Sunday, November 19th, 2017

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Questions About Collections: Statute of Limitations on a Credit Report

Dear Melissa,

I have a question regarding a credit report I recently pulled.  I found one key derogatory (KD) item from a collections agency that claims I owe in excess of $7,500.  Now, I’m quite responsible with my debts, I’m nearly debt free, and the only thing I can possibly think it could be is an old credit card I defaulted on in college, agreed to pay verbally over the phone with the creditor, and then was never invoiced again.  It could have been sold to this collections company, and I imagine they’ve thrown interest on there, as the original debt was only $2,000.  I have never received any letters or notifications of the debt since 2006.  Now, I called the number on the credit report verbally asking for a validation, and they mentioned the original creditor by name only they wouldn’t give me any background information.

 The date of first default with the original creditor was in December 2005 by a late payment of 30 days.  Is this to be considered the statue of limitations (SOL) start date or does it have to mature to 60, 90 or 120 days late? 

The original creditor first notified me in Dec 2005 that I was late.  I arranged a verbal payment plan, which I began paying in August 2006 when I began working after graduation, but according to the credit report, the collection agency didn’t start reporting KD to the Credit Reporting Agencies until August 2007.  An entire year passed and I never received any documentation on this debt.  Now it’s 3.5 years later from the first 30-day notice from the original creditor, and I just found out about the collections agency.

I checked the statute of limitations in Texas and it is 4 years for an open account.  I’ve moved around quite a bit, but I’ve always maintained my Texas residency. I want to work out an agreement to remove their reporting from my credit report, but would I have more bargaining power if the SOL were expired (hypothetically if it was validated)?  I want to request an official validation, but the damage to my credit has been going on for 2 years.  I have good credit except for both this company and the original creditor, so I’m not worried, but I’d like to fix my credit report and at least take one of them off.

So my question is if I should wait until the SOL runs out in December in order to request a verification through certified mail to bargain a removal of the report off my credit or should I push to do it now?  I have only six months left before the SOL ends, and I’d like to have as much bargaining power as I can.  Is it even possible for any collections agency who bought a debt from a creditor to remove their report from the Credit Reporting Agencies?  What’s your take on this situation?

Anthony J.

Dear Anthony,

First, I would send a letter requesting a detailed invoice and validation of the account.  At this point, you can then see what charges and interest have been added.  I am guessing you are correct, and that a great amount has been added.

Second, the SOL generally starts, along with the 7 years that an item remains on a consumer credit report, 180 days after the first missed payment.  Requesting any information or making payments will not reset this statute.  Feel free to request the verification now. 

Generally speaking, collection agencies and creditors do not remove items from credit reports.  The credit bureau requests a reason for removing the item and they can risk losing their contract by constantly removing delinquent accounts.  However, the creditor may look upon this in more favorable terms, if you play the statute of limitations game.  By indicating that you know the statute is up and that they cannot sue you for the account, you can ask them to remove it if you pay it.  It may just work!

But, you must make sure that the statute is up!  If it is not, and the creditor sues you and wins a judgment, this will last for 7 more years on your credit, and they can refile over and over until it is paid.

Melissa Douros Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection. With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.

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4 Responses to Questions About Collections: Statute of Limitations on a Credit Report

  1. Pingback: Questions About Collections: How Much Time Can A Collector Collect on a Debt?

  2. Pingback: credit report

  3. mario bain says:

    do ipay off my debt and close them out or not

  4. mario bain says:

    how can i fix my credit i have no credit card bill just hospital bill etc

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