your legal rights are with creditors. All I know is each state sets their own laws as to what creditors can and can't do to collect from consumers.
My suggestion would be to call your nearest CCCS office to set an appointment to speak with a financial counselor. During the counseling session, the counselor will analyze your overall financial situation, discuss possible solutions and make recommendations for you to consider.
Dear Susan & Co.,
Am I liable for my ex-husband's credit card debt? He acquired the credit card while we were married, but we divorced shortly after. The credit card was under his name, but he asked for an additional card for me. I cut up the card. I don't think I ever used it. He filed bankruptcy about a year after our divorce. I was unaware it, until a few years later, because we don't talk. I have no idea where he is now, but today, 7 years after our divorce, I received a notice from a collection agency saying that I am responsible for his debt!!! Is there any hope? I can't afford $6,000!!! Thanks for your help. Mitzi
Dear Mitzi:
As far as the credit card company is concerned, since a card was issued in your name, you are considered an authorized user of the card and just as legally liable for payment on the debt as your ex-husband. It sounds to me though that this debt is too old to be legally collectable. Call your state's Attorney General Consumer Affairs Office and ask them how old a debt must be before it no longer is considered a collectable debt.
I know the Federal Fair Credit Reporting Act states a debt that is over seven years old must be permanently removed from your credit bureau file and can no longer be held against you.
About CCCS helping you with interest fees, etc., it depends on who are your creditors. Some creditors make adjustments but some don't. You will need to set an appointment with a counselor who can then give you more specific answers. To find the closest CCCS office, call 1-800-388-2227. If you want to talk with a telephone counselor, please call 1-800-762-2271.
Thanks for writing and good luck.
Dear HC:
The outstanding accounts that remain on your credit report can or will be deleted before you begin the search for a new home. Derogatory information is removed seven years from the Date of Last Activity. The three accounts you have mentioned will be deleted by April, 1998. To insure this, I recommend that you view your credit reports before you start the process of buying a home. Review each credit report from the three nationwide credit reporting agencies which are TransUnion, CSC Credit Services and Experian. Information on contacting these agencies are listed in Yellow Pages under Credit. Reviewing your credit reports will guarantee that there are no errors that will hurt you during the course of purchasing.
Also, I recommend that you attend a Home Buyer's Program or similar program that is offered in your area. Contact our toll-free number to learn more about these types of programs (800) 388-2227.
Good luck in buying your new home.
Dear Susan & Co.,
I have some credit card bills on my credit report that have been overdue for the past 3 years. I haven’t been hasseled to pay, but I am now in position to start paying the debts to clear my credit report. What is the best way to get in contact with the companies I owe money to?
In addition, one company has offered to settle the account for one-half of what I owe. If I accept, will the balance still show on my credit report or will the entire amount be considered paid in full? Should I request a contract from them to guarantee that I will not be cheated?
Thank you. Jay
Dear Jay:
In tracking down old accounts, you need a complete account number for each outstanding creditor. If you don’t have an old statement or a credit card with the number, then order a credit report for a list of creditors and account numbers. You may find phone numbers on the report as well.
Of course, the original creditor may not take your payment because it has gone to collections. So then you’ll have to contact the collection agency.
Make it easy on yourself. Pull your credit report, and then call CCCS for an appointment. We deal with situations like yours daily. In addition, a CCCS counselor can help you determine payments that will retire this debt as soon as possible.
Regarding the settlement, simply ask that the company confirm the agreement in a letter on company letterhead with a statement agreeing to show the balance as zero on their books and on the credit report. The settled account will probably be notated as "paid by settlement."
Thanks for writing.
Dear Susan & Co.,
Over the past few years my wife and I accumulated large medical bills due to a child’s severe illness, student loan debt and other debts that we fell behind on. After many years, we are now current and in fact, making over $8,000 a month with only $350 in obligations.
The problem is we are scared to death to try to get a mortgage. Should we just go in to a banker and be honest about our past problems? We have saved $25,000 since retiring our debts, but we are sure our report will show several years of past problems. Thanks, Steve.
Dear Steve:
Based on the given information, I won’t say that a mortgage lender will embrace you, but close! You have a healthy income, low debt ratio and down payment money.
Yes, you have had problems but a lender will look mainly at the last 24 months of payment history. On your side is the fact that you resolved your problems. Be prepared to tell what happened to bring about the delinquency.
If you owe the IRS, pay them off before the visit. Payments on your student loans need to show current for the last several months.
As you shop for homes, remember the CCCS recommendation: no more than 25-28% of monthly net should be dedicated to housing costs.
I love it that you have savings! Be wise and don’t invest it all in one place. Part can be used as a down payment and closing costs. However, maintain some savings for emergencies, periodic expenses and home maintenance costs - bugs, plumbing, and the like.
I hope everyone in your family is now healthy. Best wishes!
Dear Susan & Co.,
How are charge-off's handled? Mike and Wendy
Dear Mike and Wendy:
A charged off account is an outstanding balance which the lender considers a business loss. Just when the lender decides the account is a loss varies from creditor to creditor, but usually several months of attempts have been made.
Once an account has charged off, the lender frequently sends the account to an outside collection agency for collection attempts. The lender usually doesn’t add interest to a charged off account. but the collection agencies sometimes add their own fees.
On the credit report the debt is designated as R9 for revolving credit charge-off or I9 for installment credit charge-off. A charged-off account "rolls off" the credit report 7 years from the charge-off date.
Some consumer think that if an account is charged off, they no longer owe the debt. This is not true. A charged-off account is still money owed and payment arrangements can be made. Whether the charge-off designation will be changed is up to the individual creditor.
Dear Susan & Co.,
I need to get my credit report cleaned up so I can buy a house. I'm thinking of offering settlements for some old credit I still owe. Is this a good idea? Want a Home
Dear Want:
It depends on the mortgage company you're working with. Some mortgage lenders view settlements favorably, others - as a matter of policy - want to see accounts that have been paid in full, not settled for a lesser amount than owed.
Before parting with your hard earned money, ask your mortgage lender if settlements are acceptable to the company or not.