Deficiency balance doubling

Carrolyn

New Member
Jurisdiction
Alaska
Hello,
So my husband and I started leasing a car in California over 5 years ago. Long story short. It was repossessed a short time later. It hit my husbands credit Oct 2014 with a deficiency balance of $4,272. The balance is owed to a third party collection agency in Oregon. There has not been a judgement on it. We never tried to set up a payment plan or have had any contact with the collection agency to settle. Over the period it has been on his credit the balance has gone up to $10,202 as of Jan 01, 2020.. I tried to dispute it about a year ago and it was verified accurate with FCRA requirements. The collection agency reports it every month with an updated balance adding about an average of $100. Is this legal? By the end of the 7 years before it can be taken off his credit it till be about $12,000. It just seems very inflated to me. Also he has had about 3 new missed or late payments added to his credit report from this company. Can they add new missed payments? We have not tried to settle this account or set up any type of payment arrangements.
Thanks.
 
Hello,
Is this legal?

You need to look at how the creditor is computing the balance due and what the loan contract says to know if the amount the creditor says is owed is correct. Note that with the addition of interest it is quite possible for the amount owed to double. Also, the contract might provide for the creditor to add various costs of collection to the balance due, too.

However, under Oregon law the statute of limitations (SOL) to sue you for a judgment on the debt is six years from the date the contract was breached (which would generally be the due date for the payment after the last payment you made on the car). So if your last payment was sometime in 2014 then the SOL likely runs out this year. Once it does, you'll no longer be able to be successfully sued for the debt because the SOL gives you a defense. The debt can still stay on the credit report for the period of 7 years (which starts to run about six months after the breach) so it will still ding your credit for at least another year, but then that too would go away if you don't get sued.
 
I guess thats a pretty big mistake on my part. The original contract I had for the car was in it when it was repossessed. I only had the car for about 4 months. It broke down from a blown head gasket The company I was leasing it from said that the warranty wouldn't't cover the fix. I was young and dumb and just stopped paying. I offered to tow it back to the company but they said they wouldn't take it baxk because I didn't sign a contract cancellation form and pay extra money at the time of signing it. Anyway though I don't have the cotract to check out unfortunately. I live In Alaska now and the company we were leasing the car is in California. Would the SOL be by California standards or Oregon? I also am worried about contacting the creditor asking about the amount being added because I wasn't sure if they can take any legal action or Judgement against my husband. I also figured it was past the point to ask for verification of the debt. Sorry I am pretty naive to most of this. I am just trying to fix our credits to buy a house.
 
Frankly, once you left the state, it's entirely possible that the statute of limitations was tolled (put on "pause", basically).
 
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I live In Alaska now and the company we were leasing the car is in California. Would the SOL be by California standards or Oregon?

The SOL rules are determined by the law of the state in which the lawsuit is filed. The creditor certainly could sue you in Alaska where you now live, and likely could sue you in Oregon, too, if it could get good service on you. Note that the law in Oregon is that the SOL stops running when you leave the state. So for example if there was three years left on the SOL when you moved out of state then there is still 3 years left to run now, and that clock won't start running again until you return to Oregon.
 
What would that mean? If we ever moved back it could be put back on? I assumed it would just be able to come off his credit after the 7 years? I was hoping to dispute the amount mainly and settle for less like I have with everything else or dispute and make it be taken off. Just the amount it has progressed over the 5 years blows me away and doesnt seem right.
 
Thanks for the help and opinions on the matter. They do help a lot and I appreciate your time. Would the Oregon SOL possiblly still use a hold on it for the fact that it is still being reported his report monthly accurring the extra charges/fees while we have been in Alaska for almost 2 years now.
 
What would that mean?

Basically it means that if you left Oregon while the SOL was still open (and it appears that's what happened) the creditor can sue you in Oregon at any time because the SOL stops running when you leave the state.

If you moved back to Oregon and waited for the rest of the time on the SOL to run then the creditor could not sue you in that state anymore but it won't be worth moving back hoping the creditor won't sue you in the time that is left on the SOL.

Regardless, federal law requires that the debt drop off the credit report after 7 years. So once that 7 years is up it will come off the credit report. At least until the creditor gets a judgment against you in court. If the creditor does sue and get a judgment, the entry of the judgment can then stay on your report for another 7 years.
 
Thanks for the feedback Tax counsel. I think there may have been a confusion. I never lived in Oregon. The creditor is based out of Oregon. We lived in California at the time it was repossessed. :)
 
Thanks for the feedback Tax counsel. I think there may have been a confusion. I never lived in Oregon. The creditor is based out of Oregon. We lived in California at the time it was repossessed. :)

Then the creditor could sue in California (if it can get good service on you) or Alaska. It could only sue you in Oregon if the contract provided that you consented to be sued in Oregon. California's SOL for a written contact is 4 years from the date of the breach. California also tolls the SOL when you move out of state. So if it was still open when you left the creditor could still sue you now in California for this. Alaska's SOL is 3 years from the date of the breach. However, there are some circumstances in which Alaska will apply the SOL from the other state. That may not apply here, but without really digging into the laws of the two states I cannot say for sure.

Given the various challenges facing the creditor here they might not ever get around to suing you. If they do you can look into the SOL for a defense. If they don't, then after 7 years it'll drop off your credit report and that'll be the end of it for you.
 
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