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Billing error? Here's how to fix it

You pay your bills and have great credit. Still, a collections agency is hounding you for a debt that you don't recognize, you've already paid or is too old to be collectable. Now what?

The law is on your side, but you have to get moving to protect your credit. Here's what to do:

As soon as you discover the problem, send a letter to the creditor, collection agency and all three major credit bureaus. (You can address the original to either the collection agency or creditor and send duplicates to the others.)

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When writing to the credit bureaus, simply address the letter to the attention of the general counsel or supervisor of the legal department, says David A. Szwak, a consumer credit attorney and partner with the Shreveport, La.-based firm of Bodenheimer, Jones, Szwak & Winchell LLP:

1. Detail the problem and the actions you expect them to take. For example, if someone else's debt has been included in your credit report, you want them to go back and correct your records -- and to refrain from including the debt in future reports.

2. Include your name, address, account number (if you have one) and Social Security number. Blank out your Social Security number on copies going to third-party collection agencies (or to a creditor with whom you do not have an account).

3. Keep a copy of the signed letter.

4. Send the letters certified mail, so you can prove all parties received them.

At this point, the creditor, the collection agency and the credit bureaus are required to investigate the debt, verify that it's correct and that it's really yours. They have 30 days to validate it or correct your records. If they continue to insist the bill is genuine -- or just do nothing -- you have two options:

  • File an amendment to your credit report with all three reporting bureaus. This is a statement that will explain your side of the matter and is required to be included in your records each time the debt is reported. But this notation will not clear up your credit rating. It also doesn't guarantee that the debt won't be held against you.
  • Sue. You can sue the original creditor, the collection agency and the credit bureau refusing to correct your records. Depending on the suit, you could collect attorneys' fees and punitive damages, as well as any money that the inaccurate report cost you. (For instance, if you were denied a 6-percent rate on a home loan, and had to settle for a 10-percent rate, you could collect the difference over the life of your loan.) You can find an attorney who specializes in consumer credit cases by contacting the National Association of Consumer Advocates.

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: March 11, 2002

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See Also
How to deal with a debt collector
Setting up a debt-payment plan
Bad credit? You can still borrow
7 steps to fixing your credit report
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