 New debt collector, new threat to credit?
|  Dear
Debt Adviser,
I'm currently disputing a debt stemming from the birth of my daughter in 2001. The collection agency advised me that my debt is to fall off of my credit report in August 2008, but they are threatening to place the debt back on my report by issuing it to another credit bureau. I'm still disputing and they are also saying that due to my dispute (which is not written) I am subject to another seven years of collection because the debt is now back open. I'm confused. Is any of this true or just scare tactics? I live in the state of Kansas.
-- Cindy
Dear Cindy,
No, and yes. I don't mean to sound like Gotham City's
Riddler, ("When is a collectible debt not collectible but still a debt?"),
but the answer to your question is not as obvious as it first appears. No, they
can't put the debt back on your credit report. But yes, you may be subject to
further collection actions.
The Fair
Credit Reporting Act
is specific on the seven-year reporting period. The date the clock starts ticking
is from the date of the original delinquency, which the act defines as the date,
"with respect to any delinquent account that is placed for collection (internally
or by referral to a third party, whichever is earlier), charged off to profit
and loss, or subjected to any similar action, upon the expiration of the 180-day
period beginning on the date of the commencement of the delinquency which immediately
preceded the collection activity, charge to profit and loss or similar action." In
general and in short, in seven years, six months, the debt would have to be removed
from a credit report. The act also provides rules for reporting
delinquent accounts. The person furnishing the information (the collector) to
the credit bureau must supply the date of delinquency from the original creditor
if the original creditor previously reported it.
If the original
creditor did not report the delinquency to the credit bureaus, then the collector
must contact the original creditor to secure the delinquency date. If the date
is not available, then the collector must use reasonable procedures to ensure
that the date reported to the credit bureaus is accurate. What
does this mean? This collector is trying to scare you. Let the collector know
that if he or she does make good on the threat to report the debt inaccurately,
that you will dispute
the item, contact the Federal Trade Commission and report the action. But
wait, as they say on those infomercials, there's more! The
seven-year reporting period is only one of three aspects that come into play when
you owe a bill significant enough to attract collectors. The other two are your
local statute of
limitations
and the last one is old-debt
reselling. Just because a debt is more than seven years
old, it does not mean you don't owe it or that collectors have to stop contacting
you. Your state statute of limitations will set the time by which the debt is
not legally collectible. Check with an attorney to see what your state uses. Even
when the statute of limitations has run out, collectors may still call if the
stakes are high enough. A debt that is not legally collectible can be sold for
a few pennies on the dollar to a collector who may still try to collect it, even
though they no longer can bring a lawsuit or take other legal action against you.
For example, if you lent money to a friend, they never paid you back, and you
ran into them years later, you would ask for the money. There would be nothing
you could do about it, but you'd ask, and you might ask more than once. Same thing
here. So, I suggest you try to resolve the dispute by paying
what both of you think is fair and having the bill reported as paid in full. Then
you can put all this behind you. Good luck! The
Debt Adviser, Steve Bucci, is the president of Money Management International
Financial Education Foundation and the author of "Credit
Repair Kit for Dummies." Visit MMI
for additional debt advice or to ask a question of the Debt Adviser go to the
"Ask the Experts" page
and select "debt" as the topic. | 
