Buying your old debt?

[yumling88]

This is what i have gathered regarding old debts that are SOL.

The collectors have the right to ask for their money forever (and the money is still owed to them) but you stop them by saying/proving that debts are SOL.

So even 20 years from now, some new collector might try again and you have to put up the SOL defense. Disputing the debt and putting up SOL defense is fine if you are just starting out in your career but imagine that you are now a CFO for some company and some collector come chasing. Pretty embarrassing right? I am sure many would settle on some old debt if they can be 100% assured that collect no longer has such a claim.

Even if you do pay, you may re-clock the old debts and bring them current and it will sink your credit. So one should not pay their debts if it is SOL even if they have the money.

But can one effectively go out and buy your old debt? Instead of settling with the creditor, ask to buy over the rights to collect on your own debt. For the creditor it is money in the pocket since the probably paid 5 cents to the dollar for old SOL debts.

For you, it is peace of mind since you now own your old debt and should anyone try and collect from you, you send them a letter disputing who has ownership of this debt! And as you own this debt no one can bother you anymore.

Does anyone know if I can selective go and purchase old debts of certain people. Rather than buying 100K names for 3 cents to the dollar, maybe I would have to pay 10 cents to a dollar.

[mayormyk]

Hmmmm,...

Maybe I could start a business, for the good of the people. Agree to buy their debts and sell them to the actual debtor for say a flat fee of $5......

I am joking but your thought is very interesting. I wonder if it would work???

Its probably very easy to become a CA, which I would think you would have to be to buy the debts..

[flacorps]

Even if you do pay, you may re-clock the old debts and bring them current and it will sink your credit. So one should not pay their debts if it is SOL even if they have the money.

No. They will not sink your credit. If an account is being reported to the CRAs, paying it off will cause it to report as paid. It will also get a new status date (assuming the CA or JDB hasn't been reporting it regularly, that status date might be much more recent). The date that the account will drop off will not change unless the CA or JDB erroneously resets the DOFD. However, the status date update might temporarily cost a few FICO points--well worth removing a major stumbling block to any manual review because the account also now shows paid, or some variation on paid.

If the account is not being reported, the settlement agreement should be written to avoid it being reported (of course, a creditor is not likely to bother reporting a paid account out of statute that they weren't previously reporting--it costs money to do that ... but why not have a backstop to that possibility in the agreement). Meanwhile if it is being reported, the possibility also exists that the debtor could negotiate a "pay for delete" (PFD), or more likely that the creditor would agree only to omit to verify the account if the debtor disputes it.

But can one effectively go out and buy your old debt? Instead of settling with the creditor, ask to buy over the rights to collect on your own debt. For the creditor it is money in the pocket since the probably paid 5 cents to the dollar for old SOL debts.

For you, it is peace of mind since you now own your old debt and should anyone try and collect from you, you send them a letter disputing who has ownership of this debt! And as you own this debt no one can bother you anymore.

Does anyone know if I can selective go and purchase old debts of certain people. Rather than buying 100K names for 3 cents to the dollar, maybe I would have to pay 10 cents to a dollar.

JDBs won't sell you a debt as a one-off, though they occasionally might do that with each other for one reason or another (mainly because one effectively got his hooks in the debtor, so he might be willing to pay a premium to get another debt the debtor owns ... you occasionally will see stories on the boards that indicate that sort of thing went on).

JDBs will sell you debts through services like Creditmax that let you buy all the debts they have in a specific zip code. But you can't go hunting for John Doe's bad debt. And in some state's it's even illegal to specifically seek out and target for purchase a particular individual's debt and try to collect on it.