Collections Agencies, Laws & State Statute of Limitations

What is my liability in a debt being bought by collection agency?

What is my liability when a collection agent buys my debt?

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Bill's Answer
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Highlights


  • Understand the collections process.
  • Validate old debts.
  • Know which statute of limitations applies to you.

First, learn about the collections process. Next, you need to learn if you have any legal means to disclaim responsibility for the debt. Third, you need to determine if the statute of limitations on collecting the debt has passed. Finally, if you are responsible for the debt, you need to consider your options for resolving the debt. Let us look at each of these issues separately.

Collections Process

To the debtor, the debt they owe is a liability. However, to the creditor, the debt is an asset. Think like an accountant. If a debt account is an asset, an asset can be bought or sold. When a debtor is making regular complete payments, the value of the account is its face value. However, when a debtor starts to slip behind in their payments, the value drops.

When a debtor stops paying on a debt, and the number of days since the most recent payment reaches 120 days, the account is no longer considered current, and the creditor is required to “write-off” the debt. Writing-off a debt does not mean the debtor is no longer responsible for the debt, or that collection efforts cease, or that the debt is forgiven. The write-off date has no legal significance, and almost nothing to do with the statute of limitations for debts, which we will discuss later.

At the write-off point, the creditor will transfer the debt to a late-accounts department, or has the option to either assign or sell the debt to a collection agent. If the debt is assigned to a collection agent the collection agent will attempt to receive payment on the creditor’s behalf. If the collection agent buys the debt, it will do so at a discount from the face value. Typically, collection agents buy debt for 5 to 50 cents on the dollar. However, the collection agent has the right to collect the entire balance due plus interest.

Collection agents can buy a fully documented account, which includes all of the invoices and records of the original creditor’s collection efforts. Or, the collection agent can buy a bare account with little documentation. A fully documented account is worth a lot more than a bare account, as we will see later.

A collection agent may use aggressive tactics to when contacting the debtor. The collection agent may threaten to call the debtor’s employer, file charges with the local sheriff, or say they will park a truck in front of the debtor’s house with a sign that reads “Bad Debt” on it. All of these tactics are illegal under the Fair Debt Collection Practices Act. Start here to learn the rights consumers have in collections under the Fair Debt Collection Practices Act.

A creditor — a debt collector that owns a debt account is a creditor — has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. A court (or in some states, a law firm for the plaintiff) is required to notify the debtor of the time and place of the hearing. This notice is called a “summons to appear.” If you ever receive a summons you should do as it instructs! In the hearing, the judge will decide if the creditor should be allowed to collect the debt, and if the debtor fails to appear, the judge has no choice but to decide on behalf of the creditor.

A judgment is a declaration by a court that the creditor has the right to ask for a wage garnishment, a levy on the debtor’s bank accounts, and a lien on the debtor’s property. Which of these tools the creditor will use depends on the circumstances. See Attorney Collections and Garnishing Wages to learn more background information on wage garnishment.

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

Disclaiming Responsibility for the Debt

If a collector demands payment of a debt an individual does not owe, or more than they owe, they can dispute the debt in writing. The formal terms are "debt verification" or "debt validation." Within five days of first contacting the consumer, debt collectors are required to notify the individual of his or her right to validate the debt. Consumers are required to write to request verification within 30 days of when they are first informed of the debt.

Is it worth your time to validate a debt? Yes! Collection agents cannot validate 41% of the accounts less than 3 years old. Collection agents cannot validate 64% of the accounts 6 years of age or older. Overall, the debt industry can validate about half of all accounts (The Structure and Practices of the Debt Buying Industry (PDF)). The least likely accounts to be validat­ed are med­ical, tele­com­munica­tions, and utility debts.

Here is where the question about a fully documented or bare account comes into play. If the debt collector has a bare account, then the collector has no means to validate the debt. Without validation, the account is noncollectable if the debtor asks for the validation and does not receive it. That is why is is wise for a debtor to ask for a debt validation when a debt collector attempt to collect on an old debt — the chances on the debt account still containing the full documentation diminishes with each passing day and with each debt collector who handles the file.

To see a sample debt validation letter, go to the Bills.com debt self-help center.

Statutes of Limitations

A statute of limitations (SOL) is the time period during which a creditor can take legal action (i.e., sue the debtor) to enforce a debt. Each state defines its own statutes of limitations, and they vary significantly.

For example, in California and Texas, creditors have 4 years to sue a debtor to enforce a debt, while in Rhode Island they have 10 years. To learn more about statutes of limitations for the collection of debts, see the Bills.com resources Statute of Limitations Laws by State and How to Tell Which Statute of Limitations Applies to Your Situation to learn basic information about the rights in each state. Debtors should consult with an attorney licensed to practice in their state to discuss the specifics of each situation and determine if the SOL for the creditor to sue has expired.

If a state’s SOL for the collection of debts has expired, the likelihood of the creditor attempting to sue the debtor to enforce the debt is much less. While the passing of the SOL does not mean that a creditor cannot file a lawsuit, if one is filed the debtor has an absolute defense against the lawsuit. If the debtor responds 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. Consult with a lawyer who has consumer law or civil litigation experience to learn how to respond to a lawsuit properly and in accordance with your state’s laws.

ost courts find it is a violation of the FDCPA for a collection agent to pursue a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987)). Some collection agents still sue in hopes the consumer will not know this rule.

In most states, the SOL begins running from the date of last payment on the account. This means that if the debtor 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 to collect on the debt — it simply provides an absolute defense in court if the creditor files suit.

Options for Resolving a Debt

Assuming the debt is validated and the statute of limitations has not passed, there are five options for resolving a debt:

  1. Pay the debt outright
  2. Debt negotiation and settlement
  3. Debt consolidation
  4. Bankruptcy
  5. Default

Debt negotiation and settlement is the process of negotiating with creditors to either establish a new payment schedule at a reduced interest rate, or a lump sum payment that is significantly lower than the total balance. If the only other option is bankruptcy, creditors are willing to negotiate to ensure that they get something rather than nothing.

Debt consolidation, by contrast, is consolidating debts to reduce high interest rates and pay off delinquent payments with a loan or low-interest credit card. There is no debt balance reduction. The debt is simply rolled into a loan or credit card that has a lower interest rate. It will ultimately save money in the long run but in the beginning, the debtor is still stuck with the same balance.

Bankruptcy is an option for some debtors, but going this route should be taken only with great care and deliberation, and after consulting an attorney in the state where the debtor’s reside.

Finally, a debtor can default — in other words, do nothing. This is the worst option, and makes the debtor a passive observer rather than the person in charge. As discussed above, doing nothing may lead to wage garnishment, additional charges added to your debt, and a reduction in the debtor’s income the debtor cannot control.

To see additional discussion of debt resolution, read What Are My Debt Consolidation Options?

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

Best,

Bill

Bills.com

51 Comments

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  • 35x35
    Jan, 2013
    gary
    Discover Card sold my debt to a collections company who has tried to collect for the last three years. I ignored them and so they froze my checking account and have now had the local sheriff dept. take the money out ($1,164) and send it to them. Are they able to do this again if I open a new account, or have I heard the last of them? The original debt was for just over $10,000.
    0 Votes

    • 35x35
      Jan, 2013
      Bill
      You indicated you reside in New York. Under New York law, a judgment-creditor can levy or freeze a judgment-debtor's financial accounts for as long as the debt is due or 20 years, whichever is less. However, a 2009 law, the New York Exempt Income Protection Act (EIPA), exempts Social Security and other subsistence and retirement payments from creditors. Therefore, if you receive Social security or similar payments you may be able to have the amount levied from your account returned to you.

      Consult with a New York lawyer, or legal aid organization that assists people with low or no income, about filing a motion to vacate the default judgment that is filed against you.
      0 Votes

  • 35x35
    Oct, 2012
    Steph
    We had a collection agency that we disputed via Experian. They reported the debt as paid, closed. Now, they are continuing to call us several times a day wanting to be paid. Is this legal??? What do we do?
    0 Votes

    • 35x35
      Oct, 2012
      Bill
      Whether a debt appears on a credit report does not control or have any influence on its collectability. Many debts are never reported to the consumer credit reporting agencies, but that does not mean those debts are invalid or uncollectable. For example, if you borrow $10 from a coworker to buy yourself lunch, your coworker will not report that debt to Equifax, Experian, or TransUnion. You still need to repay your coworker even though only the two of you know of the debt.

      It is unclear if the debt in question is paid and settled or unpaid. If the debt is unpaid, the general rule is the collection agent or original creditor has the right to collect the debt regardless of a state statute of limitation. Unfortunately, you did not mention your state of residence. If your state's statute of limitations passed, and you are a Wisconsin resident (which is a possibility based on your e-mail address), then the collection agent may not have the right to collect the debt. To answer your question specifically, we need to know:
      • Your state of residence
      • The date of last payment on the debt
      • The type of debt (credit card, student loan, mortgage, and so on)
      • If the debt was settled/paid

      Out of curiosity, do Equifax and TransUnion report the debt? If so, what status do they report for this debt?

      Keep in mind that under the Fair Credit Reporting Act, derogatory accounts may appear on your credit report for up to 7½ years.

      0 Votes

  • 35x35
    Jul, 2012
    Jen
    We had a credit card debt from 03/2005 on our credit report. Admittedly, we allowed it to default because of financial problems we were having. It even showed that this debt from "GS" was purchased by a collector on our credit reports. The collector that purchased this debt, "LVNV", is also listed on our credit reports but shows the debt originating in 03/2008, when they purchased the debt. I have sent two letters requesting for them to validate the debt, both signature on delivery (so I could confirm they'd received the letter), and both were refused by "LVNV". Now that our situation has improved I am trying to rebuild our credit, but from what I've read "LVNV" can't legally do this, can they? Are they allowed to refuse written communication? Are they allowed to bypass debt statute of limitations by presenting a debt originating when they purchase it?
    0 Votes

    • 35x35
      Jul, 2012
      Bill
      LVNV Funding buys collection accounts that, according to several Web sites, are nearing the 7½-year deadline derogatory accounts may appear on a consumer's credit report. Under the Fair Credit Reporting Act, a federal law, the 7½-year clock starts at the date of first delinquency. No other date, such as when one collection agent sells a collection account to another is significant. If, as you suggest, LVNV reports a different, later date of first delinquency, it violates the FCRA.

      You asked about refusal of delivery of a Certified Mail or similar message. There is no federal or state law I know of that makes such conduct illegal. My suggestion? Send LVNV and its collection agent Resurgent debt validation letters via Priority Mail to their street addresses, which are available on the LVNV Funding and Resurgent Web sites. Priority Mail generates notification of delivery notices. See the USPS Web site to learn more.

      Simultaneously, send dispute letters to the credit reporting agencies that are displaying the incorrect date of first delinquency for your debt.
      0 Votes

  • 35x35
    May, 2012
    Kiersten
    I received a letter from a collection company on behalf of the superior court. I responded with a request for validation and the courts responded with a copy of an application for deferral of court fees and/or costs and consent to entry of judgment. I don't know if that means there was a judgement entered against me for this and therefore which SOL applies. Either way, I believe the SOL to collect is long past. Can I tell the Superior Court that they can no longer collect or report this debt to credit bureaus? Also that interception of any tax refund I may be entitled to exceeds the garnishment limitation? Thank you for your thoughts!
    0 Votes

    • 35x35
      May, 2012
      Bill
      I confess I'm at a loss to understand exactly what is happening in your case. In my experience, I have not seen a collection agent work for a superior court, and I can only speculate why a court would believe it has the right to collect money from you. You mentioned a garnishment, and a tax refund interception, which tells me a judgment may already be in place.

      Because my stating my confusion does nothing to assist you, I urge you to consult with a lawyer who has civil litigation experience. He or she will suss-out the facts of your case, where you may be in terms of your state's statute of limitations, and if someone or something has a judgment against you.
      0 Votes

  • 35x35
    Apr, 2012
    Tim
    Several years ago, I received a parking ticket in Spokane, WA while visiting my brother in the hospital. I was leaving town right after the visit and forgot to pay the ticket -- it was for $10, now I am getting collection calls and letters from a collection agency for $105.00. I have only spoken to the agency once on the phone about 6 years ago and have never responded in writing to the agency. How can they keep calling me and sending me letters on this ticket?
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      In almost all states, a creditor may continue collection efforts on a debt after its statute of limitations expires, and until it is paid. My advice? Negotiate a pay for delete settlement of the debt. Follow the link I just mentioned to learn more.
      0 Votes

  • 35x35
    Apr, 2012
    Katie
    My husband and I rented an apartment together and were both on the lease. We ended up moving out early due to mold in the apartment and them not wanting to fix it. We talked to a lady about it and she told us to just fill out the paper and turn In our keys. When we did I asked how much we owed and she stated that we will bill you within 45 days. Well they didn't and it went straight to collections. When we tried to pay it off there is an account for me and one for my husband both for the same amount for the same apartment. I was told if I paid one off the other person would still be responsible to pay off the debt as well? Wit doesn't make since to me that we both have to pay two different accounts for the same lease?
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      I would argue you owe the landlord $0.

      Consult with a lawyer in your state who has consumer law experience about this matter. Why? Implied in every housing lease is the expectation the landlord will maintain the property in habitable condition. This means the space will be warm in the winter, not too hot in the summer, with basic utilities functioning, such as water and electricity. The presence of mold can cause serious health issues, and for people with weakened immune systems, can result in pneumonia. Mold, therefore, goes right to the heart of habitability — people should not be around it. If the landlord knew of the mold and did nothing to mitigate it, then you have the right to quit the apartment or house without recourse.

      Again, consult with a lawyer to discuss your response to the landlord's collection agent.
      0 Votes

  • 35x35
    Apr, 2012
    Norma
    I recevied a call from a "billing company" 2 days ago and called them back today. They are calling on behalf of a local gym. I remember going to a gym yrs ago, but don't remember a contract. I was informed that this gym is billing me for membership from 2005. I was also told that I was on "auto renew." So I mention that I am going to send a Request for Validation this person says that since my acct is not in collections yet, the statute of limitations has not passed. I was told that if I send the Request it must be to the Gym and not to the billing company, and that I should go in person since my acct will be sent to collections at the end of the month. This billing company got my "acct" in March but just contacted me 2 days ago and NOW i have days to get this resolved before it DOES go into collections. Is this legal, can the Gym legally collect after 7 yrs even if I was never notified of any pending balances? I live in Texas where the SOL is 4 yrs.
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      First, see the Bills.com resource Texas Collection Laws to learn about your rights and liabilities as a Texas resident.

      Second, regardless of what the collection agent told you, validate the debt following the instructions you find on the page I just mentioned.

      Third, it is likely the statute of limitations began when the payment was due, and not some mystery date the collection agent concocted during your telephone conversation.

      Finally, the account is in collections now. The collection agent telling you it is a "billing company" and something like, "We need to resolve this in the next X days before we send this to collections," is pure nonsense and has no basis in law. The fact is, any third party contacting a consumer to collect a debt is a debt collector/collection agent, as defined by the Fair Debt Collection Practices Act.

      Based on the misinformation the collection agent told you, be extra-suspicious of any statement it tells you, including that you have any liability for a contract you may have had with the gym.
      0 Votes

  • 35x35
    Apr, 2012
    Jon
    I have a debt and the SOL was up in February of this year (2012). How should I relay that to the collector that calls me non-stop? I don't want to just blurt out "SOL is up, I don't owe this;" then have that be an admission to owing the debt. I'm stuck. Any insight would be helpful. Thank you.
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      If you are certain the statute of limitations has run its course, then send the collection agent a cease communications letter and keep a copy in your files. Follow the link I just mentioned to find a sample copy of such a letter.
      0 Votes

  • 35x35
    Apr, 2012
    Jim
    I just received a collection letter from a collection agency concerning a balance from a jewelry store. First of all the bill was from around 1993. I ran into some financial issues 20 years ago when I was layed off from my job. The jewelry has not even existed for 5-10 years now. I had this happen about 1-2 years ago from another account from the same time period--and that one was from another collection agency. That one was from holiday health spa , which has not existed for many years. That one was because I moved to an area where there was not a gym. I had contacted the gym at the time and they said they would take care of it, but unfortunately they didn't. Of course, both these accounts are 17-20 years old and I don't want to pay a shady collection agency. A non-expert told me that these kind of tactics are not legitimate and they just get ahold of this info and just harass you hoping that you will pay. The recent letter tries to offer me deals to pay only a portion of it. My question is can they do anything to my credit after this long. when I saw the name of the initial creditors I was in shock since it had been so long ago
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      Step 1: Validate the debt. Debt validation is a consumer's best friend because a debt that cannot be validated may not be collected. It is unlikely the original creditor will have records of your account from that long ago.

      Step 2: If the collection agent validates the debt, which is unlikely but possible, send the collection agent a cease communications letter. Take these two steps should the present collection agent sell this collection account to another collection agent.
      0 Votes

  • 35x35
    Apr, 2012
    Danialle
    My husband had an account in NC with Time warner cable. When we moved he paid what he owed and cancelled it. THat was in 2007 we got time warner again in 2010 and when we moved again to SC we cancelled it, and when we turned in our equipment they said we paid to much and they owed us 70.00 they paid us and it surprised us. Then this year 2012 we get a letter saying he was sent to collections because he owed for the equipment he didnt return and they had no record of paying us. He called and argued and they told him finally yes you turned in the equipemtn but you owe 30 some dollars. So we paid that and were confused as to why we owed that. Then two days ago he checks his credit report and hes in collections! We have never recieved a noticed saying he was going to be sent again so he called, and they tell him its for 2007 that he owed them 80.00, and now that since they paid us 70.00 for our second acct he owes that as well. we never recieved any notice about this never! they just sent him to collections it ust showed up on his report it was not there last year. How is this legal the statute of limitations is 3 years in NC where we had the acct and 3 years where we live now, and how is it our fault they told us we were in the clear and paid us? I'm so confused.
    0 Votes

  • 35x35
    Apr, 2012
    Melissa
    I was recently sued by a debt collector collecting on and old credit card debt. I last paid anything on the debt in 2007. The debt collector filed just under the three year statute of limitations in SC. I called the collector in hopes of making a settlement. We could not come to an agreement I felt was fair to me so I told them I'd see them in court. Just a few days ago I got a letter stating the collector had voluntarily dismissed the case. This sound great to me since I can't afford an attorney and am unfamiliar with laws on this matter. Does my attempt to make a settlement restart the SOL?
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      Impossible for anyone to answer your question with certainty without knowing more about what you discussed, and if you sent the creditor an e-mail, fax, or paper letter acknowledging your legal liability for the debt. Generally speaking, courts are loath to allow a creditor to argue a settlement conference or meeting acknowledges a debt for the purposes of resetting statute of limitations for public policy reasons. If settlement negotiations reset statutes of limitations automatically, no debtor would ever sit down to negotiate a settlement, which would cause a tidal wave of litigation upon court systems already straining under the load of civil and criminal cases.

      If you made statements indicating you took responsibility for the debt, then you may have acknowledged the debt. However, if you made statements indicating you wanted to resolve a claim against you, then you made no acknowledgement. However, each state has its own rules for acknowledging debt, so you wisest course of action is to consult with a lawyer who has consumer law experience to learn your rights and liabilities.
      0 Votes

    • 35x35
      Apr, 2012
      Melissa
      Thanks. I never acknowledged any debt in writing. I had a few phone conversations that always ended in me not agreeing to their terms. I only attempted to negotiate a settlement. I'm just unsure if that alone equals admitting to owing the debt. Hiring an attorney is not an option. Thanks again.
      0 Votes

  • 35x35
    Mar, 2012
    Regina
    My husband had 2 medical bills that we were making regular monthly payments on, the company stopped sending bills so I called them a couple months to ask for a bill and then sent the payment. After a few months of this, I just forgot about them, we did not receive any bills or notice that this account would be turned over to collections, they just appeared on his credit report. We did offer to pay the bill in full in agreement for complete removal from his credit report, but the collection agency refuses to do anything except mark it as paid in full. Any advice? Were'nt we suppose to be notified before it being placed in collections? Thank you
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      It is most likely that your original creditor has the right to send a delinquent account to a collection agency. If the collection agency does not agree to a pay for delete, then having the bill reported as paid in full is your next best alternative. You could try to have the original creditor take back the file and do a pay for delete with them, although this is an unlikely event.
      0 Votes

  • 35x35
    Mar, 2012
    Kody
    My wife was contacted by a collection agency stating that she owed approximately $8,000 in credit card debt. They offered for her to settle in the amount of $4,000. The account is more than 10 years old and we live in the state of Louisiana where the SOL on such debt is 3 years. From my understanding, per the FDCPA the debt also can no longer be reported on her credit report. They stated they will call her back later this week and I told her to ask them to provide something in writing to us. I plan to send a request for debt validation letter once we receive something in writing. Is there anything further I can do at this point? My wife incurred these debts when she was 19 and naively assumed at the time that not paying them off would be of little or no consequence and I would prefer not to pay anything to these junk debt collectors.
    1 Votes

    • 35x35
      Mar, 2012
      Bill
      Nothing further you can do at this point. As you mentioned, validate the debt when you receive a written notice from the collection agent.
      0 Votes

  • 35x35
    Mar, 2012
    Jason
    I have a few medical bills that went to collections when I was laid-off. They are all past the 3 yr SOL in NC & SC, where I lived then and where I live now. If I send a unsolicited settlement offer to the CA, will that renew the SOL and restart the 3 yr clock? I have read that entering into a payment agreement constitutes a restart in the clock. Whouldn't this letter of me agreeing to pay a certain amount to settle the account be viewed as that? My concern is opening myself up for a judgement.
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      Be very careful not to acknowledge the debt in your written communication with the Credit Agency. Since SOL is a complex legal issue, I recommend that you seek advice from a lawyer experienced in consumer law.
      0 Votes

    • 35x35
      Mar, 2012
      Bill
      Be very careful not to acknowledge the debt in your written communication with the Credit Agency. Since SOL is a complex legal issue, I recommend that you seek advice from a lawyer experienced in consumer law.
      0 Votes

  • 35x35
    Mar, 2012
    Sabrina
    I tried to submit the comment the "facebook way" but the "Post comment" button didn't react, so I'm trying this way: I went to one of the free credit report sites and found a balance on it, wrote the site about it and they told me which dept collector it is. I called there (3-20-2012) and asked what that balance is and they told me, that it is a bill (465$) from Radiology from an ER visit from 2-3-2008. Apparently the hospital billed separately from from the Radiology department. I asked them why Tricare didn't pay for it (I'm a military spouse) and they said because they didn't submit it. Called Tricare and they told me they can't refile the claim because it's too old. So I called the actual Radiology place and they told me, that Tricare couldn't ID me and that is why it's not in their system. The letters didn't reach me, because they had the wrong address. However the hospital had no issues sending me a bill to the right address when something got messed up with the claim between them and Tricare and we got it taken care of. They also said that the phone number wasn't working, which we had changed 04-2008. When does the SOL start? The day of billing, day of service (2-3-2008) (or is day of billing and day of service the same?) or when I found out, which is today (3-20-2012)? This is all happening in TX where the SOL is 4 yrs. If it started at the date of service, then the 4 yrs. have passed. Can I refuse to pay it? And if the SOL has not passed, what's my next move? I don't even have the money for payments, neither do I think I even "deserve" this bill. How do I get this bill dismissed and off my credit report?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      The US system for private medical billing stacks the deck against the patient. If the billing department at a medical provider submits incorrect patient or diagnostic information to the insurance company, or misses the insurance company's deadline, the patient — who pays the insurance to cover the procedure — is obligated to foot the bill. Madness! But I digress.

      In most states, the statute of limitations for most consumer debts begins when the invoice was due, which is typically 30 days after the date on the billing statement.

      One option to resolve this issue is a pay for delete where the debt is settled with the promise that the creditor will remove any mention of the debt on your credit report.
      0 Votes

  • 35x35
    Oct, 2011
    Grace
    I believe the SOL on my debt accounts have passed. I am not receiving any phone calls or mails about these debts, it may be because I have moved address so frequently. I have two charged off debt accounts. One has a balance of $0 and the other has $2210. Do I just leave the $0 on my credit report? Or do I call them? As many have said, collection agencies are sleeping dogs. I don't want to call them and start things that will make things worse. My credit score went down the drain and I dont want these collection agencies making ir worse. What do you recommend?
    1 Votes

    • 35x35
      Oct, 2011
      Bill
      Just because the SOL has passed does not mean that the debt can't appear on your credit report. Seven and a half years is how long most derogatory items can appear on a consumer's credit report file. The 7½-year rule has nothing to do with charge off or a state statute of limitations.

      Some collection agencies don't bother to continually update the tradeline after the SOL has passed. The account still shows on your report, in this case, but is not updated each month. Some collection agencies update the account right up to the 7½-year point allowed by the Fair Credit Reporting Act that states that a debt may be reported 7 years from the first 180-day delinquency on the original account.

      The $0 balance account that was in collections is less harmful than the account that still shows a balance owing. As these accounts age, they have less impact on your score.

      I think you need to focus most on the proper steps to improve your credit. You can try to use the methods a credit repair company uses, to get the $0 balance account off your report. That process is not usually effective with accounts that still show a balance due.
      0 Votes

  • 35x35
    Oct, 2011
    Zine
    I just withdrew from the classes, the main reason is because I can't afford to pay my full tuition, I'm a transfer student in NYC, my degree evaluation is still pending for processing. However,in July, I was told I'm eligible to benefit from the financial aid (Pell grant benefit about half of my semester tuition),so after i did some math and English tests i took 12 credits - fulltime then after about 3 weeks of attendance they contact me and they said i'm not eligible because I got a second bachelor degree abroad(it's the law), i was surprised cause i provided them with all my transcripts earlier, but they had me enrolled under false pretenses, they should have mentioned this issue before. now i'm liable for paying the full tuition, I would mention that i have a part time job,and i had a limited savings, also i had this year many expenses, anyway i would ask you what are the legal risks if i wouldn't pay the full tuition, also i wouldn't take no loans(since i don't have a steady job and have a limited income).what you recommend for my advantage,i'm a permanent legal resident.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      I think you should speak with an attorney. Not paying back the debt could lead to aggressive collections, a lawsuit, and wage or bank levies.

      Whether or not the school acted in bad faith and should shoulder any of the financial responsibility, is beyond my scope and knowledge.
      0 Votes

  • 35x35
    Aug, 2011
    Jag
    Hi, I studied in the US (in B-school) in 2007 and taken a private student loan from CitiAssist (no cosigner, no guarantor). Due to financial difficulties in 2010-2011, I was not able to make some payments and now the loan is in default. I had been told by Citibank executives that the loan goes into default in 180 days. Apparently that was wrong and it is 120 days. Now my loan is due 155 days and it has been transferred to an agency called DCS. I live in Singapore and have no connections to the US anymore. Please advise how I can force DCS to settle for say $30,000 out of my $80,000 dues, since I would prefer to settle.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      I don't think you can force a collection agency to accept a settlement.

      The collection agency would have an incentive to accept a lump sum settlement if it feels it will not have other effective means of collecting. I can't speak with any authority as to whether or not it is likely that the creditor will sue you in the US and then domesticate a judgment in Singapore, to come after income you earn or assets you own in Singapore.
      0 Votes

  • 35x35
    Mar, 2011
    tiffany
    I had a car repossessed 2002 and received first letter from collection agency 2010 I only had one phone call and made 3 payments not knowing of statute of limitations in CA can I stop paying the collection agency on grounds of statue of limitations?
    0 Votes

    • 35x35
      Mar, 2011
      Bill
      When you made a payment on the old debt, you re-started the clock on the statute of limitations. Even a debt where the SOL has expired can be brought back to life by making a payment. Consult with an attorney, if you feel the collection agency pressured you into making a payment or threatened you if you would not make a payment. If the collection agency violated the Fair Debt Collections Practices Act, it may be possible to avoid paying the debt, if you take legal action.
      0 Votes

    • 35x35
      Jun, 2011
      Marie
      I have a question. I have a private student loan that is in default. Would this eventually fall off my credit after the statute of limitations expires or is it on my credit permanently like federal student loans? Also, does the SOL timeframe start from the last payment date, the date of default, or the intitial date of the loan?
      0 Votes

    • 35x35
      Jun, 2011
      Bill
      Please review the Bills.com resource Student Loan & Credit Report, which discusses the issues you raised.
      0 Votes

  • 35x35
    Jul, 2010
    Bill
    Under the FCRA, the Fair Credit Reporting Act, credit reporting agencies may report derogatory information on a credit report for seven years after the first delinquency. The date of any subsequent payment is irrelevant to the seven-year rule. Settling a debt will not reset the date the derogatory will fall-off your credit report.
    0 Votes

  • 35x35
    Jul, 2010
    Simone
    I'm a bit confused as to the 7 year reporting for credit bureaus. I was the victim of identity theft by a family member and while I was able to have numerous accounts dismissed I have 1 pesky account from Bank of America that they refused to acknowledge as being hijacked. I have basically been waiting for the 7 years of reporting to pass, and that won't be until March 2012. I currently have the funds to pay off the debt but have been afraid that if I pay it off in full or settle for part that the countdown will reset again once I've paid leaving a mark on my credit for another 7 years. My husband and I are wanting to buy a home soon and better credit would be extremely helpful. Would it be more advantageous to just pay it off and potentially have that mark shadow me for another 7 years, or just wait until the item has disappeared from my credit report in another 2 years?
    0 Votes

  • 35x35
    May, 2010
    Bill
    You wrote, "The AL SoL is 3 years on CC debt..." so I will assume you were referring to Alabama, and that you are an Alabama resident. First, review the Bills.com resource Alabama Collection Laws and the links on that page to gain a better understanding of your rights and liabilities as an Alabama resident. Second, you need to understand that a credit report is not legal evidence -- it is hearsay that does not fall under any exceptions for Federal rules, and I doubt it would under state rules either. Which leads me to my third point: Find an attorney who can review your documentation in person, and advise you precisely on the proof Alabama courts require to show the statute of limitations has passed.
    0 Votes

  • 35x35
    May, 2010
    Michelle
    I have been served by a collection agency about a debt that my credit report says the last payemtn was made on 4/2007. The AL SoL is 3 years on CC debt, and they file 5/2010. Close, but a month past the SoL if I understand correctly....right? How do I go about responding to these papers? Is there a letter to send to the attorney and court stating an expired SoL? Do I need to prove it? It doesn't seem they would dismiss it just based on my saying it was expired. HELP, please!
    0 Votes

  • 35x35
    May, 2010
    Kathy
    Dear Bill: Here is my situation. My credit card account was delinquent for about 2 years (2007-2008), then at the beginning of 2009, the collection agency convinced me to be on a payment plan and I calculated I paid about over $4K for an amount of $14K. I was able to take out some of my student loan to pay for this for almost a year. Then I graduated from the school in Oct.2009 and was no longer qualified for student loans so I stopped paying ever since. Now a different collection agency took over my account and it's now $15K (still an interested-bearing account). They demanded me to pay back right away or else they will take action and obtain a court judgement and will proceed from there. I really don't know what to do because I am actively seeking for jobs but due to the economic downturn, there has been no luck at all. I also have a lot of student loans that I just deferred. I live in CA and the collection agency is in a different state (I don't remember what state) and how does the SOL work and I would like to know what would be the worst scenario? I live with my parents and have no source of income. Please help me and I would love to see your advice. What would happen if I go default, do nothing about it? Will this debt amount be forgave if they couldn't get anything from me. I don't have any assets, houses, or cars, my bank acct amt is also limited. Thanks in advance!!!
    0 Votes

  • 35x35
    May, 2010
    Bill
    I do not have any silver-bullet solutions. There are some steps you can take. 1) Continue to negotiate the debt. 2) If your student loans are federal, then you should continue to ask for Forbearance. 3) If your student loans are private, see the student loan default to learn about your limited options. 5) Regarding your questions about statutes of limitations and your options if you default, see Collections Agencies, Collections Laws and Your State's Statute of Limitations.
    0 Votes

  • 35x35
    Apr, 2010
    Bill
    If the "acquisition company" is a collection agency, the answer to your question is yes. If you do not owe the debt, stop paying the collection agent, and when your collection account is sold to another collection agent, you can then verify/validate the debt.

    Verifying a debt has nothing to do with the statute of limitations. With each payment of the debt you reset the statute of limitations to zero.
    0 Votes

  • 35x35
    Apr, 2010
    Vivian
    I only recently became aware of the information about debt acquisitions and statue of limitations. It may be that I have already sunk my own ship. The last payment made to the credit card company was in late 2004. My state has a 3-year SOL law. I have been paying the acquisition company for 9 months on a settlement agreement. Is it too late to demand documentation?
    0 Votes

  • 35x35
    Jul, 2009
    Mark
    Generally speaking, the SOL starts to run at the debtor's last payment. TN has a six-year SOL, and Alabama has a three-year, so if your last payment was eight years ago it expired in both states. Remember that a SOL does not prevent a creditor from attempting to collect the debt. However, the expiration of the SOL is a defense that, if raised in a timely manner, bars judgment. Keep in mind the first two words of my reply. An Alabama attorney, armed with all of your facts and knowledge of Alabama law, will give you a specific answer.
    0 Votes

  • 35x35
    Jun, 2009
    Bill
    How is the SOL affected if you move from one state to another during the course of delinquency? I have an old debt of 8 years that began in TN and now I live in AL.
    0 Votes