Statute of limitations on CC debt?

[Deleted]

I posted this last night on MM on TN but I never was able to see replies (I think there were a few but they didn't show, and it appears my post is completely missing now, thanks Nest).

So, long story short my DH had bad credit when we started dating. When we got engaged, I personally pulled his credit report and paid off any outstanding debts. We bought a house shortly after, have bought 2 cars since, and I've seen his credit report multiple times in the last couple of years, and it has shown everything as paid in full and his credit score is around 680 now.

Yesterday I got a random call from a collections company trying to collect on a $1700 and some change debt from 2001. The account was open from 2000-2001 and I've never seen a notice, received a call, or otherwise heard of this debt. It may or may not be legit - I wouldn't be shocked if it was a true debt at some point, DH had been under the impression when we started dating that he had some outstanding CC debt but didn't ever do anything about it and it wasn't on his credit report when I fixed everything after we got engaged.

Anyway, the company will take a $400 and some change payment to settle, but I'm fairly certain that this is well beyond the statute of limitations in any state (it has been 11 years) and that no one can force him to pay this debt at this point. I know it is legal to try to collect debt indefinitely, but that he can't be sued/wages can't be garnished/whatever bad stuff happens.

I also am fairly certain that it would actually hurt his credit if he paid it now, because it would show up as "paid" on his credit report but would also show that it had been delinquent prior to that.

Can anyone confirm that I am correct or point me to any reputable resources to confirm that? I just don't want to ignore this if there is something bad that will happen if I do, but I also don't want to pay it if it will hurt his credit and if we're legally protected from having to pay at this point.

[thedutchgirl]

Actually, a couple of states do have 10-year statutes of limitations on breach-of-contract claims. Whether an open-ended account like a credit card falls within a state's breach-of-contract limitations period depends on state caselaw. That's not precisely an easy answer. Also, they generally look to the date of the last payment to determine when the statute starts to run, so you'd want to get an idea of when that might have been.

If you pay the debt, or settle, you are right; you run the risk of them re-reporting the debt and reporting as settled for less than owed (and issuing a 1099C for the debt forgiven). Sometimes debt buyers will re-report anyway, even though they shouldn't, so not paying isn't a guarantee they won't do that either. You could pay a reduced amount in exchange for a written agreement that they won't report to the CRAs or that they'll delete the tradeline. But you still will get a 1099C. You could pay the whole thing with the same demand about reporting.

I don't know that there is a way to guarantee any way to get a positive result. I'm sorry.

[Nonny]

You should demand, in writing, that they validate it. If they don't, they are violating the Fair Debt Collections Act (I think that's what it's called).

Here's a sample letter: credit.about.com/od/debtcollection/qt/validationltr.htm

DO NOT pay anything until they can prove you owe it (and that they can legally collect it). A lot of times debt collectors will buy up debts for pennies on the dollar that they can't actually collect on legally, and hope for the best that they can bully or otherwise coerce unsuspecting people to pay.

[Deleted]

May 10, 2012 21:15:05 GMT -5 thedutchgirl said:

Actually, a couple of states do have 10-year statutes of limitations on breach-of-contract claims. Whether an open-ended account like a credit card falls within a state's breach-of-contract limitations period depends on state caselaw. That's not precisely an easy answer. Also, they generally look to the date of the last payment to determine when the statute starts to run, so you'd want to get an idea of when that might have been.

If you pay the debt, or settle, you are right; you run the risk of them re-reporting the debt and reporting as settled for less than owed (and issuing a 1099C for the debt forgiven). Sometimes debt buyers will re-report anyway, even though they shouldn't, so not paying isn't a guarantee they won't do that either. You could pay a reduced amount in exchange for a written agreement that they won't report to the CRAs or that they'll delete the tradeline. But you still will get a 1099C. You could pay the whole thing with the same demand about reporting.

I don't know that there is a way to guarantee any way to get a positive result. I'm sorry.

Yuck! The woman on the phone did confirm that the last payment was made in 2001, so we're looking at over 10 years no matter what. So hopefully the statute of limitations is past no matter what.

I'm really leaning toward just not doing anything I guess. If would presume that if a reseller reported it on his credit, there would be something we could do to get it removed (which I'm sure will be a PITA, but at least it will go away). We've worked hard to build his credit since straightening everything out 3 years ago and I hate to go back.

[thedutchgirl]

Yes, you definitely can do something if it gets re-reported. Just keep an eye on his credit report for a while if you decide not to do anything.

The only problem is the calling--you may have trouble getting them to stop calling you.