The problem here, as I see it, isn’t the debt or even the idea of waiting for it to fall off your credit report. Entries, good and bad, that age off of your credit report are not likely to show up in any investigation.
The problem that I see in the case described is that the debt was previously reported, the applicant changed his story and there was no effort to address the debt. This applicant’s problems were not all under Guideline F. There are issues with candor, honestly and personal behavior all wrapped up in a wad . . .