What does it mean when my account is listed as "Inactive"?

by Brian
(Surprise, AZ, United States)

Two years ago I went through a divorce, leading to the foreclosure of our home in Arizona. We had both a first and second mortgage. Both used for the initial purchase of the home (80/20). The primary mtg. was with Wells Fargo and was foreclosed and cancelled on 1/20/2010. The secondary ($46,000) was with Wells Fargo Home Equity and was charged off as bad debt on 6/28/2010.

However, it was submitted to Tiburon Financial for collections before it was charged off. The last correspondence I seem to have received from Tiburon was sometime back in April of 2010, before WF charged it off. Since that time, I've heard nothing and it appears my account with Tiburon has gone into "Inactive" status. They did make one credit inquiry back on 9/10/2010; although, nothing since that time.

One other thing. My ex-wife filed for Chapter 7 bankruptcy in March 2011. She included the Home Equity loan in her bankruptcy.

Ultimately my questions are:

1) What does it mean for me that the account is in "inactive" status? Outside of the one inquiry, the collection has not hit my credit report at all. Could they be biding their time, waiting for me to pay off my other debts before pursuing me? Should I still be concerned about it?

2) Is it possible that the collection agency wrote off the debt entirely due to my ex-wifes Bankruptcy?

Reply from DebtCollectionAnswers.com:

The inactive status is nothing to be concerned about. It is inactive for credit reporting purposes, so it sounds accurate. However, the fact that it is listed as inactive has nothing to do with whether a collection agency can still pursue the debt at a later time.

You may be right that the collection agency has decided not to pursue the debt due to your wife's bankruptcy. It may not want to risk the chance of violating the automatic stay that protects her from collection activity on the debt.

However, that doesn't mean you are off the hook. The collection agency may decide to pursue it later, or it may sell it to another collector. Unfortunately, there is no way of knowing.

Time may be on your side here, though. If the debt goes into limbo and the statute of limitations expires, then you may not have to worry about it again.

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