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Expired Unpaid Debt Appearing on My Credit Report - The Bills.com Blog
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Expired Unpaid Debt Appearing on My Credit Report
Tuesday, Jul 28, 2009
Question: I have an unpaid housing cancellation fee from a university from 2004. I attended another school and have not paid the fee. I live in TX and the university is in AZ. The university recently sent my account to a collection agency and the collection agency recently put a collection on my credit report. Is this legal for them to do this, since the university never did? Also, has the SOL expired on it? I know in TX it's 4 years but I'm not sure what to categorize this "debt" as. It is not a student loan debt. What do I need to do to get this off my credit report?
Answer: Keep in mind that there is no relationship between a state's statute of limitations (SoL) on enforcing a judgment for collecting a debt and what data appears in a credit report.Let's step back a moment and talk about SoLs. All states have a body of statutes in their codes of law called, "Limitations of Actions," commonly referred to as the statutes of limitations. The idea behind these laws is that we as a society have decided that we do not want old debts hanging around forever. We want people and businesses to be able to move on with their lives without worrying about being sued. The length of time a creditor has to sue you depends on your state of residence and the type of debt. For example, many states allow longer for creditors to file suit to collect on closed-ended consumer loans than on credit card debts. Most states give credit card issuers three to four years to file
suit after default, but some states allow as many as 10 years. Check out Bills.com page Collection Laws and Statute of Limitations .
This site has more information about statutes of limitations and a list of limitations by state. If a creditor files a lawsuit after the allowed time, the court will usually throw the case out and not allow the creditor to file suit again (called dismissed with prejudice). However, you must raise the issue of expired statute of limitations in a written response to the lawsuit, or else the court will not know that the statute of limitations has expired. Although the periods vary from state to state, I believe that there is only one (Ohio) that is longer than 10 years.
Here, the SoL in Arizona is three years, and Texas is four. If the date of last activity on that account was in 2004, then (I write this in 2009) five years have passed and the SoL has expired in both states. This means that if you are sued, you must raise the SoL issue in a timely manner (i.e., immediately) so that the court has notice of the SoL issue. However, because of the SoL issue, the chances of your being sued for this
This site has more information about statutes of limitations and a list of limitations by state. If a creditor files a lawsuit after the allowed time, the court will usually throw the case out and not allow the creditor to file suit again (called dismissed with prejudice). However, you must raise the issue of expired statute of limitations in a written response to the lawsuit, or else the court will not know that the statute of limitations has expired. Although the periods vary from state to state, I believe that there is only one (Ohio) that is longer than 10 years.
Here, the SoL in Arizona is three years, and Texas is four. If the date of last activity on that account was in 2004, then (I write this in 2009) five years have passed and the SoL has expired in both states. This means that if you are sued, you must raise the SoL issue in a timely manner (i.e., immediately) so that the court has notice of the SoL issue. However, because of the SoL issue, the chances of your being sued for this
debt are very small.
Now let's turn to the appearance of this debt on your credit report. Defaults are removed from a credit report after seven years. A creditor can sell a debt to a collection agency, and collection agencies routinely sell debts to each other. A creditor is not obligated to report an unpaid (or any other debt, for that matter) to the big-three credit reporting agencies. A collection agency that owns a debt is free to report it to a credit reporting agency.
Here, the Arizona university neglected to report your default on the debt, but the collection agency the university sold the debt to did. It may have done so for leverage purposes because it knows at this point there's little hope of collecting on the debt should they sue you.
As I mentioned, a default must be removed after seven years. This means that in 2011 (2004 plus seven years) you can ask the big-three to remove that item from your credit report.
To learn more about credit reports, see the Bills.com credit report resources .
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
Now let's turn to the appearance of this debt on your credit report. Defaults are removed from a credit report after seven years. A creditor can sell a debt to a collection agency, and collection agencies routinely sell debts to each other. A creditor is not obligated to report an unpaid (or any other debt, for that matter) to the big-three credit reporting agencies. A collection agency that owns a debt is free to report it to a credit reporting agency.
Here, the Arizona university neglected to report your default on the debt, but the collection agency the university sold the debt to did. It may have done so for leverage purposes because it knows at this point there's little hope of collecting on the debt should they sue you.
As I mentioned, a default must be removed after seven years. This means that in 2011 (2004 plus seven years) you can ask the big-three to remove that item from your credit report.
To learn more about credit reports, see the Bills.com credit report resources .
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/blog/
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1. Posted by sharen on Wednesday 26th August 2009 07:48
I incurred a debt with two businesses and after four years on one and 10 years on another a different collection company sends me a collection letter. Although these items have been dismissed after the seven year. one actually was paid according to an one time payoff agreement that the collection company offered before I purchased my house. These items have not appeared on my credit report in years (4 or more). Is this legal or the collection agency is trying to aquire suckers.
2. Posted by Bill on Wednesday 26th August 2009 17:39
It is within the creditor's right to try to collect on a debt that has passed the statute of limitations in your state. However, if the creditor goes to court and tries to get a judgment and the defendant raises a statute of limitations defense, the court will dismiss the case.