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Ask Dr. Don

Multiple listings of negative information on my credit report

Dear Dr. Don,
I hope you can help me. Before I question the credit reporting agency, I want to make sure what the rules are concerning this.

Can different entities report the same debt more than once? I have an adverse listing on my credit report for a credit card by the original debtor. They charged the debt off and sold it to a collection agency. I settled with that collection agency, and the debt is settled. However, there are two adverse references now on my credit report for the same debt. The original bank lists it and also the collection agency. Is that right?

I never entered an agreement with the collection agency. My lending agreement was with the original debtor. So why are they able to enter an adverse remark against me?

I understand that something will be referenced concerning the credit card debt, but I don't think it should be entered twice. The collection agency lists the same delinquency information as the original lender. I need to know what the regulations are concerning this before I complain to the credit reporting service. I want to clear this up, not make it worse. Any help you can give me will be greatly appreciated.
JF Journal

Dear JF,
When a creditor charges off a debt and sells the obligation to a collection agency, the payment history with the creditor remains on your credit report. If the collection agency is also unsuccessful in collecting on the debt, then they will report your nonpayment as well. Showing the payment history for the collection agency continues the payment history on the debt. Having the creditor charge off the debt doesn't remove your obligation to repay the debt. They're just classifying the debt as a nonperforming asset.

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That's the bad news. The good news is that seven years from the first negative listing for the credit card, all negative entries concerning this payment history will be removed from your credit history, including the collection agency's account information.

Two exceptions to this seven-year de-listing of negative information can occur: either when you file for bankruptcy; or the creditor wins a judgment against you. File for bankruptcy and the bankruptcy appears on your credit report for seven years with a Chapter 13 bankruptcy and 10 years with a Chapter 7 bankruptcy petition. Accounts included in the bankruptcy petition will also be reported for seven to 10 years from the time of the petition.

If the collection agency sues and wins a judgment against you for nonpayment of the debt, the judgment stays on your credit report for seven years from the date the judgment is filed. Collection agencies that haven't received payment will often threaten to sue toward the end of the initial seven-year period even though the debt may not be enforceable based on the applicable statute of limitations on the debt.

A promise to repay, partial payment or a regular payment on your part could restart the statute of limitations. Consult with an attorney before responding to a creditor's threat to sue for payment.

-- Posted: Nov. 21, 2002

Read more Dr. Don columns
See Also
5 ways to improve your credit
Step-by-step guide to credit cards
Financial advice glossary
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