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An old loan has come back to haunt me.


Herbie's Girl
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Hi everyone, a newbie here....

An old personal loan I defaulted on back in 1997 has come back to haunt me. The credit union I borrowed from is sending me correspondence now, trying to collect the 1200 some-odd dollars I owe them. How can they do this 8 years after the fact?

Any info would be greatly appreciated. I don't know where to go from here. Thanks!

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You defaulted in 1997? If no payments have been made since the default, it is way past statute. Totally uncollectable. To avoid being nailed with "account stated," you need to send them a letter telling them the acocunt has past the Statute of Limitations and that you never want to be contacted again about it.

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Doesn't matter if it was 1997 or 1998.

The Statute of Limitations in Texas is 4 across the board. If no payment has been made on the account for more than 4 years, it is beyond SoL and they cannot win a lawsuit over it.

They can TRY to sue you, but your answer to the complaint is an affirmative defense that the alleged debt is past SoL.

The limitations in Statute are there to prevent lawsuits decades after the complaint. It's designed to prevent people from being sued over stale issues where witnesses and proof may no longer be available for a defense.

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Methuss: I think this is only going to get worse with the new BK laws. Imagine this - sending a dunning that reads basically "You can't claim bankruptcy anymore so pay up!"

Zombie debts and even just plain frauds claiming debt when there never was one, hoping to get someone who doesn't keep good records or will pay up to avoid confrontations.

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Not sure what that has to do with SoL, Grim...

Most people are unaware of the SoL anyways and don't have a clue about this defense.

That's what I mean. They won't be aware of SoL and pay up a token amount, perhaps as a bogus settlement, therefore resetting the clock. I was just listening on CNBC and one of the presenters on there was saying "People won't be able to declare bankruptcy anymore after Monday". I think the context was "as easily" but it was said as I quoted above. I dropped my jaw when I heard the quote. CA's might use the Wicked Witch of the West "I have you now my pretty!!" methodology when attempting to collect on past SoL.

This is the kind of (mis)information people are getting.

I wonder if the credit industry now will go after states to remove SoL now that they have their bankruptcy reform they wanted.

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Well. They can't just decalre BK anymore after the new law goes into effect. So the guy wasn't misrepresenting anything. Consumers will be forced into credit counseling programs before they are permitted to file. So the creditors get you both ways. Either through the CCCS programs or through Chapter 13 (since most won't qualify for Chapter 7).

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While we are on the topic of CCCS, I was told to look into this...I took a $20,000 per year pay cut to be able to take some continuing education courses at night, and the bills look like they are about to stack up. I am not getting anywhere paying the minimum amount due on my CC's and not really seeing a light at the end of the tunnel. What's everyone's take on doing this? My credit is in the Poor to Fair rating. I WAS making progress in paying things off until I was laid off and had to make some decisions. I have about 1 year left on paying off my car, and was thinking of maybe talking to them about refinancing to get my payments down a bit lower, but I don't know if my credit makes me a "risk" in their eyes.

Thanks for all the advice,

The Newbie

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CCCS programs cannot do much more than you can yourself. All they do is negotiate a hardship program with the creditor. What those counseling programs do isn't even legally enforceable so if the counselor screws up and mails payments late, it is still YOUR fault and is reflected on your credit report.

You would be better off using some discretion. Cut up the cards so you are not tempted to use them and then start making extra payments towards your highest interest items while paying minimums on the lower interest items. Get a bonus? Don't spend. Pay down. Got some old stuff that's worth something and you don't use it anymore. Don't sit on it, sell it and use for pay offs. I got rid of $1000 of old 35mm camera gear I'll probably never use again and paid off a credit card.

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