Some Old Debts Just Resurfaced on My Credit Report. – Carrie

“Dear Steve,

Several years ago (6-8 years) I accumulated approximately $25,000 of debt and no reasonable way to pay it back after a divorce. I dodged the creditors and collection agencies-but never had the means to pay anything to any of them. (I lived in subsidized housing,received food stamp benefits and was qualified for rehab services for my hearing loss, which then made me elligible for a ‘donated’ car and computer skills training!)

Over the next couple of years, I secured some full time employment but only at minimum wage. Then I met and married my husband, who provided me and my kids with a very significantly improved lifestyle! He wanted nothing to do with my debts and insisted that everything-EVERYTHING – be in his name only…to ‘protect me’ from the creditors, and to protect HIM from my bad credit.

Now, 4 years into this marriage (at age 50) I am determined to clear my credit and be released from the vulnerability of no resources and bad credit. I have contacted the credit bureau’s for a recent listing (within the last 6 months) of debts/creditors etc. and amazingly, most of the older and biggest debts have…’dropped off’ my report.

I called one of the credit bureau counselors to confirm this- and it was suggested that I just ‘wait out’ the remaining debtors as they will likely drop off as well- and that if I attempted to pay back the now listed debts totaling only $800, my report would then carry around the details of THAT transaction for the next several years.

Then, just recently, a collection agency ‘found’ me and offered to make a deal- I make payments and they knock off about 1/4 of the total owed….I haven’t responded because this could mean the OTHER collector’s would then add ‘their’ offer etc…..and I do not have the means to pay back any of them! I’m considering doing the bankcruptcy to get out from all the potential trouble I could find myself faced with if I don’t do SOMETHING. As I said, my husband will do nothing, and I work (no pay…) only part time in my husband’s office while going to school to finish a degree.

My question is this….why wasn’t THAT debt/creditor listed on my report when I checked into it a few months ago- this was indeed a debt I had, but it was from 7 years ago…and it was NOT on my recent credit report check that I did just 6 months ago……can the debts/creditors/collection agencies ‘hide’ by not listing the debt I owe on my report and just ‘wait’ until I somehow trigger their attention? Keeping in mind their goal being that if I were to do a bankcruptcy, I would have to LIST ALL CREDITORS – and knowing that I might not even KNOW all my creditors at this point…( what if I don’t know who they ALL are,) and they are not ALL on my credit report?

Carrie”

Dear Carrie,

Interesting.

Well credit reports do not list all debts, only the ones reported to the individual credit bureaus by the creditors. And you individual credit reports don’t contain the same debts if the creditor does not report to all the credit bureaus. The only way to see what your credit report really looks like is to get a consolidated credit report, that’s what I do.

So the old debt that was just reported could have been recently purchased by a bad debt buyer and they took the initiative to report it recently. They should have still reported it with the original default date, not a recent date.

Your question also highlights a common misperception people have. Just because an account has been charged off, written off, or fallen off a credit report it does not mean it is not available to be collected on. The first two are accounting functions and the last is a credit report requirement. None of them invalidate or terminate a debt owed. In certain situations your credit report can show all debts from all time to someone looking at it. It’s the typical consumer credit report that has things falling off.

The time when someone can see your entire credit history over seven years are:

• a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
• the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
• the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

On that $800 debt, your payment should not extend the clock since the reporting date and seven year clock is from the date it first went into default.

You should be able to get a better deal from that collection agency. I would suggest no more than half of the debt as a settlement. But make sure you have the full payment on-hand to pay it off immediately.

Debt settlement also has some consequences. Debt forgiven more than $600 is reported to the IRS as if you earned the money and you’ll have to pay income tax on that debt. But when you reach a deal to payoff an old debt it closes the door on that debt and you won’t have to worry about it again. Well, that is, as long as you keep your receipts showing you just paid the debt in full or reached a mutually agreeable settlement that retired the debt completely. Without that last statement from the debt owner they could come back years from now and claim they never forgave a thing. Get the deal in writing and keep it with all your other important life papers you protect.

Please update me on your progress by

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