Do you have very old debt lingering on your credit report? In California, if it has been more than four years since you first became delinquent; i.e., missed a payment, then the debt collector can no longer sue you to collect on that debt. HOWEVER, that doesn’t mean that the debt is forgiven, or that the debt is not owed. Under both the Fair Debt Collections Practices Act and the Fair Credit Reporting Act, debt collectors can continue to collect the debt owed long after the statute of limitations (the time period a debt collector has to sue on a debt owed) has expired. In fact, that collection can remain on your credit report for seven (7) years after you first became delinquent.
I agree with Liz Weston’s (www.asklizeston.com) answer in her recent column where she explains, “. . .there’s no forgiveness for most debt. It’s legally owed until it’s paid, settled or wiped out in bankruptcy.” I see clients who want to move on with their financial lives and buy a home or car, but are declined due to these pesky old debts that linger on their credit reports. Even though many of them are old and the creditor can no longer sue, the consumer still owes the debt and the collection sits on their credit report. So, what plan is there for debt forgiveness?
The answer is always; it depends. Every situation is different. Time and timing are the most important factor in deciding a course of action. If you’re like most folks these days, you live in the instant gratification age and want results NOW! If you’re being sued, or have far too many credit lines in collections, then time may not be your friend. Unfortunately, quick results come at a price that likely includes filing bankruptcy. Otherwise, if you can wait for time to pass, a full seven (7) years later, your credit report should be clear of the negative items.