Creditors/Collection Agencies Vs S.O.L's

[Calloway]

I was conversing with a friend who’s a mortgage broker. He was in the midst of getting lender approval for a long time client and was surprised by the following problem:

A leasing company, who had not done business with the client in 9 years entered a recent payment on this old derogatory account, thereby converting it from a dead account to a current derogative account. The result was that her “over” 700 fico score plunged below 600. She did NOT make any payments to this company in the entire 9 years. This could have been a mistake, but seems it is most likely a lie. Since she’s in the midst of financing now, she does not have the time to go through the process of contacting the creditor/bureaus in effort to get this mistake corrected.

Think about this one - If the statute of limitations regarding suits on revolving credit in a given state is 4 years, then approximately 4 years from the date of last payment, a collection agency may file suit, but the case would be dismissed when/if the debtor brought it to the court’s attention that the statute of limitations had expired. However, if the debtor makes a payment on the account, the clock starts over. The debtor may now be sued on the account, it can be reported as a recent collection (smashing your score), and additionally take another 7 years from the date of that payment (assuming no other payments are made) to drop off your credit report. (more if judgment is obtained)

Anyone can make a payment to an account even if it is not their account provided they put the account information in the memo section of the check or money order. Just the same, you can walk into a bank and deposit money in anyone’s account if you fill the deposit slip out with the account number.

It may prove difficult to uncover or find the method by which this was paid, and even more difficult to get a micro fish copy of the instrument of payment. The broker and client are trying to do this. I will follow up with a post of their discovery.

[NightStar]

and additionally take another 7 years from the date of that payment (assuming no other payments are made) to drop off your credit report. (more if judgment is obtained)

That is incorrect, it is not legal to re-age an account so that it reports longer. If that happens then file a complaint with the FTC and dispute with the credit reporting agency.

The only debt that can report more then 7 years is student loans and tax liens. All other accounts besides bankruptcy comes off in 7 years.