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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Consumer Protection Law
Satisfied Customers: 12826
Experience:  B.A.; M.B.A.; J.D.
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I bought a timeshare back in May? of 2001. After 9-11 my business

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I bought a timeshare back in May? of 2001. After 9-11 my business suffered and I went from making $3000/month down to barely $400/month. I stopped paying on the timeshare sometime in 2002.
Now I am getting letters from a collection agency saying if I don't pay up they will report me to the credit bureaus and the IRS and tht I will have to claim the amount I owe as income.
This dept is over 10 years old, well past the statute of limitations, however I just cleaned up my credit report.
I know they can't win if they sue me but can they put it on y credit report and will I owe something to the IRS. I don't have possession of the property, the timeshare company does.
Submitted: 9 months ago.
Category: Consumer Protection Law
Expert:  Phillips Esq. replied 9 months ago.
Hello: This is PhillipsEsq. I am a licensed Attorney and I will be assisting you today.



I bought a timeshare back in May? of 2001. After 9-11 my business suffered and I went from making $3000/month down to barely $400/month. I stopped paying on the timeshare sometime in 2002.
Now I am getting letters from a collection agency saying if I don't pay up they will report me to the credit bureaus and the IRS and tht I will have to claim the amount I owe as income.
This dept is over 10 years old, well past the statute of limitations, however I just cleaned up my credit report.
I know they can't win if they sue me but can they put it on y credit report



Response 1: Yes, they can.

The Statute of Limitations on a debt deals with the time a creditor/collector has to file a lawsuit to collect on its debt or forever barred from bringing up the lawsuit. The creditor may still use other means to try to collect the debt such as threatening to put the debt on your credit report, telephone calls, and letters. However, without the threat of lawsuit, there is really nothing the creditor/collector can do. So, a debtor does not have to pay debts that are passed the Statute of Limitations. Finally, if a creditor files a lawsuit, the fact that the Statute of Limitations has run on the debt is an Affirmative Defense and the debtor must request that the Court dismiss the case because the Statute of Limitations has run on the debt.

The Statute of Limitations on a debt starts to run from the time the debtor stopped paying on the debt.

Kindly note that paying anything on the debt will restart the Statute of Limitations period. So, the debtor must not agree to pay anything on a debt that has passed its Statute of Limitations.









and will I owe something to the IRS. I don't have possession of the property, the timeshare company does.


Response 2: If they cancel the debt and send you Form 1099-C, you must report the cancelled debt as income on your tax return. Whether you pay taxes on the debt would depend your overall income and expenses for that tax year.

Customer: replied 9 months ago.

Hi


thank you for your reply.


 


I just want to clarify, can the collector just put this on my credit report, is it just a threat, does he have to go through legal channels first? If the debt is more than 7 years old can I just get it removed?


The reason I ask is I'm trying to move (the place I am living has become intolerable). I was approved for a mortgage but my credit is just over the limit. I have to wait until January though because I am self employed and my income in 2011 was too low.


I suppose I should feel bad about the timeshare but I didn't want it in the first place. I know it's my fault for giving into the hard sell, I never used it.


Should I send this company a cease and desist letter telling them that I don't owe the money and they need to prove it? Also, if the time share already wrote this off and I didn't get a 1099 from them, can the collection agency send me a 1099 for the total amount when they probably didn't pay the full amount for the debt


 


They are say8ing the loan is in foreclosure status or I can do a deed in lieu of option for a fee? What is my best option?


 


Also is there a way to pay you a little extra since this isn't a simple yes or no question?


 


 

Expert:  Phillips Esq. replied 9 months ago.

Hi

thank you for your reply.

I just want to clarify, can the collector just put this on my credit report, is it just a threat,

Response 1: Yes. The collector can put this on your credit report

does he have to go through legal channels first?

Response 2: No.

If the debt is more than 7 years old can I just get it removed?

Response 3: Unfortunately, you cannot. You would be able to remove the debt only if you dispute the debt with the Credit Reporting Agencies and they found in your favor. Otherwise, the removal would be based on the scheduled dates for removal with all the Credit Reporting Agencies

The reason I ask is I'm trying to move (the place I am living has become intolerable). I was approved for a mortgage but my credit is just over the limit. I have to wait until January though because I am self employed and my income in 2011 was too low.

I suppose I should feel bad about the timeshare but I didn't want it in the first place. I know it's my fault for giving into the hard sell, I never used it.

Response 4: You should not feel sorry about the timeshare. With few exceptions, timeshares have become real headaches for people who were taken in by the hard sell tactics of the timeshare companies.

Should I send this company a cease and desist letter telling them that I don't owe the money and they need to prove it?

Response 5: If you owe the debt, you really cannot send a dispute letter. However, you can send a simple cease and desist letter for them to stop contacting you because you cannot afford to pay the debt. Once you send this letter, they must stop immediately from contacting you. Otherwise, they would be in violation of Fair Debt Collection Practices Act.

Also, if the time share already wrote this off and I didn't get a 1099 from them, can the collection agency send me a 1099 for the total amount when they probably didn't pay the full amount for the debt

Response 6: The only one that can send you a 1099-C would be the person that forgave the debt. If the debt was forgiven and 1099-C issued, the creditor cannot turn around and contact you for the debt. However, you may have misunderstood how a charge-off works. When debts are written off as bad debts, the debts are not forgiven at the same time. The debts are just on the creditor’s books as bad debts and may or may not be sold to a debt buyer. Until the debts are actually forgiven, you would not receive a 1099-C.

They are say8ing the loan is in foreclosure status or I can do a deed in lieu of option for a fee? What is my best option?

Response 7: Deed-in-lieu is not a viable option because the timeshare company is most likely not going to accept a deed-in-lieu even if you offer the timeshare back to them for free because they make more money from the maintenance fees. However, there is nothing to lose at this time to ask if they can take the deed back. If they refuse, you do not have any option but to let the property go into foreclosure.

Also is there a way to pay you a little extra since this isn't a simple yes or no question?

Response 8: Yes, and thanks for asking. You can leave a bonus.

Customer: replied 9 months ago.

Ok


 


I am so sorry I hope this is the last clarification I will need


 


The letter I received says I am eligible for a deed in lieu. What I am afraid of - I don't trust collection agencies - is that if I go for the deed in lieu they will take that as my agreeing to make payments and start the SOL all over again. If most of the time the timeshare will not do a deed in lieu how can the collector make me that offer? Should I contact the timeshare directly and bypass the collector?


 


Also, if the SOL has run out how is it that they are just now threatening with foreclosure and I received notices from the time share years ago threatening foreclosure and I told them to go ahead, so why is it taking over 10 years? I guess you can't really answer that, I'm just not understanding that if the debt is part the SOL then how can the foreclosure affect me now? Shouldn't they have foreclosed before the SOL ran out?


 


 

Expert:  Phillips Esq. replied 9 months ago.

Ok

I am so sorry I hope this is the last clarification I will need

The letter I received says I am eligible for a deed in lieu. What I am afraid of - I don't trust collection agencies - is that if I go for the deed in lieu they will take that as my agreeing to make payments and start the SOL all over again. If most of the time the timeshare will not do a deed in lieu how can the collector make me that offer?

Response 1: I do not know why the collector is doing this. I do not know what the collector's motive is. I can only tell you what I know off from handling these cases.

Should I contact the timeshare directly and bypass the collector?

Response 2: No. Once the account has been transferred to a collector, the timeshare company would refuse to communicate with you. They would tell you to contact the collection agency.

Also, if the SOL has run out how is it that they are just now threatening with foreclosure and I received notices from the time share years ago threatening foreclosure and I told them to go ahead, so why is it taking over 10 years? I guess you can't really answer that,

Response 3: You are right. I do not have an answer for you on this one, but would add that the timeshare company would foreclose on their own time and schedule.

I'm just not understanding that if the debt is part the SOL then how can the foreclosure affect me now?

Response 4: The foreclosure may appear on your credit file. As previously stated, the SOL only deals with the timing of lawsuit and nothing else.

Shouldn't they have foreclosed before the SOL ran out?

Response 5: Again SOL has nothing to do with timing of the foreclosure. Kindly see my previous and detailed explanation on how the SOL works.

Phillips Esq., Attorney-at-Law
Satisfied Customers: 12826
Experience: B.A.; M.B.A.; J.D.
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