SOL

I see a lot of posts and the SOL is mentioned quite a bit. So I thought I would chime in with some support and useful philosophy for those who are worried or need some comfort. The 7 year rule is entirely arbitrary. There is no special commission or law that defined that a consumer was credit rehabilitated at 7 years (10 years if you were BK). The credit bureaus just pulled that number out of their.. well you get the point. I would like to see something to the contraty. If it weren't for the laws, they would probaly report forever if they could get away with it. I read somewhere that after 7 years, items drop off of your credit report, doesn't that mean that the credit bureaus are doing credit repair for us then? Why woult I wait til then, so I dispute things now. I feel that I get punished enough with all the debts and CA's I have to deal with. Here is another good point, the credit bureaus are in the business to make money, right? We know how they make money by capitalizing on our information. So why do I have to support there captilalistic ventures which can have a potentially profound negative impact on my financial life? Someone once asked me when I disputed something on my file if that was right and ethical, I used to think that way. But now, I have no moral obligation to support corporate greed because of that. Now I'm not advocating running up a bunch of bills and then not paying them. That would be unethical. But when things progress further along and interest rates and fees are as high as they are, and of course we all know that CA's don't play fairly. Neither do the credit bureaus if you ask me. They will say that their margin of error on credit reports is less than 1%. HAH! Independant studies have shown it to be closer to 40% for errors on consumer files. Anyway, just venting here for the little people and hoping that whoever reads this, will find a little comfort and zest to fight back and tip the balance just a little more in their favor.
What are your thoughts?

Here, here I agree totally that is why I dispute information on a annual if not semi annualy basis. Not to get religious but the 7 year thing started because of the reference in the Bible, someone with more knowledge of the Bible fill this in please

How are you being punished? By letting other creditors know you didn't honor your agreement with them?

Personally I think things should stay on your credit report until paid. And I have been in debt before and I am still paying things off as well.

The law lets people off too lightly in my opinion. Granted things should not be reported that aren't yours but for the things they are.. I feel they should be reported until the agreement is honored.

Generally a credit bureau just takes information that a creditor gives to them and posts it. I wouldn't blame them if something is inaccurate, it's the person who's reporting inaccurate information that is at fault. And that is what the FCRA is for.

I know I am only 1 person here. But I can't say that anything on my report is a flat out lie... I let accounts get charged off, they were reported as a chargeoff; I paid them, now they are reported as a paid-chargeoff. I can dispute the items to try and get them removed, but it's by my own fault they are there in the first place.

As long as I don't make the same mistakes twice, 7 years from now I will have excellent credit. And even if creditors run my credit now, they will see chargeoff, but they will at least see that I paid it eventually.

Why should we be allowed to run up the debt, not repay it, and then claim that we're the victim? If there weren't credit bureaus, then a lot of people would have the feeling that "I don't have to pay it back, and there's no consequences."

Yes, they are big corporations. But the majority of these corporations are providing a benefit to us. When it becomes on un-profitable venture, they will invest their funds somewhere else instead of the public. Then how will we get financed on our cars and homes if there is nobody that is willing to give loans out?

Be still my heart!

One more comment, it is the credit bureaus that help eliminate "risk." By elminating risk, it helps a lender filter out the ones who aren't likely to repay. By keeping the delinquency down, they can charge lower interest rates.

If they just gave out loans, without knowing what they were getting involved in, they would have to write off a lot more accounts; and to cover all the writeoffs, they would have to charge more interest.

Look at the payday stores... they give a loan to everybody, they don't run your credit. But they also have a lot of people who don't pay them back. So they have to charge a lot of interest in order to make money off the ones that do pay, after writing off all the ones that don't.

Ashley I have put in my thoughts at http://www.debtconsolidationcare.com...btinbible.html


[mike: changed the url]

Brilliant…

Allow me starting with SOL. SOL has nothing to do with credit reporting. It defines the time span after which no legal action can be taken against the borrower for not paying the debt, that’s it.

I think we are discussing Bad Credit Reporting Time here. Credit reports mainly show the risk associated with lending money to the consumers. In that case, the history of past 7 years is thought to be enough, statistically. As bankruptcy, judgment are serious obligation, credit bureaus keep it for 10 years.

And this is mentioned within the FCRA.

http://www.ftc.gov/os/statutes/031224fcra.pdf

Any other thoughts?

I think 7 years for some things is too long. There have been studies done that show people are usually financially "fit" within 3 years. So let's say that I work real hard to pay off all of my debts to include some of the outrageous fees and interest. Now I've paid them all off in a couple of years. Then when I try to get a loan on a new car because my current car won't satisfy my needs, I'm being punished by paying on a higher interest rate when I shouldn't have too. I'm a hard working person that is recovering and trying to make right. (I use that in a general sense. Not specifically relating to me). While it's true that CRA just report what is told to them, there should be some accountability there. That's why I fault them to a certain degree. I think it's irresponsible for them to just go ahead and post on my credit report whatever someone tells them. Now I realize that it is my responsibility to keep on top of my credit report and what is being reported, but let's be realistic here. Take into account the human element and the fact that not all of us are savvy on what should be or when we need to look at our credit report. Basically, creditors prey on our lack of knowledge. Debtcruncher is taking Resurgence to court. They are probably counting on him not knowing what he is doing and therefore he won't show up in court so they can get a judgment against him. That might work in the majority of cases and creditors count on that.
I reiterate that we have to be financially responsible. In no way am I saying lets go out run some debt and not pay then blame someone else for our problems. That's wrong. It’s true there are people out there who do just that, and for them, they deserve the higher interest rates and the rejections. But then there are people, probably a lot more than we know, who are genuinely down on their luck for a variety of reasons that they had no control over. Maybe a loss of job to include medical benefits, but their sick kid needed a doctor. Or the person who looses a spouse that they have relied on for income the last several years and now they have to support the family. So those people are being punished for situations that they had no control over. That’s where the system works against them and I hold responsible the creditors who don’t care about people’s situations or hardships as was mentioned in an earlier post. There is a balance somewhere, just think it’s been blurred.

Good discussion by the way

Here's something else to think about. Kind of like the PDL situations. A person who has bad credit through no fault of their own, is struggling to get by. They are underemployed, meaning they don't make as much as they used to. They might live paycheck to paycheck at times. Well, this person is being charged a high interest rate on all of their loans, (car, house etc.) They get caught in a seemingly endless cycle of high interest rates and underemployment. Sure at some point this person may recover but it's a long ways off. In the meantime, they have to struggle and worry. If they could just get a break, get a lower interest rates, then that would create more income for them and less struggling. So it's a system that works against the good hard working person and I just don't think it should be.

Outlaw You are exactly right. If someone would cut a break maybe there would not be so many in debt. Even down to employment insurance everything they check that credit. It is definately unfair. KYSIDE38

Yep, that was another point I was going to bring up. Why should my credit have anything to do with my abilities to be employed or my car insurance. I may have bad credit from unfortunate circumstances, but I am a loyal and ethical employee. Why do I have to be punished again and not get that job I want and have to take one at a lower wage where credit doesn't matter. Same with car insurance. That has nothing to do with my ability to drive an automobile. I have bad credit right now. But I have not had a ticket in over 6 years and have had a no fault accident in more like 15 years. I have an excellent driving record.

Outlaw, I see your point. I would have to write a 10-page thesis to debate the pros and cons from both the creditors and the debtors standpoints...

It all has to do with economics and accounting. All companies are in business to make money; sad but true. A finance company's income is the interest they charge; it's main expense it the accounts they have to write off. Profit = interest minus writeoffs. A company has to charge enough interest to cover its losses.

If we could be assured that there would be NO losses, then we could charge very low rates. But that will never happen.

Take a small bank, for example. Suppose they are brand new, just opened, they have $100,000 capital to give loans out with. For ease of calculation, suppose they give out 20 - $5000 loans at 7.5%. The monthly interest on 1 loan = $30.82; times 20 loans = $616.40. $616.40 is their income for one month. If they have a single one of their loans go bad and they have to write it off, then it will take them about 8 months just to break even.

When you are dealing with low rates, their is a very small margin for delinquency. That is why you need to have perfect credit to get a loan from a bank; they cannot risk your loan going bad.

The credit report is an indicator of a person's financial stability. Yes, a person may be able to overcome their problems in 3 years. But 3 years is not long enough for a creditor to gauge whether the problem was a one-time deal, or if it is recurring.

The reason I say that: I see people every day who file Chapter 7 every 7 years like clock-work, just because they can. The pattern is this: they file 7, start back with new loans as soon as the BK is disharged, over-extend themselves on the new debt, and put themselves in a position where they file BK again as soon as the law lets them.

There are honest people, and there are dishonest people. It is unfortunate that the honest ones bear the burden of the dishonest ones, but it is true that "one bad apple spoils the whole barrel."

I would love to write more, but like I said I would end up writing a 10-page thesis here.

I wasn't logged in above when I mentioned the car insurance point. So I didn't get those points either.
Anyway, you are right Debtcruncher, we could debate and write forever on this topic. And I do see your points and they are valid just as well. It would be nice to strike a balance in there somewhere but that is in a utopian society I think. The best we can do is just that, the best that we can.