Sons medical bills, and SOL

[shoopy]

My son encountered some substantial medical bills while uninsured, about 6 and a half years ago. The total for surgery and hospital care was over $40,000. He was unemployed for several years after, and no one appears to have sued. He ran a credit report, and there are negative notations of course.

He had been planning on filing BK, but since it appears that he has passed Michigan SOL, he is thinking that maybe there is really no benefit to do so.

He has never made any payments, which would re-age the debt. Where would he start to get out from under the SOL debt? I am clueless on SOL stuff. Any thoughts or input would be greatly appreciated. Thank you.

[bcohen]

Please understand that the expiration of the SOL does not mean you can't or won't be sued--it just means that if you are sued, and if you file a timely response to the lawsuit, and if you raise the statute of limitations defense in that response, then you should prevail. Of course, that assumes that the junk debt buyer, collection agency, or creditor suing you is honest, and uses an honest law firm which makes a good-faith effort to serve you. Some collection law firms are known to use "sewer service" and deliberately "fail" to find you, or serve you where you don't live, so you don't answer the law suit, and they win an easy default judgment. Since you didn't answer (because you never knew about being sued) the plaintiff gets a default judgment--which they can proceed to enforce--even if the debt is invalid or past SOL.

In other words, if your son is currently unemployed, and doesn't own any lienable assets (real estate, or a motor vehicle worth more than the state exemption amount) then he has little to gain by filing for bankruptcy at this point. On the other hand, if he's working, or owns a house (which has positive equity) then it sounds like bankruptcy is a good idea. Filing for bankruptcy brings legal certainty to the status of the debts, i.e. the debts are void upon discharge, and the full weight of the federal court stands in front of any attempt to collect on discharged debts.

[shoopy]

He is currently employed, so I guess a garnishment is possible. His possessions fall below the state exemption limits for generic debt collection. He just checked, and there are currently no default judgements entered in the legal jurisdiction of his address.

If a judgement pops up, is it difficult to vacate? Obviously, if he is aware of pending legal action, he will answer the complaint, but the "sewer service" (I like that term) possibility is a concern.

I told him it is a crap shoot, and bankruptcy would be a more dependable solution, but he doesn't really have the money for an attorney, and believes that at this point, it would be better for his credit, to try to wait out any potential collectors, thus avoiding an additional 10 year ding from filing BK. His decision, I guess.

[HHM]

it would be better for his credit, to try to wait out any potential collectors, thus avoiding an additional 10 year ding from filing BK.

Only 1 problem, the above statement is WRONG WRONG WRONG, and WRONG

These bad debts don't simply go away, as they get traded around, new negative entries appear on the credit report. Bankruptcy puts a stop to all that. Also, although BK is "on" the credit report for 10 years, it doesn't "affect" a person's credit for 10 years. In general, after about 3 years, a bankruptcy has virtually no impact on a persons credit score.

So, if your son is going to make a "decision", it should at least be an "informed" decision. His is not.

[frogger]

Only 1 problem, the above statement is WRONG WRONG WRONG, and WRONG

These bad debts don't simply go away, as they get traded around, new negative entries appear on the credit report. Bankruptcy puts a stop to all that. Also, although BK is "on" the credit report for 10 years, it doesn't "affect" a person's credit for 10 years. In general, after about 3 years, a bankruptcy has virtually no impact on a persons credit score.

So, if your son is going to make a "decision", it should at least be an "informed" decision. His is not.

Excellent answer!

[df04527]

Yes indeed it is a spot on answer. So many people do not understand this.

[GoingDown]

Only 1 problem, the above statement is WRONG WRONG WRONG, and WRONG

These bad debts don't simply go away, as they get traded around, new negative entries appear on the credit report. Bankruptcy puts a stop to all that. Also, although BK is "on" the credit report for 10 years, it doesn't "affect" a person's credit for 10 years. In general, after about 3 years, a bankruptcy has virtually no impact on a persons credit score.

So, if your son is going to make a "decision", it should at least be an "informed" decision. His is not.

In some very rare instances, very old zombie debts that are beyond the SOL will rise from the dead and start causing problems, but I want to emphasize that these are RARE instances.

All of my debts are now beyond the SOL for filing a lawsuit, and they are all so old now that they have dropped off my credit reports. I now have nothing but positive accounts on my credit report. Nothing negative.

These old junk debt buyers no longer call me on the phone.

None of my junk debt buyers have filed a lawsuit against me.

I don't think they ever will.

So, in my opinion, to advise someone whose debts are already beyond the SOL, to go spend thousands of dollars hiring an attorney to file BK when they don't need to do that is not a good idea.

It would be different if their debts were newly defaulted and they had a high risk of getting sued.

But in this case, their risk of getting sued is extremely LOW. Almost non-existent.

As for sewer service, it does happen, but is also very rare. In most areas, they have state and local websites where you can search court records for your name and see what pops up in terms of lawsuits, and if you see something pop up, you can go fight it in court and win the lawsuit and ask the court to make the loser pay your court costs, etc. And if they did win a lawsuit against you using sewer service, you can file a motion to vacate the judgment on the basis that they did not properly serve you.

Again, a very rare circumstance.

Worrying about the improbable is ridiculous.

Here are some examples of the websites you could use to find out if anyone filed a lawsuit against you... just use your own local equivalent of these websites...

https://www.superiorcourt.maricopa.gov/docket/CivilCourtCases/caseSearch.asp

http://justicecourts.maricopa.gov/FindACase/casehistory.aspx