Author Topic: Can credit card debts just "disappear" ?  (Read 5457 times)

FatCat

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Can credit card debts just "disappear" ?
« on: April 21, 2015, 01:18:50 PM »
A friend of mine got a credit card and maxed it out and didn't make any payments on it. They sent him a bunch of mail and called him quite a lot about it. This was about a year ago.

Recently he got a windfall that can more than cover the debt so he's spending money like it's nothing. I suggested he pay off that credit card debt before he blows it all on random fun things. He said "Oh, the credit card company lost it so I don't have to pay anymore!" I asked why he thinks that. He said they were calling him and sending him mail for a while, then they just stopped. (He turned off his phone. And just threw away the mail.) They haven't tried to contact him about it for several months now. He believes the record of the debt has been lost or else they just gave up. Either way he doesn't intend to pay it back now that he can because he thinks they lost the record of it. 

Is it possible they've lost the record of the debt or decided to not bother with it? Is it possible that it's just gone to a collection agency and they haven't yet contacted him about it yet? I have no experience with what happens if you max out a credit card and then just refuse to talk to them about it.

It seems like if you can just apply for a credit card, max it out, then ignore them when they try to contact you, then lots of people would be doing this.

Bob W

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Re: Can credit card debts just "disappear" ?
« Reply #1 on: April 21, 2015, 01:22:49 PM »
It didn't just magically go away.   It is still on his credit file indefinitely.   The CC company may have written it off if it was a smallish amount.   That would be the reason they quit contacting him.   That and he pretty much changed anyway they could contact him. 

lise

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Re: Can credit card debts just "disappear" ?
« Reply #2 on: April 21, 2015, 01:23:32 PM »
My friend was in foreclosure and the bank has admitted they have "lost the paperwork".  So the proceedings have stalled and they are living in the house for free.  However there credit score remains bad and they know the bank will come calling sooner or later.

I doubt the debt is forgiven, it may catch up with him later in life ...

charis

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Re: Can credit card debts just "disappear" ?
« Reply #3 on: April 21, 2015, 01:26:52 PM »
It  probably has been reported to a collections agency, so it will stay on his credit report for several years even after he pays it off.  He won't be able to get new credit.

GizmoTX

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Re: Can credit card debts just "disappear" ?
« Reply #4 on: April 21, 2015, 01:27:40 PM »
Tell him to pull his credit report. It's there. The CC company has likely reported it as uncollected; the best case is they might have closed the account & so stopped interest accrual. He still owes it. Has he tried to apply for credit recently?

tarheeldan

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Re: Can credit card debts just "disappear" ?
« Reply #5 on: April 21, 2015, 01:37:25 PM »
It  probably has been reported to a collections agency, so it will stay on his credit report for several years even after he pays it off.  He won't be able to get new credit.

This. The typical process is that after XX days the original lender gives up, sells the account for 0.YY on the dollar to collections agencies, and the agencies then try to get a return on their investment. The charge-off is typically reported by the original lender, and the account in collections status is reported as well. Its possible that the delinquent account may not be reported to all 3 of the agencies (TransUnion, Equifax, Experian).

Cassie

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Re: Can credit card debts just "disappear" ?
« Reply #6 on: April 21, 2015, 01:48:16 PM »
It takes 6-7 years before it is fully charged off. Sometimes depending on the amount a cc company will get a judgement against the person.

RexualChocolate

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Re: Can credit card debts just "disappear" ?
« Reply #7 on: April 21, 2015, 02:11:22 PM »
Depends on the amount. It is not free to post things to credit bureaus. If it is a small amount or not a strong claim, they can and do give up. Credit cards are considered an extremely strong claim, cancellation fees are not for example.

Credit cards are charged off by the lender for most people around D90 and then sold. The debts that are purchased are given to secondary companies that try to collect. These debts can and are sold several more times for fractions of a fraction of a penny to increasingly aggressive collectors, but even they run out of steam.

I won a fight with Direc TV who claimed I owed them 400 dollars simply by doing nothing- their threats were empty but did accelerate until they stopped completely at around the 5 month mark. I answered the harassing calls and explained my situation. Once the debt was sold, I just wasted their time since they no longer have any power to eliminate the debt outright but they will wheel and deal since they bought the debt at a % of what is outstanding. However, make sure they send you WRITTEN TERMS that say you'll settle for X amount. I almost did this with Direc TV to get it dealt with but was told that they'll just lie to you and continue following up on the debt.

If you ever get a very old debt notice in the mail, never pay anything towards it. It will run off on its own at around 7 years on your report, but acknowledging the debt can reset the clock.

FatCat

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Re: Can credit card debts just "disappear" ?
« Reply #8 on: April 21, 2015, 02:16:11 PM »
The credit card limit was $5000. So it's for that amount + whatever interest accrued.

He'll probably never have to apply for credit so he doesn't know or care what his credit score is. This was the only credit card or loan he's ever had. So it would be the only thing on his credit report if anyone looked at it which would look pretty bad to me. He only got the card for the purpose of maxing it out as extra spending money so he could put off looking for a job a couple months longer.

I was thinking that they might try to sue him and garnish his wages to make him pay it back or something. They can still find him by his address because he lives in the same house as always.

Beaker

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Re: Can credit card debts just "disappear" ?
« Reply #9 on: April 21, 2015, 02:47:36 PM »
He'll probably never have to apply for credit so he doesn't know or care what his credit score is.
...
He only got the card for the purpose of maxing it out as extra spending money so he could put off looking for a job a couple months longer.

(facepalm)

Well, at that rate he probably will never have credit again. Of course that's different from never needing or wanting it, but whatever.



jackiechiles2

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Re: Can credit card debts just "disappear" ?
« Reply #10 on: April 21, 2015, 02:52:35 PM »
The credit card limit was $5000. So it's for that amount + whatever interest accrued.

He'll probably never have to apply for credit so he doesn't know or care what his credit score is. This was the only credit card or loan he's ever had. So it would be the only thing on his credit report if anyone looked at it which would look pretty bad to me. He only got the card for the purpose of maxing it out as extra spending money so he could put off looking for a job a couple months longer.

I was thinking that they might try to sue him and garnish his wages to make him pay it back or something. They can still find him by his address because he lives in the same house as always.

Depends on a lot of factors, but you're right, the debt most definitely has not gone away.  I've represented clients trying to collect from deadbeats before.  They stop answering the phone, throw away the mail, then are surprised when a process server shows up at their door with a lawsuit. Then they ignore everything you send them. They get a default judgement against them.  Then, likely a year or so later, you begin the process of trying to collect by seizing assets, bank accounts, etc.  My state is pretty debtor friendly, so the sheriffs literally do nothing, then mail you back something that says "sorry, we didn't find anything."   Other states have the sheriffs go out and ask all the local banks whether you have accounts, and look for other assets you may have to satisfy the judgement. 

FatCat

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Re: Can credit card debts just "disappear" ?
« Reply #11 on: April 21, 2015, 03:02:38 PM »
He'll probably never have to apply for credit so he doesn't know or care what his credit score is.
...
He only got the card for the purpose of maxing it out as extra spending money so he could put off looking for a job a couple months longer.

(facepalm)

Well, at that rate he probably will never have credit again. Of course that's different from never needing or wanting it, but whatever.


He was given his house and his new car for free to help with "starting his life." So the big purchases that most people take out big loans for are already paid off. If he ever wants another car again he'll need a loan, but since it's a new car he probably won't need to buy another car until after the 7 year mark at which his credit card problem will be removed from his credit report.

I'm sure if he'll want another credit card at some point, but I think he assumes he won't be able to get one. If he loses his current job, he'll probably try to get another credit card to do the same thing again. If they deny him (surely they will), he'll just look for a job instead of trying to live a few months off a credit card.

slugline

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Re: Can credit card debts just "disappear" ?
« Reply #12 on: April 21, 2015, 03:04:31 PM »
They can still find him by his address because he lives in the same house as always.

And now it's clear as to why he's not concerned about his credit file....

Syonyk

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Re: Can credit card debts just "disappear" ?
« Reply #13 on: April 21, 2015, 05:12:12 PM »
Is it possible that it's just gone to a collection agency and they haven't yet contacted him about it yet?

Likely.

Quote
I have no experience with what happens if you max out a credit card and then just refuse to talk to them about it.

I assume nothing good comes of that approach to credit.  Unless you're Too Big to Fail.  Or the government.  Then the judgement is just delayed.

MoneyCat

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Re: Can credit card debts just "disappear" ?
« Reply #14 on: April 21, 2015, 05:22:29 PM »
After seven years, the bad mark will fall off his credit report and then he'll be in the clear.  However, the credit card company may choose to sue him before then and then he'll be screwed.  $5000 isn't small change.

Lyngi

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Re: Can credit card debts just "disappear" ?
« Reply #15 on: April 21, 2015, 08:31:41 PM »
He needs to watch out.  The CC company can get a judgement lien on his property.  Check the state regulations, a revolving credit has a particular statute of limitations, but a lien is different.  DH happened to have a revolving credit account, forgot to add it to his payoff amounts and now we have a lien.  The statute for revolving credit is 4 years in my state, the statute for liens is 8 years, unless it is renewed.  DH doesn't remember being served a summons, the creditor won't respond with any documentation.   The company is mega huge in our area, with deep pockets. 

FatCat

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Re: Can credit card debts just "disappear" ?
« Reply #16 on: April 21, 2015, 10:44:30 PM »
I decided to talk to him about it again. I told him the possibility that they could get a lien. He said he'll put the amount he owes the credit card in a separate savings account so he doesn't spend it. That way if he gets contacted about it he can pay it. He said he doesn't really know how to pay it since he lost all the information and they stopped sending him mail. He was ignoring them when he had no money since he couldn't pay it anyway. Now that he has money he is willing to pay but doesn't know how and is hoping they've lost record of it.

He also said he's tired of being irresponsible and he's going to use this windfall to turn everything back around.


The whole reason he stopped by was because he was excited to show me his Loot Crate box that just came in the mail. And tell me what a great deal it is. It's like a birthday present that comes once a month because you don't know what's inside. Everybody he's been telling about it says they're too broke to afford it. He really thought it's a great deal though because it's stuff you probably wouldn't have had otherwise. He tried to talk me into getting it too.

Syonyk

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Re: Can credit card debts just "disappear" ?
« Reply #17 on: April 21, 2015, 11:24:02 PM »
... so you pay them money and they send you random junk in the mail? :/  Why didn't I think of this business model?