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Issues with Credit - who/where to go to with questions?


Just Kate
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Dh and I made a fairly big mistake several years ago, which is still following us around on our credit report. We are in a better place financially now and would really like to take care of this issue. My problem is...I'm not sure what to do. I keep reading online and there are so many different suggestions for how to move forward (i.e. let sleeping dogs lie, try to settle, never try to settle, etc.).

 

We don't really want a company to do anything for us (so those credit repair companies, which I don't trust anyway, wouldn't help). I thought about contacting an attorney, but I'm not sure what kind of attorney to talk to...and for that matter, how much it would cost! I don't mind to pay for advice, I just don't have millions put away. I guess, I don't mind to do the work myself - I just want to make sure that the steps we take are the right ones for our situation.

 

Any suggestions? Websites to try or companies to contact? This has been hanging over my head for a few years now and I am really tired of the stress that it adds to my life. Getting it taken care of, one way or another, would help so much.

Edited by Just Kate
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I understand completely if you do not want to share more details than you already have, but it really depends on what the "big mistake" was, when it happened, and what has happened since then.  If it is an unpaid debt, for example, there is generally a time limit for when it will drop off your credit report.  This time limit is generally from the time the debt was considered "active."  Even coming to an agreement with the debt owner and paying it off now may be WORSE because it would re-start the time it can show up on your credit report.

 

 

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I understand completely if you do not want to share more details than you already have, but it really depends on what the "big mistake" was, when it happened, and what has happened since then.  If it is an unpaid debt, for example, there is generally a time limit for when it will drop off your credit report.  This time limit is generally from the time the debt was considered "active."  Even coming to an agreement with the debt owner and paying it off now may be WORSE because it would re-start the time it can show up on your credit report.

 

While this is true, I personally think that there is a moral imperative to pay people what we owe that trumps how it might negatively impact us.  Which is why I gave the advice I gave.  (Which obviously might not even apply!)  I know that not everyone sees it this way but this is something to think about anyway no matter what conclusion you might come to. 

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How long has it been?

 

The usual time for something like a charge-off to drop off is 7 years.  If you're closer to the 7 and there has been no action to collect on their part, you may want to consider letting it be and hoping it will drop off.  However, you do run the risk of a collection company purchasing the old debt and re-activating it, which would then give you an opportunity to pay it off, but at the cost that once it re-activates, it will be another 7 years before it actually were to drop off.

 

If it's something more serious, like a judgement done in a courtroom, as far as I know, those don't really ever go away until you pay them.  In that case, you could use your public court records to find the attorney of the people who sued you, and contact them about repayment.  Once it is repaid, they will release a satisfaction of judgement to you which you can file with your county court and then it will be reflected on your credit as fully satisfied.  They will absolutely charge you interest though, so don't go into this thinking you only have to satisfy the original penalty. 

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Thanks everyone. The issue is a charge off...and the last payment was five years ago. We were in a terrible financial situation then and we have worked so hard to get to a better place. I do agree with Jean that we have a moral obligation to pay, but I want to make sure we go about it the right way. I am going to check out the credit boards forum (thanks for that tip!).

 

If anyone is especially savvy with this sort of thing and would want to PM me, I would certainly appreciate having someone to talk through this with.

 

Thanks!!

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Based on what happened a few months ago with family members, take your names off any joint accounts or assets with your children (or parents). If they try to get a judgment, they will take what's in that account. Should they? No, but they will and expect you to go through the expensive legal channels to get it back.

 

Do not move money out of a 401K either. Find out if IRAs or college funds are protected in your state. She had a rollover IRA from a (involuntary) cashed out pension. Poof, gone. 59 years old with almost $0 in retirement funds now.

 

FWIW, this was also from an old credit card, ran up when she was sick 10+ years ago and in the hospital and unable to work for a bit, and it snowballed out of control (along with some head-in-sand syndrome). A lawyer was consulted, but for various reasons did not help, and bankruptcy was not an option either.

 

Good luck. Money stuff like this just makes you sick to your stomach, but dealing with it proactively is always, always the better option.

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I googled 'collections going after old debt' and got a lot of results. Here's one:

 

http://www.bankrate.com/finance/debt/6-ways-not-to-reset-old-debt-1.aspx

 

The above site recommended checking about regulations with your state's Attorney General or your state's Department of Consumer Affairs.

 

While I see Jean's point about the ethics of repaying original debt and reasonable interest, I would not want to be in a position of paying for a mountain of fees and add-ons that might dwarf the original debt. I don't know if this is the case in your situation, but you do hear some horror stories.

 

Good luck!

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The issue is a charge off...and the last payment was five years ago. 

 

A charge off should drop off your credit report seven years after it is charged off.  Assuming this is a credit card charge off, check the following link for the statute of limitations in your state. It is between 3 and 6 years for most states, some are longer.  Beyond this time, you can't be sued for this debt.

 

http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php

 

I understand the moral obligation of paying your debts, but there is a reason that there is a timeframe for how long it can affect your credit rating and ability to be sued. As a society, we forgive these financial mistakes after a period of time. 

 

Since it has been 5 years already, I would strongly consider the option of simply waiting it out. I would use extra funds available now to really solidify the financial stability of my family (emergency fund, retirement fund, college fund, etc.).  Contributing an amount equal to the original debt to a charity of your choice is also an option. 

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