Information and advice about collection calls on 12 year old debt - The Bills.com Blog
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Information and advice about collection calls on 12 year old debt
Question: My husband purchased a truck in 1995 and turned it in less than one month later. The account was turned over to several collection agencies. We obtained a home loan in 2003 and at that time, that deliquency was no longer on his credit report. We have had his credit checked several times since then and it remained off of his credit. Well today, werecieved a bill from another collection agency on the outstanding balance from 1995. I thought that something only stayed on your credit report for 7-10 years. This thing is haunting us. Can they still send us a bill after all this time?
Answer: A collection agency can contact you attempting to collect a debt for an unlimited amount of time?neither the limit on how long an account can appear on your credit report, nor the statute of limitations (the time period a creditor has to sue you to collect on a debt) prohibits a collection agency from contacting you to try to collect an old debt. However, just because a collection agency contacts you, you are not required to pay the debt. In fact, I would recommend that you do not make any payment on the debt, as doing so could reset the statute of limitations, depending on your state?s law, thus allowing the creditor to take legal action against you for this old debt. A collection agency?s contacting you does not necessarily mean that you are legally obligated to pay the debt, nor does it mean that this 12 year old account will reappear on your husband?s credit report. You are correct that most items can only appear on your credit report for seven years, while certain types of records, such a bankruptcy filings, are reported for ten years. Since the deficiency balance on your husband?s old truck is over twelve years old, it should no longer be appearing on his credit reports. I will discuss these issues below in more detail, but the bottom line is that your husband can probably no longer be sued on this debt and it should not be appearing on his credit reports, so he really has no reason to be concerned about the debt?if he sends a cease communication demand letter to the collector, he should also be able to stop the phone calls.
If a creditor wishes to file a lawsuit against you to collect on a debt, it is required to file suit within a certain time period, referred to as the Statute of Limitations. Basically, a
statute of limitations (SOL) is the time period during which a creditor can take legal action (i.e., sue you) to enforce a debt. Each state has defined its own statutes of limitations, and they vary significantly from state to state. For example, in California, creditors have four years to sue you to enforce a debt, while in Rhode Island they have 10 years. To learn more about statutes of limitations for the collection of debts, I encourage you to visit http://www.bcsalliance.com/y_debt_sol.html. While it is likely that this information available online is accurate, I encourage you to consult with an attorney licensed to practice in your state to discuss the specifics of your situation to help you determine if the SOL for your creditor to sue you has expired.
If you determine that your state?s SOL for the collection of debts has expired, the likelihood of the creditor attempting to sue you to enforce the debt is much less. While the passing of the SOL does not mean that a creditor cannot sue you, if a lawsuit is filed you should have an absolute defense against the lawsuit. If you respond to the suit stating that the SOL has expired, the judge should dismiss the case. In addition, if the court believes that the creditor filed suit despite knowing that the SOL had expired, the court may sanction the creditor for its actions. Keep in mind that in most states, the SOL begins running from the date you last made a payment on the account. This means that if you paid just a few dollars to a collector a couple of years ago, the running SOL for that debt could have been reset. Also, keep in mind that the passage of the SOL does not forbid a creditor from calling you to collect on the debt; it simply provides you an absolute defense in court if the creditor files suit. You can generally stop collection calls by sending a cease and desist letter to the creditor?for more information about sending cease and desist
letters, you can visit http://www.ihatedebt.com/.
Your state?s SOL has little to do with how long accounts can appear on your credit report. The length of time credit accounts can appear on your credit report is governed by federal law, specifically the Fair Credit Reporting Act. Generally speaking, negative listings will appear your credit report for seven years, while bankruptcies will appear for ten. So if your state?s SOL is five years, an account can appear on your credit report for two years after your state?s SOL has passed. A new company purchasing your account cannot lengthen the time that the account can appear on your credit report. Be careful, though, because many debt purchasers try to change the date of last activity on old accounts so they appear on your credit report for a longer time. You need to pull your credit report and carefully review the accounts in question to make sure that no unauthorized changes have been made. If you find any suspicious information on your credit report (for example, if this old debt has reappeared on your credit report under a different name) you should dispute the listings with the credit bureaus. The Federal Trade Commission offers a helpful guide to disputing credit listings, available at www.ftc.gov . To find out more about credit, credit scoring, and credit reports, I encourage you to visit the Bills.com Credit Resources page at http://www.bills.com/credit/.
For further information regarding options available to consumers struggling with debt, I invite you to visit the Bills.com Debt Help page at http://www.bills.com/debt-help/. I hope the information I have provided will help you Find. Learn. Save.
Best,
Bill
www.bills.com
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