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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Re: Credit score Date: 7/23/2014 3:27 PM
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aj485,

You wrote, Most derogatory marks (late payments, write-offs, etc.) are required to be removed from your credit report 7 years and 180 days after the missed payment that initiated the derogatory mark. Bankruptcies can remain for up to 10 years.

Actually an item you would think might age off in 7.5 years could last much longer. If the amount is substantial, the creditor could opt to sue you for the balance. Any judgement they obtain is a new derogatory mark and that mark starts a new 7-year clock.

When a creditor might chose to sue could vary based on where you live. Most states allow at least a 4 year statute of limitations. Since litigation is a fairly expensive option, they could chose to sue just before the SOL expires. In a state with a 4 year SOL, the default could result in 13 years of bad credit. For a state with a 6 year SOL, it would be more like 15 years.

What's more, in most states once a creditor obtains a judgment, he can typically garnish up to 25% of your eligible wages - which could force you to default on other obligations.

If a creditor sues, depending on where you live and whether or not you actually have a handle on your current income, expenses and obligations, it could be time to consider bankruptcy as an out.

We try to encourage people to get out of debt without filing bankruptcy; but for a few it's just not practical.

- Joel
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