Exactly. Some blogs and other websites are offering bad advice. Performing overt actions such as: checking one's credit, sending debt validation letters, paying small amounts, maintaining other debt at the expense of another, seeking jobs which check credit, and others can empower debt collectors to pursue that individual vigorously. On the other hand, a completely destroyed credit report (100% charge offs) with no known mortgage or vehicle with a hard-to-find debtor is unlikely to be pursued since they are more likely to be collection/judgment proof.
What many people do not realize is that most charged-off debt is uncollectible. Only a small fraction actually gets paid. Most debtors cannot be located by their collectors, and that's the primary reason why debt collectors will normally settle for less than what is owed.
Checking your own credit doesn't show up on the credit report collectors pull, so they would have no idea you did this. It also costs them money each time they pull a credit report, so they're unlikely to do it very often (or at all) by the time the debt is old enough that it's unlikely collectible.
Actually, the latest credit product systems from Experian and TransUnion (not sure about Equifax) allow creditors to see inquiry data as a list of dates. This array may include pre-approved offer checks and third-party pulls (such as those from Credit Karma). I believe you can even see this date list on Credit Karma as well.
In the same way that a debt validation letter is a "smell" to the debt collector that the debtor is concerned about their debt (and potential credit status), any indicator that the debtor is evaluating their own credit can also potentially raise the debtor's file with the collector to high-attention (or litigation) status (versus being sold off to another collector).
> Actually, the latest credit product systems from Experian and TransUnion (not sure about Equifax) allow creditors to see inquiry data as a list of dates. This array may include pre-approved offer checks and third-party pulls (such as those from Credit Karma). I believe you can even see this date list on Credit Karma as well.
This is not the same thing as checking your own credit, which is not visible on reports that creditors see.
Soft vs Hard inquiries. There is a problem with various credit apps doing hard inquiries without the user being fully aware - ie Did you read and fully understand the disclaimer?
It's much more complicated than that. The law doesn't wipe the slate clean. Rather, it gives the debtor an affirmative defense against a lawsuit after X years. It does not stop a debt collector from trying to collect on otherwise uncollectible debt (phone calls, letters, calls to friends, family, and employers if the debtor doesn't respond). Additionally, debts barred by the statute of limitations can sometimes still crop up as "zombie debt" years or decades later. Collectors can (and will) put a new records on a person's credit report, preventing most debtors from rebuilding their credit.
When a debtor stops paying debts entirely, it can start a whirlwind of problems. They can be barred from finding housing, certain types of employment, their actual current jobs (certain professional licensing require financial responsibility). Additionally, most debts end up in the hands of collection attorneys (CA) who will sue en masse to obtain judgments. This effectively stops the statute of limitations and gives the CA 10 years, 20 years, or a lifetime to collect the debt. In these cases, a well-timed bankruptcy is (and should be) an option for people. In some cases of debt -- student loans for example -- the debt is presumed non-dischargeable and can create a lifetime of hardship for the debtor.
>phone calls, letters, calls to friends, family, and employers if the debtor doesn't respond)
They are only allowed to call to locate you, and they aren't allowed to tell people why they are calling.
Since the debt is past the statute of limitations, there's no reason to hide from them. You can send them a cease and desist letter to make them stop contacting you.
>Collectors can (and will) put a new records on a person's credit report, preventing most debtors from rebuilding their credit.
They can’t change the date the item went into collections. If they add an item and say that it’s new debt you can dispute it.
Of course debt collectors can always break the law and do whatever they want, but if they violate the FDCPA you can sue them for actual damages and statutory damages.
>Additionally, most debts end up in the hands of collection attorneys (CA) who will sue en masse to obtain judgments.
Yes, this is the real problem if you stop paying. You can still go bankrupt after this point though.
That tactic has been shot down by the courts, but there are some big loopholes to it. Any acknowledgement of the debt (normally in writing) or any token payment by the debtor can reset the clock. Sometimes, debt collectors employ shady practices to get the statute reset, such as telling the debtor, "If you pay us $10, we'll stop calling you for three months." This token payment will reset the clock.
Once upon a time (40+ years ago?) accepting partial payment for a debt using an instrument that declared something to the effect of, "for the satisfaction of all debt", was enforceable. This became a problem when automated payment processing systems became prevalent. Savvy debtors--presumably mostly lawyers--could write a check for $10 that extinguished a $10,000 medical bill once cashed. Needless to say, the law was quickly changed before it became too prevalent--much more quickly than laws designed to protect consumers.
Unlike the loophole regarding debt acknowledgment you mention, this loophole was an artifact of mercantile law. Terms on negotiable instruments are typically strictly enforced as compared to regular contracts, to ensure maximum efficiency of payment systems. (Or at least the rules for what's enforceable are very brightline, and aren't particularly concerned with fairness. Magical phrases are still very much important.)
"The takeaway from these two cases is that accord and satisfaction can only settle a disputed debt when both parties have knowledge of the outstanding issues to which the debt pertains, and the party negotiating the check has reasonable notice that by depositing the check the dispute is completely settled for the amount of the check."
I wonder if you could put a 'warning sleeve' or something around a check that is sent to someone who may process it automatically.
What many people do not realize is that most charged-off debt is uncollectible. Only a small fraction actually gets paid. Most debtors cannot be located by their collectors, and that's the primary reason why debt collectors will normally settle for less than what is owed.