Tag Archives: credit cards

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Running Out the Clock on Debt

If you have charge-offs or collection accounts on your credit report, you’ve probably heard that debts can no longer be collected after the statute of limitations expires. That’s true–sort of. The devil is in the details, though. So here are some important distinctions about running out the clock on old debt.

On a personal note, I have done this myself. I had a few charged-off credit cards that went into collections several years ago. Some lenders had sold the debt, and others had kept it and hired collection agencies to try and collect.

At this point, I was well into my credit repair journey, and I knew that if I could make it 4 yeas from the date of first delinquency (without getting sued or doing something to extend the statute of limitations–more on that later), I was home free. At the time though, 4 years (the statute of limitations in my state) sounded like forever.

Running out the clock should never be your Plan A. It’s more like Plan B, C, or D. But you need to be aware of the statute of limitations and some other important info no matter what your plans are. 

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Credit Tightens, But Not by Much

Credit numbers are out for the last quarter of 2014. Here are the highlights from ZeroHedge:

Housing Debt

  • Originations, which we measure as appearances of new mortgage balances on consumer credit reports and which includes refinanced mortgages, increased slightly, to $355 billion, but remain low by historical standards.
  • About 122,000 individuals had a new foreclosure notation added to their credit reports between October 1 and December 31.
  • Mortgage delinquencies improved, with the share of mortgage balances 90 or more days delinquent decreasing slightly; 3.1% of mortgage balances were 90+ days delinquent during 2014Q4, compared to 3.2% in the previous quarter.

Student Loans, Credit Cards, and Auto Loans

  • Outstanding student loan balances reported on credit reports increased to $1.16 trillion (+$31 billion) as of December 31, 2014, representing about $77 billion increase from one year ago.

And the kicker:

  • Student loan delinquency rates worsened in the 4th quarter. About 11.3% of aggregate student loan debt is 90+ days delinquent or in default in 2014Q4, up from 11.1% in the third quarter.
  • Auto loan delinquency rates worsened. The 90+ days delinquency rate is now at 3.5%, up from 3.1% in the previous quarter.

That’s a lot of deliquency. Nearly 1/8 of all student loan debt is 90+ days late. And that debt doesn’t go away.

 

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Revolving Credit Surges; Auto and Student Loans Slow

From ZeroHedge:

The most notable aspect was the $5.77 billion surge in revolving credit (e.g. credit cards) as Americans extended and pretended into the holidays – the biggest rise since April, and the second biggest monthly increase since the GFC…student and auto loans rose by the smallest amount since February 2012!

So student loans and auto loans are still increasing; they’re just growing at a slower rate.

I suspect this has something to do with the fact that so many loans have been made, they are reaching the saturation point. With student loan debt at all-time highs, there isn’t much room for more growth.

Still, lending standards are loose. If you have good financial habits and low debt, now is a great time to get a loan and move up the credit ladder.

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Hiding Money from Your Spouse? You’re Not Alone.

From Yahoo! Finance:

One in five Americans have spent $500 or more on a purchase without their partner’s knowledge, according to a CreditCards.com report released Wednesday…It’s not just purchases that many are keeping secret. Approximately 7.2 million Americans (4.4 million men and 2.8 million women) have hidden a bank or credit card account from their live-in spouse or partner, the report found.

Look, marriage advice is beyond the scope of what I do here. I do NOT want to get in the middle of that one.

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Americans Shed Credit Card Debt at Record Pace

From ZeroHedge:

Sure enough, moments ago the Fed reported household consumer credit for the month of November and it is there we learned that not only did overall consumer credit miss expectations for the 4th month in a row…but that in November revolving credit, aka credit cards, not only declined for the first month since August, but it had its biggest collapse since November of 2013, which not only explains why this year’s Thanksgiving spending season was a complete disaster but also shows that contrary to the S&P hitting record highs at roughly this time, the bulk of America is still actively deleveraging.

Now, the country’s total credit card debt is often viewed as a sign of consumers’ expectations about the economy. If they expect things to get worse, they start tightening their belts and charging less on credit cards. That appears to be what’s going on here. Despite lower gas prices and a rising stock market, people on don’t feel like their personal economic situations have gotten much better.