Quick Answer: Old student loans typically fall off credit reports after 7 years from the date of last activity, but debt collectors sometimes manipulate these dates to extend reporting periods. The borrower should request debt validation from the current collector and dispute the March 2014 activity date with credit bureaus if no payments were actually made.
Question:
Dear Steve,
My husband has an $18,000 collection on his credit report resulting from a defaulted private student loan opened in 2009 while attending The Art Institute of Las Vegas. The statute of limitation in Nevada is 7 years, and it’s our understanding that this collection account may fall from his credit report after 7 years from the date of last activity. The newest debt collector that’s reporting this debt is showing a date of last activity as March 2014, however, my husband has never been able to make a payment on this loan nor has he ever made any payment arrangements regarding this account. We are trying to buy our first home but this private student loan debt is keeping us from being approved for a home loan. Note: all of his Federal loans totalling $80,000 have been consolidated and are in good standing thanks to the repayment plans available.
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What is the best way to verify the actual date of last activity and determine when this will fall off his credit report? Can we contact all three credit bureaus to request proof that the debt is still valid? Do we write a debt validation letter to the original creditor or current debt collector?
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Answer:
Dear Michelle,
I have to applaud your initial awareness on these issues. It’s so refreshing to hear from someone who has done some homework.
The shifting activity date isn’t surprising. Some collectors do that to keep the pressure up on the credit report.
Frankly, I think the most cost effective solution here would be for you to speak with a consumer attorney that represents consumers. One place to find such an attorney is here.
The attorney can also assist you with validating the debt but the more likely scenario is just to verify when the Statute of Limitations (SOL) actually expires on the debt. Little issues can impact that date.
With all that information in hand you can then dispute the information on the credit reports. But more importantly, you’ll have a legal advocate in your corner if the collection company plays fast and loose again. If they do you may be eligible for a monetary award and the collection company would have to pay the attorney fees for that action when you win.
There is no downside to getting good professional advice and this situation begs for you to do that so you can know the legal specifics about your situation, can speak with authority when questioned, will have documentation to backup any future attempt to collect, and you can keep the collector at bay.
Keep in mind the SOL approach is always a defense and never something you can count on to stop future collections attempts. Just because a debt is outside the SOL does not mean a collector can’t try to trick you into acknowledging the debt or making a payment or payment arrangement. Any little slip like that will start the SOL clock all over again.
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Thanks for the suggestion, Steve, we will be contacting an attorney for this.
It’s a smart investment.
Question asked.
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