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.
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.