Sol

What is the name of your state? California

My husband had an account with a credit card company in 1998 and had gone to collections in 2000. The balance was 1787.00 and with the accrued interest, as they claim is now $2884.00.

The collection agency is now asking for $2000 to settle or make payments, but will have to pay their asking amount of $2884. My question is what is the statute of limitation for the creditor to collect in California? Can they accrue that much interest? I'd like to settle but the amount is pretty steep for us for one time payment.

Also, does the statute of limitation applies where you live or where it was originated. He also had a student loan from state of Hawaii back in 1998.

Lastly, how long will these information stay on his credit report before it can be taken off from his record?

Can someone help me answer these questions? Thanks!

[Ladynred]

The SOL for open ended accounts (credit cards) in CA is FOUR years. However, the SOL clock starts based on the last time a payment was made. Do you know when that was ? The SOL applies to where the debt was incurred.

If it was more than 4 years ago, then you're pretty much home free.. they can't sue you (well, they can try, but you can beat them) and you don' t have to pay it.

As for the interest, they not only tack on outrageous interest but they tack on a lot of fees as well, so its not impossible for the difference to be so high.

For the most part, information stays on your credit report for 7 years, so even if the debt it is out of statute, it can be on your report for 3 years after the SOL has run out.

As for the settlement, especially for something that high, be aware that IF you settle, anything over $600 becomes taxable as 'cancellation of debt' income, which you'd have to report on next years taxes. So, if the debt isn't beyond the SOL, and you want to settle, you'd be opening yourself up to additional taxes next April.

I wouldn't settle with them, at least not to start with. Collectors will make a lot of threats to get you to pay, but they're illegal. Don't negotiate on THEIR terms. Offer them what YOU can afford, and negotiate getting the entry removed from your credit report, or at least reported as 'paid as agreed'. Whatever you do, DON"T do this on the phone, unless you get everything in writing, they will conveniently 'forget' and you'll be back to square one. Send any and all correspondence to them Certified, Return Receipt Requested.

Read the Fair Debt Collection Practices Act and know your rights under the law. See [url]www.ftc.gov,[/url] Consumer Protection, Credit, look for the FDCPA.

...For the latter question, I don't believe student loans have a statute of limitations. Nor can you discharge them in bankruptcy. Hope you weren't expecting a tax refund, because the government will snatch that right up if it's delinquent.

[Ladynred]

About all those extra posts ! Dumb firewall at work yesterday kept timing out my connection, so I never knew they went thru !

Anyway... NO, student loans go on forever, no SOL, and are not dishcargable in bankruptcy, neither are back taxes.

Thanks to Ladynred and Justathought for the reply.

I received a letter from the collection agency today and it says that the last payment made was 11/98. So if the SOL in California is 4 years, does that mean that this November it will expire and the collection agency can no longer go after my husband's bill?

In the letter, they want us to pay by June 17th the amount of $2000.00. And I told them this afternoon that we can only come up with $1500. He says that if they don't receive the payment by the 17th, then we need to renegotiate the agreement.

What do you think? Should we pay them and wait for the SOL to expire? And am I right, is it four years this coming November from last payment made in 11/98.

Thanks again!

If you pay them even a dime, you will "re-set" the SOL clock.

How you want to use that information is your call.

[Ladynred]

Another thought.. DON'T trust what the collection agency tells you about the date of last activity, they could very well be lying to you !

Send these scumballs a request for validation.. make them validate the debt.. that'll stop their collection activities for a while as they MUST comply and validate within 30 days. Check out the info on Debt Validation at [url]www.creditinfocenter.com..[/url] its very good. Send you letters Certified, RRR, as you should do EVERYTHING when communicating with a collector.

Once you send the validation request, get a copy of your credit reports and look for the date of last activity on that account, I'd have more faith in that than what a dirtbag CA tells you. If your husband has any records on this account.. start digging and see if you can determine when he last paid anything. The validation request will buy you time if you need it to figure this out.

Second, whatever you do, DO NOT make any agreements for settlement unless you get it in writing, period !! They have very convenient 'memory losses' and could very well still stick you for the remainder ! If you want to settle, that's your choice, just get it ALL in writing. While your at it, negotiate to get any entries on your credit report to 'paid as agreed', or even removed if you can do it. YOU have the leverage of negotiation here.. you have money they want.

If you find that the last payment really WAS made 11/98, then yes, the SOL will run out November of this year. You just *might* be able to stall them long enough to run out the SOL. I wouldn't mention the SOL to the CA, though they may already be on to that since they gave you a last activity date.

Do nothing verbally over the phone.. get everything in writing !

You're absolutely right ladynred.

My husband's plan is to pay it so it but I want to do it right way. I agree with you. I will request the validation, this would give us more time to come up with the money.

But i will not pay more than a $1000 dollars in finance charges and interest. I will offer what we have and that's it. They're gonna have to take it or leave it.

Thanks again Ladynred and Justathought.

[Ladynred]

A better source for the sample letters is [url]www.creditnet.com.[/url]
They are 'buried' in the discussion forums, and you have to 'join' to get there, but its free There's a lot of other good info there too.

Consider this too - CA's buy old debts for pennies on the dollar, so if they're damanding almost the full balance, and they've bought the debt, they're making a considerable profit. With old debts like this, its likely this one was bought for next to nothing.