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Credit Report Question and Dispute - The Bills.com Blog
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Credit Report Question and Dispute
Thursday, Apr 19, 2007
Question: Should I question everything on my credit report? About 5 years ago I had some problems and was not able to pay a few credit card companies. Each were charged off. I know I owe the money, but they have been passed to different collection agencies. I do not know which was the original creditor. Some of the debt I don't even know if it is accurate. Should I question everything on there and then let the credit bureau figure it out? Or should I try and research each collection agency and try to figure out who I owe.
Fair Debt Collection Practices Act
The longer since charge-off and the more agencies that have been involved on the creditor side, the more confusing and inaccurate the credit report entry will tend to be. The process created by Congress under the Fair Debt Collection Practices Act (FDCPA) to identify collection accounts that have been bought and sold, sometimes several times, is called "debt dispute and verification."
If you are not familiar with the entity trying to collect a purported balance, you should dispute that you owe the debt or the amount of the debt. The collector may have the account history which it must provide to you to answer your dispute. The collector is required to state the name of the original creditor if ownership has changed. Just this much information will usually allow you to identify the account on the credit report as one of your old charge-offs. If the balance is bogus you can still compare your payment records with theirs. The most advantageous provision of the FDCPA relating to collection activity is that until the collector can "verify" the debt, i.e., deliver documentation that there is no mistake as to debtor identity, all collection efforts must terminate and not to resume until acceptable verification is provided.
Collection agents and old debt
This is how the "bad/old debt" market works: An account purchaser (many times for very old debt, this is the collector contacting you) can buy the account
"bare" with no documentation or with full documentation. The documentation is legally acceptable as proof of the debt, enough to support a judgment. Why would a purchaser choose to forgo purchasing the documents that are necessary to prove the existence of the debt and his newly bought right to collect it? Put simply, the price differential between documented and undocumented accounts is huge.
Since relatively few accounts are ever questioned or disputed, the cost of documentation usually seems a waste of money to the collector/purchaser. However, if you dispute the debt, the collector that bought the debt without documentation to save money has no way to verify the debt to you.
Therefore, it cannot legally continue to collect.
Debt dispute and verification
Instead of just paying a debt because the collection letter says that the addressee owes it, more and more consumers are becoming collection savvy and questioning the questionable debts by demanding formal FDCPA verification. Many never hear from the collector again.
Just make sure when you dispute debts you leave the big three credit reporting agencies (Equifax, TransUnion, and Experian) informed. Get your free annual credit report from all three at AnnualCreditReport.com .
Then, if you choose, you can start disputing and requesting verification directly with the credit bureaus and the debt purchasers on the debts that you do not recognize. The Bills.com Debt Do-It-Yourself contains sample debt verification and other letters you can download and customize for your needs.
If the purchasers are able to verify the debts, and the verified entries add up to $10,000 or more, you might want a debt negotiation firm to settle on these for you and clear up your credit report completely. You can attempt this yourself, but it is time-consuming and you might not get as favorable
Since relatively few accounts are ever questioned or disputed, the cost of documentation usually seems a waste of money to the collector/purchaser. However, if you dispute the debt, the collector that bought the debt without documentation to save money has no way to verify the debt to you.
Therefore, it cannot legally continue to collect.
Debt dispute and verification
Instead of just paying a debt because the collection letter says that the addressee owes it, more and more consumers are becoming collection savvy and questioning the questionable debts by demanding formal FDCPA verification. Many never hear from the collector again.
Just make sure when you dispute debts you leave the big three credit reporting agencies (Equifax, TransUnion, and Experian) informed. Get your free annual credit report from all three at AnnualCreditReport.com .
Then, if you choose, you can start disputing and requesting verification directly with the credit bureaus and the debt purchasers on the debts that you do not recognize. The Bills.com Debt Do-It-Yourself contains sample debt verification and other letters you can download and customize for your needs.
If the purchasers are able to verify the debts, and the verified entries add up to $10,000 or more, you might want a debt negotiation firm to settle on these for you and clear up your credit report completely. You can attempt this yourself, but it is time-consuming and you might not get as favorable
results. Bills.com has advice on Credit Solutions .
Statute of limitations & collecting debt
Another important issue that arises with old debt is the statute of limitations (SoL). The statute of limitations the time period in which a creditor must file a lawsuit against a debtor to collect on an unpaid debt. Each state has its own statute of limitations; for example, in California the SoL is four years.
If the SoL has expired, you have an absolute defense against any lawsuit a creditor or debt purchaser files against you, but you must file an answer to assert your defense. Otherwise, the court will not know that the SoL has expired, and will likely grant the creditor a judgment against you.
See the Bills.com Collection Laws and Statute of Limitations for information about your state. If the SoL has expired, you may want to send a letter to the collector demanding they stop calling (they are required to honor such requests by Federal law) –- the collector will simply not be able to collect the debt.
Statute of limitations & credit reports
By federal law, all debts must be removed from a credit report after seven years (US Code Title 15, §1681c) and bankruptcies after ten. Remember that just because a debt is removed from a credit report that does not mean the statute of limitations has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.
You may be able to get them off faster if you dispute the debts and the creditor is unable to verify them. Even if you cannot get them off with a dispute, if your state's SoL for collection of debts has already expired, it may be worth it to wait a couple more years for the accounts to come off your credit report on their own.
Whichever choice works best for you, best wishes for no debt.
Sincerely,
Bill
www.bills.com
Statute of limitations & collecting debt
Another important issue that arises with old debt is the statute of limitations (SoL). The statute of limitations the time period in which a creditor must file a lawsuit against a debtor to collect on an unpaid debt. Each state has its own statute of limitations; for example, in California the SoL is four years.
If the SoL has expired, you have an absolute defense against any lawsuit a creditor or debt purchaser files against you, but you must file an answer to assert your defense. Otherwise, the court will not know that the SoL has expired, and will likely grant the creditor a judgment against you.
See the Bills.com Collection Laws and Statute of Limitations for information about your state. If the SoL has expired, you may want to send a letter to the collector demanding they stop calling (they are required to honor such requests by Federal law) –- the collector will simply not be able to collect the debt.
Statute of limitations & credit reports
By federal law, all debts must be removed from a credit report after seven years (US Code Title 15, §1681c) and bankruptcies after ten. Remember that just because a debt is removed from a credit report that does not mean the statute of limitations has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.
You may be able to get them off faster if you dispute the debts and the creditor is unable to verify them. Even if you cannot get them off with a dispute, if your state's SoL for collection of debts has already expired, it may be worth it to wait a couple more years for the accounts to come off your credit report on their own.
Whichever choice works best for you, best wishes for no debt.
Sincerely,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Nathaniel on Saturday 2nd June 2007 00:05
If I contact a credit bureau before the collection agency's SOL (5 years) runs out, does that start the timeclock all over again if the credit bureau gets validation from the collection agency?
2. Posted by amy on Tuesday 14th October 2008 19:08
I received a call from a creditor about a card I had. I am aware that I owe the money and tried to work out plans before with them since the account was charged off. They are now threatening to sue. I have no access and am a single parent no making much money. Are they still going to sue me eventhough it make still take a while to get the money?
3. Posted by Bill on Wednesday 15th October 2008 07:47
No the SOL resets if you make a payment (even a partial payment).
4. Posted by Bill on Wednesday 15th October 2008 07:53
There is not set rule as to when they can initiate legal proceedings against you. They have full access to your credit profile and will be able to gauge if you have any major assets or not. If they feel that they cannot recover all of their money, then it is unlikely that they will try to sue you. Most of the time, even after they file a suit they are looking to resolve the matter as soon as possible, hopefully in the first court hearing. It costs money to go legal. But, in the end nobody can predict when a creditor decides to go legal. You should speak to them in trying to get the account resolved, even partial payments will at least show that you have the intent to pay.
5. Posted by Dan on Monday 11th May 2009 14:24
I am a 100% disabled AF veteran, who was turned down for a home loan. I disputed several items on my credit report and had them corrected. My Trans Union jumped from 440 to 635. There were 13 entries on my report for a guy with the same name but 26 years younger and a different SSN. I had a judgement which I paid off. Equifax and Trans Union have taken care of these matters on my reports. Experian refuses to even look at it. After paying off the debt I received a letter and sent each reporting bureau a copy (certified mail) so I have proof they received it. How do I get Experian to get off their lazy butts and get this matter straightened out? Dan
6. Posted by Bill on Monday 11th May 2009 16:13
Have you tried this link? http://www.experian.com/disputes/