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An old credit card from 2004. It was only a $500 credit limit. I used it and never paid back. I know my bad.
But today I have good credit and this company has been sent to a collection agency years ago--it is well past the statue of limitations in NJ (6 or 7 years). I am not worried about that.
They have been calling me and sending me letters since 2007. I always ignored them.
This past Memorial Weekend I had a week moment and "acknowledged" the debt when they called me. I answered the phone and knew it was them but I was upset because they called during a holiday weekend.
They caught me at a weak moment (okay I was trashed). I mentioned the statue of limitations and told them they can't get a judgment. He acknowledged he wasn't out for a judgment. He said he was only trying to help me. I was in a bad mood and responded "Are you trying to help me or yourself?" After that he said this conversation isn't going well so I will hang up.
1) I was wrong by not paying the original debt back in 2004.
2) I was wrong by losing my cool with the collection agency and acknowledging the debt.
3) I am wrong now for seeking advice.
Now I just need honest advice on what's best to do for my FICO score? Currently it is 755 (median average of the 3).
1) Wait to see what happens. I am not sure I legally acknowledged the debt according to NJ statues; and restarted the "Statue of Limitations" according to NJ laws. I know it varies by state. I researched it and am even more perplexed.
2) Call them back and pay. I have no problem with paying even though the original debt is now double because of interest fees. My concern is by paying it. it will also negatively impact my credit score by them reporting it the big 3 credit agencies. They have harassed me enough; I got nasty with them today; I want this to be done with. Am willing to pay if it will not negatively impact my credit score.
3) Just continue to ignore them regardless of FICO outcome.
4) Pay them in full in regardless of FICO outcome.
All advice greatly appreciated!
ps: It's a bit ironic that my brother works for this collection agency. He works in IT so he doesn't know about this stuff.
Basically what should I do?
Last edited by johnfrisco; 05-27-2014 at 07:21 PM..
Location: 23.7 million to 162 million miles North of Venus
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Quote:
Originally Posted by johnfrisco
I mentioned the statue of limitations and told them they can't get a judgment. He acknowledged he wasn't out for a judgment.
Now I just need honest advice on what's best to do for my FICO score?
Basically what should I do?
No you didn't reset the SOL, simply mentioning the SOL had passed is not enough to reset the SOL .. NJ law about resetting SOL ..
25:1-5 Promises or agreements not binding unless in writing 25:1-5.
No action shall be brought upon any of the following agreements or promises, unless the agreement or promise, upon which such action shall be brought or some memorandum or note thereof, shall be in writing, and signed by the party to the agreement
(in a nutshell, the SOL can only be reset if you had sent a written, and signed, agreement or promise to pay - not just casually verbally mentioning the SOL had expired)
What you do is not going to affect your scores, since it's too old to report.
Send them a SOL letter.
You might Google Why Chat's Credit Confusion , which is a free site to read and use whatever is on there. Look on his main page, under the Special Purposes section, for the letter to the collector notification of SOL letter template link. Also, on his main page scroll down to near the bottom and click on your states name to find the statutes to use in the SOL letter.
What Berdee said is correct however to elaborate a little more, just ignore them. These collection agencies purchase your debt for peanuts on the dollar. The older the debt the less they pay for it. The original debtor by law had to write it off. A little accounting knowledge and government regulation helps to understand.
When you owe a company money it is a receivable to them. That receivable is part of sales, if the are on the accrual method of accounting they have to recognize income when the make the sale regardless if money exchanges hands. They pay taxes on that money. In addition Account Receivable is an asset account which puts it on the balance sheet. It is considered an asset. After 5 years the government says you cannot tell the world you have an asset (receivable) that was not converted to cash. Then the business writes off your debt and reduces sales equally, that is how they get the tax money they already paid back.
Your $500 debt probably was $300 and then when you defaulted they charged you additional fees, late fee, over limit fee and what ever other fees they can legally get away with. But these fees have a purpose. It helps offset their loss. So say you origianlly owed them $300, if they were in the 15% tax bracket they would pay out $45 in income tax. Plus they lost the $300. When they write off the $300 they would get their $45 dollars back. But they are still out $300. So they add fines and fees which cost them nothing it is a paper transaction and now the debt is $500. When they write off the $500 they will get a tax savings of $75. That is $30 more than what they originally paid. So now they are only out $270. I believe the government may let them charge late fees for 2 or 3 months. Purpose of the story while I am not supporting not paying a debt do not feel bad about it. The government lets them create bogus charges to help offset their losses.
Think of this a collection agency buy a $500 debt for $1. You make one payment then stop. Your credit is affected but more interesting is the collection agency after 5 years can write off $500 not the original $1. That is a very lucrative business model to help you offset income. Whatever money is collect it will be offset by the people who committed to the new debt but never finished paying. The collection agency can reduce their taxes without ever really paying any money because they are using the face value of the debt for a write off but not paying out any substantial money ($1 for $500).
The interesting thing is congress doesn't have to use the rules they create. They can keep something on their books forever and keep adding interest to increase their receivable amount. When they do this it helps them balance the books (federal budget). If the government was force to comply with their own laws the deficit would be way much higher. They even passed a law where student law debt can never be eliminated in bankruptcy, and if you own the government any back taxes they will deduct it from your social security check, when you retire.
What this all mean to you is the original debt holders have forgiven you and moved on. You are just dealing with a collection agency who purchases old bad debt. The older the debt the less they pay for it. You do not owe the money anymore legally, unless you acknowledge and really make a payment. When you make a payment it is considered a new debt and is recorded with the credit reporting agencies. If not the collection agency cannot place a duplicate credit history record on your report, which already passed the statue of limitations.
Remember anything you say will be used against you. Do not call and have any philosophical discussions they don't care.
Regards,
PS I had a debt collector try to place an old Citibank debt (over 30 years ago) on my credit report to force me to pay. I wrote the credit agency and they quickly removed the debt. They have history and know the debt was already on my report a long time ago and the statue of limitation is up. The collection agency will try anything, you cannot concern yourself with being dishonest to the devil, it is the devil. The unethical behavior of collection agencies is well documented.
I guess it's easy to be an A Whole on the Internet
Yeah, I know, especting people to spell at a 6th grade level (or to look things up on www.dictinoary.com before posting) makes me an a-hole to some. You call it being an A-hole. I call it having standards.
I understand the lamentation of grammar and spelling errors, Mysty, I've felt them myself... but I've also learned something valuable as I face a small hearing loss that will only get worse as I get older -- unless the stem cell thing they are working on works and my cilia can grow back.
It's become comical what I "hear". I hear all sorts of wild stuff -- none of which is actually being said. Statute can very easily be mistaken for Statue. Since I've been at this point for some time with the hearing loss -- I've become far more forgiving of people's "mondegreens".
And to put this back on topic -- OP -- listen to Berdee -- she is wise and knows her stuff...
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