Advice on Collection Calls On Old Accounts

A collection agency can contact you attempting to collect a debt for an unlimited amount of time — neither the limit on how long an account can appear on your credit report, nor the statute of limitations (the time period a creditor has to sue you to collect on a debt) prohibits a collection agency from contacting you to try to collect an old debt. However, just because a collection agency contacts you, you are not required to pay the debt. In fact, I would recommend that you do not make any payment on the debt, as doing so could reset the statute of limitations, depending on your state’s law, thus allowing the creditor to take legal action against you for this old debt. A collection agency contacting you does not necessarily mean that you are legally obligated to pay the debt, nor does it mean that these old accounts will reappear on your credit report.

Given the age of this debt, it should no longer be appearing on your credit reports. I will discuss these issues below in more detail, but the bottom line is that you can probably no longer be sued on this debt and it should not be appearing on your credit reports, so you really have no reason to be concerned about the debt — if you send a cease communication demand letter to the collection agencies, you should also be able to stop the phone calls.

If a creditor wishes to file a lawsuit against you to collect on a debt, it is required to file suit within a certain time period, referred to as the Statute of Limitations. Basically, a statute of limitations (SOL) is the time period during which a creditor can take legal action (i.e., sue you) to enforce a debt. Each state has defined its own statutes of limitations, and they vary significantly from state to state. For example, in California, creditors have four years to sue you to enforce a debt, while in Rhode Island they have 10 years. To learn more about statutes of limitations for the collection of debts, I encourage you to visit Collection Laws.

While it is likely that this information available online is accurate, I encourage you to consult with an attorney licensed to practice in your state to discuss the specifics of your situation to help you determine if the SOL for your creditor to sue you has expired.

If you determine that your state’s SOL for the collection of debts has expired, the likelihood of the creditor attempting to sue you to enforce the debt is much less. While the passing of the SOL does not mean that a creditor cannot sue you, if a lawsuit is filed you should have an absolute defense against the lawsuit. If you respond to the suit stating that the SOL has expired, the judge should dismiss the case. In addition, if the court believes that the creditor filed suit despite knowing that the SOL had expired, the court may sanction the creditor for its actions. Keep in mind that in most states, the SOL begins running from the date you last made a payment on the account. This means that if you paid just a few dollars to a collector a couple of years ago, the running SOL for that debt could have been reset. Also, keep in mind that the passage of the SOL does not forbid a creditor from calling you to collect on the debt; it simply provides you an absolute defense in court if the creditor files suit. Again, you can generally stop collection calls by sending a cease and desist letter to the creditor — for more information about sending cease and desist letters, you can obtain a sample of a cease communication letter at the Bills.com Debt-Self Help Center.

Your state’s SOL has little to do with how long accounts can appear on your credit report. The length of time credit accounts can appear on your credit report is governed by federal law, specifically the Fair Credit Reporting Act.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as 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 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 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. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.

If your state’s SOL is five years, an account can appear on your credit report for two years after your state’s SOL has passed. A new company purchasing your account cannot lengthen the time that the account can appear on your credit report. Be careful, though, because many debt purchasers try to change the date of last activity on old accounts so they appear on your credit report for a longer time. You need to pull your credit report and carefully review the accounts in question to make sure that no unauthorized changes have been made. If you find any suspicious information on your credit report (for example, if this old debt has reappeared on your credit report) you should dispute the listings with the credit bureaus. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information. To find out more about credit, credit scoring, and credit reports, I encourage you to visit the Bills.com Credit Resources page.

For further information regarding options available to consumers struggling with debt, I invite you to visit the Bills.com Debt Help page. I hope the information I have provided will help you Find. Learn. Save.

Best,

Bill

www.Bills.com