Old CC Debt Keeping Me From Getting a Loan

iVillage Member
Registered: 10-27-2006
Old CC Debt Keeping Me From Getting a Loan
3
Mon, 06-17-2013 - 11:17pm

I've been trying to get my credit back on track since 2007.  However, I had a cc with Capital One which I was drowing in. My limit was $1000 and my balance on it was $800 at the time I tried to start paying it, but I was just not making enough to put a dent in it. One late payment turned into a ton of money in late fees and interest and it just kept accumulating, but I had no choice but to keep paying what I could even though my balance was increasing. In 2009/2010, it was sent off to in-house collections, I believe, due to late payments. I tried working with them and had started getting monthly payments arranged, which would catch me up and put me back with the original creditor and put me in good standing, but one month there was some computer error that caused my payment to not be made. It was not a fault on anyone's end. My payments were scheduled months in advance, but for some reason, during one month, it did not recognize my account. I didn't realize this until about a week later and when I called I was told it was sent back to collections and there was nothing that could be done now. I fought with them on this since it was not my fault. I even sent a letter to them from the bank stating it had nothing to do with insufficient funds, as that is what they thought at Capital One, but to no avail, back to collections it went and they wanted a huge amount. I could not do it, so I didn't pay it and just paid other debts.

Now here we are in 2013 and I still haven't paid it, but it is causing havoc on me trying to get a personal loan. I make the money now. I've paid off huge debts but of course they still show as closed or negative. I did receive a lot of letters from Capital One and their collectors stating if I paid now they would decrease it by so much (it is at about $2500 right now), but the letters and calls stopped about a year ago. I just don't have that lump some. The last activity on it was back in 2011. On my report though, it does not show as a charge off. All it shows is that it is behind $411 and monthly payments are $114 and that it has been late over 150 days late. There is nothing saying it was passed on to a collections agency or charged off yet.

My question here is, what should I do for the best outcome. We are in the process of moving, and I was trying to get a small personal loan for moving expenses, but they won't do it due to deliquencies. I do have some from a few years back, but Capital One is my most current one. I can't do anything about previous delinquencies or negative accounts, as they are already closed and paid in full accounts, so they are pretty much there for a few more years. I can, however, try and do somethign with Capital One, but what is the question. I don't want to take a chance of letting it reach SOL (4 years in Texas), as Capital One is a huge company and could easily sue. I don't want to restart the SOL either. I don't have the lump sum to offer them. I have heard of paying to delete but that is is against the law. What options do I have? How can I clean this up? Any ideas or advice? My credit score ranges from 645-685, so I don't know if taking care of this would hurt or help me either. I worked hard to get it where it is at and would hate to mess it up.

Thank you,

Elle

Community Leader
Registered: 07-26-1999
Tue, 06-18-2013 - 10:09am

Even if you opt not to pay it and use the SOL for collections as the reason, it will stay on your credit report for at least 7 years after the last activity on the account, which would be any payment you made.  I don't know the answer as to what it will or won't do to your credit score to begin paying it again.  If you want to resume making payments on it to get it caught up, I would pull your credit report, and it should say on their who is the current collection agency I believe.  If you can't find it, I suppose all you can do is start putting aside money so that when another collection place comes calling and you opt to pay it, you will have the money set aside to offer them a lump sum.  Others may have other advice for you.

Photobucket
Community Leader
Registered: 03-17-2003
Thu, 06-20-2013 - 12:01pm

Hi Elle.

The delinquent account will continue to hurt your credit score.  If you don't have the money to pay the bill, then there isn't much more to discuss.  So let's look at the current situation:  The debt is now 2 years old and there is no payment activity on the account.  You have 2 more years until you hit the SOL, which you wrote is 4 years.  Maybe it's best to let the SOL run and accept the fact that this account, in addition to other troubled accounts, will continue to hurt your credit report.  Nothing will change that, except for time.

Credit reports will report troubled accounts for a total of 7 years from the date of last activity.  The Cap One account is 2 years old.  As long as there is no activity on the account it will be another 5 years until it falls off your credit report.  You understand that paying any amount on any old account will re-age it and start the 7 year clock over again.  Since you (1) can't pay off the account and (2) don't want to start that 7 year clock over again my suggestion is to just let sleeping dogs lie (do nothing).  The CC company may or may not do anything.  We don't have a crystal ball, but we do know that an account that has no activity that is a "baddie" will fall off after 7 years.  The older these "baddie" accounts get the less they hurt you provided you do not incur more delinquencies or re-age these accounts.

You ask what you should do for the best outcome.  Perhaps it would be best to let sleeping dogs lie and do nothing.  You can't change what has happened.  You and millions of others are dealing with exactly the same issue.  Monitor your credit reports (print out copies) and watch how this account and other accounts are being reported.  The older these "baddies" become the less it will hurt you and your chances for getting new credit.

Hope this helps.

Carolyn

Community Leader
Registered: 08-25-2006
Mon, 06-24-2013 - 6:41pm

I am no expert, but I have heard about the clock starting over in an attempt to "do the right thing."  

I also wonder if it is best to leave it, since you don't have any money at all to put towards it and no one is bugging you right now for it.  KEEP all of the correspondence you have between the bank and yourself and the CC company regarding that mishap.  You just never know when you may need to prove what happened.  (i.e. buying a house)

Lastly, I would try to avoid borrowing any money or charging anything for moving costs if at all possible.  You really don't want a personal loan, anyways.  Laughing

Good luck!

Serenity