By
Brigitte Yuille Bankrate.com
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True or false: You can be sued after the statute of limitations period ends.
True, technically, says Baird, but only if you reaffirm the debt.
Generally, the statute of limitations is the amount of time the debt collector can take legal action. This action can include a lawsuit or having your wages garnished. The time period is set by individual states.
American Collectors Association International, or ACA, a trade association of third-party debt collection businesses, says the statute of limitations is longest for documents that have been notarized by a notary public, while it is shortest for actions on open or revolving accounts such as credit card debts.
The countdown begins on an accounts' last activity, according to ACA. It can restart with a partial payment or a written promise to repay, which reaffirms the debt, depending on the state law.
It's suspended if a consumer leaves the state or is sent to prison. However, the statute doesn't prohibit the collector from going after the debt, it just prevents the collector from taking any legal action, such as filing a lawsuit or garnishing wages.
Jamison says any time the statute of limitation is passed, you probably don't want to settle.
If you choose to settle beyond the statute of limitations, Jamison believes the company is more likely to agree to delete the account with payment since the company knows it can't use a lawsuit.
Jensen says Omnium doesn't sue most of the debtors it deals with.
"The legal process takes time. Most of the accounts we get, we don't have the period of time to sue," she says. "We do occasionally file suit when somebody has the ability to pay, but refuses to pay."
She says the agency can determine the person's ability to pay by seeing if he or she is employed. Or, the agency may review the person's financial situation by looking at the person's credit report.
Jamison offers this reminder: Don't verbally agree with the collector on the phone or send in a payment even for a dollar, because the statute of limitations will start all over again.
True or false: Credit card charge-offs can't be deleted from your credit report.
False. It's possible. But that doesn't necessarily mean it will happen.
Jamison says it's unlikely to be deleted if you are dealing with a big bank, which probably won't give you a deletion letter.
"Reason being, the companies are too big and they have too much red tape that you have to circumvent to be able to get somebody that can make a judgment call to give you a deletion with payment."
Baird disagrees. "If the creditor has a reason to delete a reported debt then they are going to delete," she says. "Saying that creditors are not deleting because it is not efficient is not accurate."
True or false: If you have a debt in collections over $2,000, you won't be sued.
False. Jamison warns when collections get over $2,000, the collection agency is more likely to sue before the statute of limitation ends because there's a lot of money at stake.
Baird agrees.
"Most creditors look at the dollar amount to determine whether they will sue," she says. "They look at whether the person is working or not, whether they own a home or not, the cost of commencing a lawsuit and state-specific avenues for collection related lawsuits and collection."
Jamison hypothetically uses the $2,000 amount because the extra money needed to pay the debt in full may not benefit the consumer as much in return.
"If the person can afford to, I suggest paying in full in return for a deletion for accounts that are $5,000," he says.
If the account is for a credit card, Jamison says the settlement will depend on how much the person intends on using the card in the future. If the consumer uses it a lot, he advises the consumer to be willing to pay a higher amount to delete. That's if the deletion can be negotiated.
When it comes to collections less than $2,000, Jamison suggests getting a deletion is better than getting a deal. Calling the collection agency to settle for 50 cents on the dollar won't work because he believes the agency won't agree to a deletion with payment. Instead, he advises paying the full balance in return for a deletion letter, especially if the consumer is concerned about his or her credit report and credit score.
Baird warns if you do pay in full for an account that may have been charged-off, the creditor is under no obligation to delete the account. However, the creditor must report that it is "paid in full."
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