Protecting myself

[Brad739]

What is the name of your state? TEXAS

In 1999 I had a credit card that I stopped paying on... It was college and I was an idiot. Apparently, over the last 8 years the debt has circulated through several collectors. It's ended up with Credigy. The original debt was $1,000 (in 1999) now it's in excess of $7,000 (interest and penalties).
I've spoken to several people at Credigy- It's hard to understand what they're saying, they enjoy giving the run-around and very vague answers to questions like:
Can I get a statement with the exact amount I owe?
Will this be removed from my CR?
Will the variance in the settled amount and the collection amount return in the future to haunt me?
Will this REALLY be removed in 30 days upon receipt of payment?

I'm all about paying off my debt (40% of it at least) but I want to protect myself:
Please advise...

 

[Debt Guy]

To protect yourself, get the agreement in writing before you send money. Ask for a "settlement letter" -- they know what it means.

read the letter carefully and make sure it covers what is important -- that your payment of $x satisfies the entire debt in full.

be forewarned that you will receive a 1099 for the amount forgiven and will pay taxes on that amount as if it were income.

Technically, this debt is out of statute in TX. You still owe the money and you can still be sued but you would respond to the lawsuit by filing a response that the debt is time barred. The judge will toss the case. This all assumes, of course, that you lived in the TX at the time of the default and have not left the state or otherwise done something that tolls the SOL. If you lived in another state at the time of default, you will need to look to the laws of that state for tolling of the statute when you left the state. You can still be sued and you could still assert the OOS defense but the plaintiff will argue all the reasons that another state SOL applies and why. It is even possible that you could be sued in the other state and then the judgment domesticated in TX. There are several ways to fight that attempt that might or might not be effective.

But, you will likely then get a 1099 for the entire amount owed -- that tax thing again.

 

[ecmst12]

If the debt is 8 years old, it shouldn't be on your credit report at all - if it's there, either it's an error, or one or more of the collection agencies illegally re-aged the debt. And you can dispute that with the credit bureaus.

 

[Brad739]

Thanks!

Thanks DEBT GUY. This helps a lot. I'm going to call them today (record the conversation). We'll se what happens.