Collection on Report for 5 years

[rondaperfili]

i have a collection which has been on CR since 2001. I am buying a home and Mortgage Co. said I need to pay it off before closing. I called OC and told them the SOL ran out long ago, and asked to either change to Charge off ( which bank will accept w/o making me pay) or to put down owing zero since it can't be collected. They said "prove it". Isn't there a law that says after 180 days an account is supposed to change to a charge off? thanks for the help. I am supposed to close in 2 days so I need advice real fast!!!

[elyse449]

I haven't heard any "law" per say...but it's my understanding that nobody "has to" charge off.

If it were me, and given that you've already gone through the mortgage thing prior to credit repair--I'd just pay it. More than likely they now know you need this dealt with and are digging their heels into the ground. It's pretty typical, which is why most folks will recommend credit repair prior to even looking for homes/mortgages. It removes their leverage for messing with ya.

Sadly, they have the right to collect it until hell freezes over, but may only legally report on your CR for 7 yrs.

Good luck, wish I could offer more. Maybe someone else will have more information.

Elyse

[LadynRed]

I called OC and told them the SOL ran out long ago, and asked to either change to Charge off ( which bank will accept w/o making me pay) or to put down owing zero since it can't be collected.

The expiration of the SOL does NOT mean the debt is uncollectable unless you're in WI or MS where it is illegal to collect on out-of-statute debts. A charge-off also does not mean the debt is uncollectible, that's just an accounting function for the creditor.

The banking regulations procedures does say that an unsecured debt should be charged-off at a max of 180 days, but they can stretch that up to 210, or they can do so sooner. The likelihood that this OC has NOT charged-off a non-performing account is pretty slim, they just wouldn't carry a non-performing account on their books for 5-1/2 years.

So, unless you're in one of those 2 states I mentioned, the debt IS still collectible.. so you probably need to just have the bank put that money in escrow and pay it.