How to Use Statutes of Limitation for Credit Repair
The Power of Statutes of Limitation
Statutes of limitation (SOL) pertain to open collection accounts on your credit report. Knowledge of SOLs can make or break your credit repair project. Take the time to research the SOL for each collection account and you be able to choose the most intelligent and effective course of action.
Using the Knowledge
Armed with knowledge of your SOL you will know when and how to contact a collector and how much, if anything, you should offer them. You will know the risks, or lack thereof, of disputing these accounts as part of your credit repair program.
Risks of Ignorance
Conversely, acting blindly, without information about the SOL can lead to disastrous consequences such as lawsuits, and harassment. Many people jump into the dispute process believing there is no harm in sending letters to the credit bureaus challenging everything and anything. This is a mistake.
SOL and Potential Lawsuits
Employing credit repair to challenge collections is fine, as long as you understand the SOL. An SOL for a debt is the length of time following an original default date that a collector can enforce collection through the court system. In other words, it is the amount of time they are permitted to sue you.
Suing After the SOL
For the sake of completeness, I should mention that collectors regularly sue debtors after expiration of the SOL, hoping that the debtor will not know their rights or be afraid to show up at court. Either way, unless a debtor raises the SOL defense a collector can still convert a collection into a judgment, at which point the original SOL is irrelevant.
Your Homework
SOLs are easily found on the web. You will need to locate the SOL for your state and for the specific debt type. Have you moved since entering into the debt? You need to double check your position relative the collector; they have some flexibility in choosing which state SOL to apply, your state of residence, or the state of original contract.
Which State to Use
For credit card debt, collectors use the SOL for the state of residence. For written contracts, like car loans and mortgages, collectors get to pick the state of contract or residence, whichever works best for them.
Judgments and SOL
If you have a judgment and are curious about SOLs, the situation is different; the SOL for the original debt no longer applies. You need to find a SOL judgment chart for the state where the judgment was granted. And since judgments can be renewed, they may even live beyond the initial SOL. Tread lightly.
Credit Repair Options
Once you have your SOL, your credit repair options are simple. If the SOL has not expired, plan your approach very carefully. Collectors are trained to be aggressive, and if they still have legal leverage they may become unpleasant. Several of the large collectors treat dispute letters as a trigger to launch a lawsuit.
You Are in Charge
But if the collector can no longer sue you, and you know it, and you let them know that you know, you are in charge, they should be willing to settle for a tiny percentage of the original debt. If they play hardball you can hang up on them and there is nothing further they can do.
Getting Your Offer Across
In fact, if they remain aggressive, you can send them a cease communication letter and they are not allowed to contact you again. If your offer is not accepted, try sending a cease communication letter, and then follow up with your offer a week or two later. It may be helpful to know that as collectors earn commissions offers made towards the end of a month are often accepted more readily.
Copyright © 2010 James W. Kemish. All Content. All Rights Reserved.
Questions and Answers
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