Charge Off, Credit Report, Statute of Limitations & Banks

I stopped paying a creditor 9 years ago. My bank just merged with them and collected the amount due. Is that legal?

Can a financial institution collect on a charge-off account from nine years ago because they have merged with your present financial institution without giving you notification they will take your money?

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Bill's Answer
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Highlights


  • Learn when an account moves into 'charge-off' status.
  • Examine when the statute of limitations can make a debt expire.
  • Dispute any inaccurate information on your credit report.

Before I explore the issues raised in your question, we need to establish a few definitions and concepts.

Charge Off

"Charge off" is an accounting term used by creditors when they move a delinquent account from its accounts receivable books to its bad debt ledger. This usually occurs between 180 and 240 days from the date of your last payment. The fact that an account is charged-off does not mean the debt may not be collected later. The charge-off date also does not correspond to the statute of limitations on collecting a debt, or the date that an entry on a credit record must be removed. All three dates or deadlines are independent of each other and have different meanings.

Because an account is charged off does not mean the creditor lacks a legal right to collect the debt. To the contrary, the creditor may move the account to its own internal collections department, or sell the debt to a third-party collection agency. At some point, and it varies by your state of residence, a debt becomes so old that it cannot be collected. This is where your state’s statute of limitations comes in.

Statute of Limitations

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 the Bills.com Collection Laws and Statute of Limitations and How to Tell Which Statute of Limitations Applies to Your Situation pages.

The site I just mentioned 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.

Remember: The passing of the SOL does not mean that a creditor cannot sue you. It means if a lawsuit is filed you should have an absolute defense against the lawsuit if you raise the defense. Also, keep in mind that the passage of the SOL does not prevent a creditor from calling you to collect on the debt; it simply provides you an absolute defense in court if the creditor files suit.

Quick Tip

Get a no-cost, no obligation analysis of your debt options from a pre-screened debt relief provider.

Fair Credit Reporting Act

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c)
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer

The FCRA 7-year rule is separate from state statutes of limitations for debt issues. Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.

The start of the 7-year period begins at the date of first delinquency, or if no payments are made, when the first payment was due. Review your credit report carefully to make certain the dates of first delinquency are reported correctly. Unscrupulous collection agents reset the date of first delinquency to stretch out how long a derogatory account appears on consumer’s credit report. This is illegal under the FCRA.

Just because a debt does not appear on a credit report does not mean the statute of limitations for the debt has passed. The opposite is also true: The passing of a state statute of limitations on a debt does not mean the debt may not appear on a credit report. The federal FCRA and state statutes of limitations are separate and independent of each other.

Whether a debt appears on a credit report does not establish legal liability for the debt. The opposite is also true: You may have legal liability for a debt not reported to the credit reporting agencies. Credit reports are not legal records of every debt a person owes.

If you find any inaccurate information on your credit report, you should dispute the credit report listing with the bureau in question. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

Quick Tip

Struggling with debt questions? Let the Bills.com Debt Coach review your debts and give you your options to resolving these debts.

Merged Financial Institutions and Debt

I do not know your state of residence, so with a nine-year-old debt it is impossible for me to say with certainty that your debt is older than your state’s statute of limitations. Let us create a hypothetical situation here loosely based on your facts. Let us say that you have a debt with a financial institution, you reside in a state where the SOL has expired, and the two financial institutions have not merged. If the creditor sues you, and you raise a statute of limitations defense, the court will dismiss the case with prejudice, meaning they cannot return to court to sue you again for that debt. The debt is not erased. They can continue to pester you about the debt, but they cannot sue you or threaten to sue you.

Your Facts

Now let us look at your facts. If I understand your question correctly, your bank merged with your old creditor, your bank discovered an outstanding debt, and plundered your account without notice. As I understand the law of remedies, what your bank did was reprehensible but not illegal because the debt was never forgiven -- the creditor never released you from your obligation.

However, I hasten to say that I do not know what state you are in, and as a consequence have no way of knowing if you are shielded by state laws that protect consumers in this situation. For that reason, I urge you to consult with an attorney in your state who has experience in consumer law to review your facts.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

51 Comments

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  • 35x35
    Dec, 2012
    Grant
    I had a car repossessed back in May of 2006. I struggled to make payments during the term of the lease and the account went from delinquent to paid up multiple times before finally lapsing and leading to the repossession. What date would be used to determine when this will fall off my credit report? You mentioned that "the start of the 7-year period begins at the date of first delinquency". Would that mean the first time I missed a payment (in early 2005 and thus past 7 years), or since the account was late then paid up multiple times the last time it first went delinquent leading to the repossession (in February of 2006 meaning I'm stuck with this on my report until next year)? Thanks in advance for your help!
    0 Votes

    • 35x35
      Dec, 2012
      Bill
      FTC staff attorneys used to publish questions and answers about the Fair Credit Reporting Act. Clarke W. Brinckerhoff's letter to Jeff Kosmerl has a fact pattern similar to yours.

      Staff Attorney Brinckerhoff states then when an account has multiple delinquencies, the date of first delinquency begins on the date when the account becomes continuously delinquent. Subsequent remediation, and then delinquencies are not significant under the FCRA's Sections 605(c)(1) and 623(a)(5).
      0 Votes

  • 35x35
    Oct, 2012
    eileen
    I went to my child's doctor appointment and was called back before being seen and before my child's chart was put in the doctor's bin. I was called to the check-out area where I'm presented with a simple sheet of paper stating my balance and date of service leading back to 2001. I need to, A: Make full payment; or B: Use their phone to call and set up a payment arrangement. If I choose neither then I will not be seen and/or my child will be discharged as a patient. My question is, can I be forced to pay a bill with no exact explanation other then your insurance didn't pay? For a bill over 11 years old?
    0 Votes

    • 35x35
      Oct, 2012
      Bill
      Yes, a service provider or merchant can condition their doing business with you on your paying an old debt.

      Was it rude for the medical office to call you out they way they did? I think so. Should the office alerted you to the existing balance when you made the appointment? In a perfect world, yes. But there is no requirement a medical provider or anyone else forgive and forget an old debt, unless a bankruptcy is involved.

      My advice? Negotiate a settlement to this medical debt.
      0 Votes

  • 35x35
    Sep, 2012
    Zachariah
    I have a motorcycle that was charged off about 8 years ago. can i get the lien holder taken off of the title? the debt has been sold about 6 times now and the original lien holder has no paperwork about the vehicle or the amount owed anymore. they creditors that buy the old debt dont contact me either. can i take the lien holder off my title and can i get the debt taken off of my credit report also? by the way I live in texas.
    0 Votes

    • 35x35
      Sep, 2012
      Bill
      Two issues in play here:
      • See the Bills.com resource Bonded Title to see if this procedure applies in your situation.
      • Under the FCRA, the derogatory on your credit report should no longer be reported 7½ years after the date of first delinquency. If, as you mentioned, the date of first delinquency was 8 years ago, this bad mark should no longer appear on your credit report.

      My advice? File a dispute with the credit reporting agencies that publish the derogatory information in question.

      0 Votes

  • 35x35
    Aug, 2012
    Kevin
    I have a debt that was a line of credit that I have not paid in nearly 180 days. They have told me that if I make one monthly payment that it won't charge off. My question is : If I make that one payment does the clock start again for them to have to wait another 180 days before they can charge off the debt? I am in North Carolina.
    0 Votes

    • 35x35
      Aug, 2012
      Bill
      Charge-off has no legal significance. Charge-off is not the same as cancelling or forgiving a debt. There are no hard-and-fast charge-off rules because it is an accounting action, and subject to each organization's policies.

      Charge-off appearing on a credit report will have a negative impact on a person's credit score. On to your question.

      If the creditor tells you its policy is to not charge-off a debt if you make a payment on day 179, then you have to take them at their word. However, if the creditor thinks you are just going to string them along for another 179 days before you make your next payment, it may decide to accept your payment, then charge-off your account anyway.
      0 Votes

  • 35x35
    Jun, 2012
    Jenna
    I wrote a couple checks from a closed account bank to my current bank account for cash. They closed my bank account, charged it off and filed charges on me. Now it shows up on my credit and I have to pay the money back or face criminal charges. Can they do that?
    0 Votes

    • 35x35
      Jun, 2012
      Bill
      You indicated you reside in Texas. If so, read Texas Penal Code 32.41 Issuance of a Bad Check to learn Texas' "hot check" law. If you knew at the time you wrote the check your account did not contain sufficient funds, you could be prosecuted for a Class C misdemeanor.

      Note to readers residing in other states: Other states have different laws regarding writing a check on an account with insufficient funds. Your state may not criminalize writing a bad check under any circumstance, or it may under particular circumstances.
      0 Votes

  • 35x35
    Apr, 2012
    Julia
    My husband has an old debt that is about four years old. In CA an agency can not collect on a debt after 3 years but the debt will remain on your credit report for seven. National Recovery Agency has been contacting my husband about this old debt but do not appear on any of his credit reports. Since it has been 4 years since the original debt can they touch his credit report in order to collect the debt? Thanks.
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      You wrote, "In CA an agency can not collect on a debt after 3 years..." I assume you are a California resident. If so, your interpretation of California's statute of limitations for consumer debt is incorrect. First, the statute of limitations for debt related to a written contract is four years, and an oral contract is two years from the date of breach in California. Second, an original creditor or collection agent may collect a debt after the statute of limitations expires in California. Please see the Bills.com resource California Statute of Limitations to learn more. For readers in other states, please see the Bills.com resource Statute of Limitations Laws by State to learn your state's statute of limitations.

      You mentioned your spouse's credit report. A state's statute of limitations for debt has no relationship to the federal rules for credit reports. See the Bills.com resource Fair Credit Reporting Act to learn more.
      0 Votes

  • 35x35
    Feb, 2012
    Brenda
    Does anyone know the date that Arizona raised it's statute of limitation on debt collection from 3 to 6 yrs? I know it was proposing to raise it last year but I don't know the exact date that it was raised.
    0 Votes

  • 35x35
    Feb, 2012
    Andrea
    My husband had a auto loan with a credit union on 4/2007 and he stopped making payments on 6/2008. We recently started making payments again, the account says it is charged off but the loan management representative at the credit union is taking our payments and still applying monthly interest of 9.5%. Is it legal to still be applying interest to a charged off loan. I am not really familiar with these kinds of things, please help!
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      A charge off does not mean the debt is forgiven, canceled, or extinguished. Charge-off does not change the legal relationship between the borrower and the lender. Charge off is an accounting term, and has no legal significance for borrowers.

      It is perfectly legal for a lender to attempt to collect a charged-off debt, and to charge interest on such a debt.
      0 Votes

  • 35x35
    Jan, 2012
    Mary
    My husband stopped making payments his Home Equity Line of Credit in August 2008. Our home was foreclosed in February 2009 by a different bank. The Home Equity Line of Credit was charged off on October 2011, which is more than 3 years AFTER the last payment. Based upon the date that my husband made his last payment, the delinquent account should be removed from his credit report 7 1/2 years later, which would be January 2016. However, the Credit Reporting Agency has the delinquent account scheduled to be removed on July 2018. Please help.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      You are correct that the debt should leave his credit report 7½ years after the last payment. You should start disputing the account if it does not drop off at that time. Regardless of what the CRA tells you now, the question is moot until 2016. Try not to worry about this issue now and revisit it in 2016.
      0 Votes

  • 35x35
    Dec, 2011
    Marcin
    Hello, I recently had my credit report ran to refi my current mortgage. The report came back showing an old credit account as a fairly recent charge off (paid.) The report showed the charge off as of 09/08, rather than the actual date, confirmed by the original creditor as 08/07. When I pulled my 3 annual credit reports, both XPN & EFX list the account as "charge of from 08/07 to 09/08" with CO's showing on the timeline through that period. This in essence is making the CO appear more recent that it is. Can I take any action to make this list on the actual date of Charge Off (08/07) rather than making it appear "more recent" as it's doing so now? Thanks for any help. M.S.
    0 Votes

    • 35x35
      Dec, 2011
      Bill
      I recommend that you read the Bills.com article about charge off and credit reports. In general, a credit line will appear for 7.5 years from the date of the delinquency. You may wish to dispute the entries, however, since this is a relatively old tradeline it may not greatly affect your credit score.
      0 Votes

  • 35x35
    Oct, 2011
    Tom
    Your web site is quite helpful. I have a question regarding SOL and Charge Off that I believe may impact my strategy with a collection agency. I was contacted for collections regarding a credit card debt that was opened in New York around 2002. The account was charged off by the credit card company in 2003 and has since cleared my credit reports as of 2010. Between 2005 and early this year, I made small payments towards the account without a subsequent written agreement to do so, payments were just posted to the account at the website without further communication between the company and myself. However, I have since stopped paying and have now been threatened with a lawsuit. Seeing as how New York Law requires subsequent written agreement to bar accounts from, SOL, which date am i to rely on for the SOL? Would it be the Charge Off date or the last payment made on account? Thanks for any info.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Generally speaking, a payment resets the clock on the statute of limitations to zero. However, New York law may have modified this rule. Your safest course of action is to consult with a New York lawyer who has consumer law experience to learn a precise answer to your question.
      0 Votes

  • 35x35
    Sep, 2011
    will
    i want to know if the bank has rfused to repo my car and they have not yet took me to court...is it possible for me to obtain the title from them after the SOL is up?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      I doubt a state's statute of limitations laws for debt apply to the situation you described. Consult with a lawyer in your state who has consumer law experience. He or she will research your state's laws, and learn if any state statutes or case law applies to lienholders who sit on their rights.
      0 Votes

  • 35x35
    Jun, 2011
    mickey
    What do I do now, is there anything they can try to do legally? It looks as if the VA SOL has run out on the account and that's what I told the collection agency on the phone.
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      First, regarding your credit score, the damage is done when a creditor reports the delinquency. Your paying a debt now will have almost no impact on your credit score. The only impact it will have is in your reported debt load, and if the debt is large that may be significant to your debt-to-income ratio.

      Second, regarding the statute of limitations, the applicable statute of limitations is tricky. If the contract you signed has a choice of laws clause stating the parties will use State A's laws, then despite your residing in State B, and the creditor being headquartered in State C, both parties agreed to use State A's laws if a dispute ever arose out of the contract. Complicating this is that some state judges will take pains to ignore choice of laws clauses, and not every contract has one. The default is to use the defendant's state laws, and hence, his or her state statute of limitations. If you are ever sued regarding this debt, consult with a lawyer in your state, and be sure to raise a statute of limitations defense if it applies because a court will not raise it for you.

      Third, just because the statute of limitations has run does not mean the creditor cannot file a lawsuit against you. However, as mentioned, if you are sued, be sure to raise the statute of limitations affirmative defense in a timely manner.

      Fourth, just because the statute of limitations has run does not mean the creditor cannot contact you privately to try to collect the debt (except in Wisconsin).

      To resolve this matter, you can negotiate a settlement for the debt. Be sure to ask for a pay for delete.

      Click on the hyperlinks mentioned here to learn more about each issue. Ask any follow-up questions you may have on the appropriate pages.
      0 Votes

    • 35x35
      Jun, 2011
      Mickey
      Thanks Bill for the advice, I do however have another question regarding the issue. The charge off has already impacted my credit score and subsequently came off after the seven years, can they add the same thing back on my history again? Eventhough I owed the debt I feel as if I suffered seven years worth of bad credit due to the charge off and have now paid my dues. It was a long hard road to rebuild my credit and for the last almost five years it has been perfect for the most part, I have a 755 credit rating. I view it like someone going to jail for a crime, once they've pulled their time they are free. Am I wrong to view it this way?
      0 Votes

    • 35x35
      Jun, 2011
      Bill
      The date of first delinquency is key, and not the date of last payment. Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. Under the FCRA, the Fair Credit Reporting Act, §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the consumer credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7½ years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule.
      0 Votes

    • 35x35
      Jun, 2011
      Adam
      I defaulted on a Capital One credit card when I was in college in 2003. I've never paid off this debt, and now I am looking into getting an auto loan. I was going through lending tree and the only financing that they could get me was through Capital One. If I take the loan, could they repossess my vehicle because of the default on credit cards even though I am paying the auto loan? What damage could they do with having a lien on my vehicle? I live in VA. Thank You!
      0 Votes

    • 35x35
      Jun, 2011
      Bill
      Your debt has likely passed the statute of limitations for debt, IF you have not made a payment on the debt for a number of years.

      I don't believe that Capital One would have authority to repossess your car, based on what you described.

      Still, as you are concerned about the issue and I can't give you 100% assurance that Capital One could not cause you problems, I suggest that you look for other financing. Look elsewhere than Lending Tree; if Capital One is willing to finance an auto loan, then some other lender will be, too. Try looking at car financing at a local credit union.
      0 Votes

  • 35x35
    Jun, 2011
    mickey
    I live in Virgina and had a charge off more than nine years ago when I was young and starting out and the plant I worked in shut down unexpectedly. The loan was through a credit union that came to my workplace and enrolled everyone. The payment came straight out of my paycheck, so when the plant closed I assumed the debt was insured or something because I never recieved anything from the credit union until they had made their decision to charge it off. In the past few months a collections agency has contacted me wnating to make a settlement. I told them no and agreed to nothing, in 2002 I tried to make an arrangement with the credit union to pay the debt and they said it was already charged off and even if i paid the note it would not come off my credit history, so I said if it's going to hurt me then I just will not pay it.
    0 Votes

  • 35x35
    Nov, 2010
    Angie
    Hi Bill - I just found this string while searching for some information, and I hope you can help. My husband bought a stereo system from a company 19 years ago. The company went out of business shortly after he purchased the item, but he was fairly certain it was paid off. For the lsat 5 years or so, we have been getting phone calls from Merchants Credit Group wanting to collect for this no-longer-in-business company. We live in Missouri, and from what information I can gather, the SOL is way past, and was so when they first began calling. Can you advise as to what the best course would be for when we are contaced again? Thank you in advance.
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      Validate the debt. If the collection agent cannot validate the debt then it may not report the debt to the credit reporting agencies, which it cannot do because the debt is more than 7½ years ago, and it may not attempt further collection efforts. I would be very surprised that after 19 years the collection agent has sufficient documentation to validate the debt.
      0 Votes

  • 35x35
    Sep, 2010
    Bill
    A debt can certainly continue to accure interest, fees and penalties after the creditor has charged off the debt. I suggest that you read about Georgia collection laws and post any follow up questions you have on that page.
    0 Votes

  • 35x35
    Sep, 2010
    Tami
    If a debt was charged off in 2005 and put on your credit report as a charge off in 2005 is there anyway that company can still charge interest to date where the totaling amnt now since we are trying to settle they are stating is not 400.00 but mow 637.00 since thay have continued to let the interest accrue daily. I live in Ga.
    0 Votes

  • 35x35
    Sep, 2010
    Bill
    Validate the debt immediately. Debt that cannot be validated cannot be reported on your credit report (which it cannot be here), nor can it be collected. Also, the statute of limitations has long passed on this debt, so if you are ever sued regarding this debt, be sure to raise a statute of limitations defense.
    0 Votes

  • 35x35
    Sep, 2010
    sarah
    i have a car loan that defaulted 19 years ago. they sold the car and it left a remaining balance, i tried calling the bank back than to find that the company had closed due to financial difficulties after it was sued for wrongful interest charges. now they are asking for payments what do i do?
    0 Votes

  • 35x35
    May, 2010
    Bill
    1) A delinquent entry on your credit report may harm your credit score.
    2) You will not go to jail if you fail to pay a debt. Debtors have not been imprisoned in the US since the Civil War. Being in debt is not a criminal offense anywhere in the US. If a debtor fails to repay a debt, the only remedy creditors have is in the civil -- not criminal -- court. The remedies to debt are wage garnishment, levy, and lien.
    3) Unscrupulous collection agents exploit consumers' ignorance of the law to coerce payments. Read See the Bills.com resource Collection Advice to learn more about your rights in the collections process.
    4) Validate the debt. Do not repay the debt if the collection agent cannot validate it. Put another way: Repay this debt only if the collection agent validates it.
    5) The statute of limitations may make it impossible for the purported creditor to use the court system to collect the debt. See Collection Laws and Statute of Limitations to learn your state's statute of limitations.
    6) Remember what I wrote in point No. 2 above.
    0 Votes

  • 35x35
    May, 2010
    Breanne
    I have an account with a magazine company and I have been unable to pay it for over a year and I received a call from a debt collector who said the amount is $600 now and that if I dont pay today that he will put my account down as delinquent. What does that mean and can I go to jail or anything like that for not being able to pay?
    0 Votes

  • 35x35
    Mar, 2010
    steve
    what about a charge off done for tax purposes? can a third party debt collector still press for payment in this circumstance and what dept. of the irs would give information regarding such an issue.i have a debt collection agency suing me for this kind of situation (live in oregon) thank you
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    Impossible for me to say without knowing your state of residence. See Collection Laws and Statute of Limitations to learn the laws in your state.
    0 Votes

  • 35x35
    Jan, 2010
    m
    i have a credit card that was charged off by one company and is now trying to be collected from a law firm. The last payment on record received is in 12/07. Does this still an acctive under the SOL.
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    1) You will not go to jail if you fail to repay a payday loan. This is not a criminal matter unless you took out the loan with the intent of never repaying it. Proving this is very difficult, and most district attorneys and police departments have cases with much higher priority occupying their attention.
    2) Unscrupulous collection agents exploit consumers' ignorance of the law to coerce payments. Read Advice on Pay Day Loan Collections to learn more about your rights and the tactics of collection agents.
    3) You do not seem to recall this loan. Therefore, it is imperative that you validate the debt. See Collections Agencies, Collections Laws and Your State's Statute of Limitations to learn about debt validation. Do not repay the debt if the collection agent cannot validate it. Put another way: Repay this debt only if the collection agent validates it.
    4) The statute of limitations may make it impossible for the purported creditor to use the court system to collect the debt. Click on the hyperlink I mentioned in No. 3 above to learn more about your state's statute of limitations.
    5) Remember what I wrote in point No. 1 above.
    0 Votes

  • 35x35
    Jan, 2010
    Catherine
    On Tuesday, my ex-husband was contacted by someone who said that he was a fraud investigator and was looking for me regarding criminal charges. When I contacted the person that spoke with my husband, I discovered that it was a law firm attempting to collect on a payday loan that they said owe $900.00 on. He told me that if I didn't settle this loan, I could face both civil and criminal action such as a lien, garnishment, or charges for fraud and theft by check. I became totally disabled in 2007 and my only source of income is less than $900 per month in disability and out of that I have major medical expenses. However, I was intimidated enough to agree to pay them $100 per month for the next 9 months. Then I went looking for any paperwork I had to see exactly what I agreed to when I incurred the debt. I could not find any payday loan paperwork so I called them back to get further information on the loan. According to the person I spoke with, the loan originated in November 2005 but they could not tell me the original amount of the loan, the amount of interest/fees, or any contact information for the original lender (this is a law firm). I don't want to be difficult and I would like to resolve the debt but I can't afford to pay $900 total or $100 per month but they said they couldn't let me pay less than that. I don't want to go to jail or have a lien. Can you tell me what my options are and how to handle them? When I called back to ask for details about the original loan, they told me to have my attorney call them and that they couldn't explain it to me because I wouldn't understand it and that if I wanted to be difficult they had several ways to handle this and that one way or another I would pay this debt. Help!
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    Lawsuits can be filed against persons, either natural (such as you and me) or artificial (corporations). Therefore, a creditor cannot file a lawsuit against a mortgage because a mortgage is not a natural or artificial person. A lien can be placed on a titled property. The only way a creditor can touch your property is by first filing a lawsuit against you, winning, receiving a judgment, and then placing a lien on your property.
    0 Votes

  • 35x35
    Nov, 2009
    Bonnie
    Can collectio agencies file a lawsuit against a reverse mortgage? I had a corporation (Nevada) but it was permanently revoked in 2003. My personal mortgage is in a reverse mortgage. It is less than $4,000.00. Interest rates are high. My only source of income is from Social Secutity (I retired in 2003) Thank you.
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    The passing of the statute of limitations does not mean the debt is canceled. Also, as I state in the article above, the passing of the SOL does not mean that a creditor cannot sue you. It means if a lawsuit is filed you should have an absolute defense against the lawsuit if you raise the defense. Also, keep in mind that the passage of the SOL does not prevent a creditor from calling you to collect on the debt; it simply provides you an absolute defense in court if the creditor files suit. In my humble opinion, Chase should give its customers notice that it is exercising its right to collect on past-due accounts so that customers are not surprised when funds are missing from their accounts unexpectedly. I believe Chase has a right to collect on past-due accounts, but if it seeks the trust and loyalty of its customers it should show courtesy and gracious good manners.
    0 Votes

  • 35x35
    Nov, 2009
    Angela
    I had a bank account in Texas which I thought was close and payed off only to find last week it was not. Chase has bought out bank one and my current bank WaMu. Last week Chase took out over 100 from my account and when confronted I was told it was in reguards to a Bank One account I had back in 04-05. The account was payed and charged off 9/19/04. One week later they took an addition 325 out of my Chase account. It this legal? I have looked up information and it states there is a 4 yr SOL. Can they take this money unknowningly whenever they want after 4 yrs?
    0 Votes

  • 35x35
    Sep, 2009
    Bill
    Do these six things in this order:
    1) The next time the collection agent calls, ask for the agent's name, his or her firm's name, and their location. If the collection agent claims to be from a law office, ask for the name of the attorney responsible for your case, and in what state that attorney is licensed to practice law.
    2) You mentioned you are in California. If the collection agent is or works for a California attorney, go to the The State Bar of California Web site and search the State Bar's member database to see if that person is actually a California attorney in good standing.
    3) If he or she is a California attorney, you are in luck -- you get to file a complaint to The State Bar of California about one of its members! Explain your circumstances in your complaint, and tell them that their member violated Rule 5-100 in the Rules of Professional Conduct of the State Bar of California. This rule reads "A member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute." I would argue that an attorney stating falsely that the statute of limitations has not tolled on your debt, and consequently has the the right to sue you for the debt successfully misstates the law . This false threat of a lawsuit is an attempt to obtain an advantage in a civil dispute. Further, I would argue that the member violates Rule 3-200, which prohibits the assertion of a position in litigation for the purpose of harassing or maliciously injuring a person.
    4) If he or she is an attorney outside of California, you need to go to that state's bar association Web site and determine its rules of professional conduct. If the attorney's state follows the ABA Model Rules of Professional Conduct, he or she may have violated ABA Rule 8.4(b), which prohibits committing a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; and Rule 8.4(c), which prohibits engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. I would argue an attorney violates ABA Rule 8.4(c) when the collection agent states it will file a lawsuit against you when it seems clear that doing so would be a fruitless effort, and because court proceedings are expensive, extremely unlikely. Violating professional responsibility rules do not create a cause of action for you, but giving a detailed and factual report of a rules violation to an attorney's state bar usually creates an investigation, which may cause that attorney to modify his or her behavior.
    5) If it turns out the collection agent is not an attorney, you may have a cause of action against the creditor under the FDCPA. ("Cause of action" is lawyer-speak meaning you have a darned good basis for a lawsuit.) Under 15 USC 1692e § 807(3) it is illegal for a debt collector to make a false representation that it is a law firm, and § 807(4) it is illegal for a debt collector from threatening to take any action that cannot legally be taken or that is not intended to be taken. See an attorney in your state who has experience in consumer law if you believe you have a cause of action under the FDCPA.
    6) Please return here and let us know your results.
    0 Votes

  • 35x35
    Sep, 2009
    Elizabeth
    Hi Bill-- I have one credit card that was opened in 1999 and last paid May 4, 2004-- I have received 2 calls from an attorney's office claiming that they are well w/in the SOL to file a lawsuit against me. I live in CA-- and i have checked my credit report and there is no sign of this debt being on there-- What's should I do???
    1 Votes

  • 35x35
    Sep, 2009
    Moanna
    I have 2 credit cards that was closed due to the change of APR that I did not accept. What if I don't pay them what will happen. One of my credit was already closed but, they are still adding charges on the account? for overlimit fee, can they do that? Are the credits cards company can they still harrass?
    0 Votes

  • 35x35
    Sep, 2009
    Bill
    First, read these two replies to other readers who had similar questions: "Consequences of Credit Card Default" and "Collections Agencies, Collections Laws and Your State's Statute of Limitations." Next, I recommend you review your rights under the Fair Debt Collection Practices Act and the Credit Card Accountability Responsibility and Disclosure Act of 2009.
    0 Votes