Restore healthy credit after illness

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Dear Debt Adviser,
I was out of work for more than five years due to illness. Now I don’t know what to do. All my accounts are in collections and they seem to become new debt every few months with a new collector. How on earth do I clean up this mess? I would just like to get my life back, but I am not even sure that if I paid these that it would make any difference. Several items should have dropped off my credit report because of the seven-year limit, but they keep reappearing. I am no longer even sure it’s my debt. Help!
— LA

Dear LA,
First things first: Focus on the fact that you are healthy again and back to work. Take a breath. Things are actually pretty great and what isn’t great, I can help you with. I admire your desire to get back on track financially and pay what you owe.

You have two separate things to deal with here. One is your credit report and the other is your old debts. Let’s look at your credit report first. You may have out-of-date accounts as well as errors on your reports. Once you have all three reports from the credit bureaus (go to, follow the dispute procedures to have any negative accounts more than seven years old taken off. Some debt, like student loans and IRS obligations, stay on until you pay them. All the other oldies should come off once you ask. You will hear back from the bureaus in 45 days or so telling you what action they took on your disputed accounts.

Also, dispute any accounts you don’t recognize. The bureaus get billions of pieces of data every month, so stuff sometimes ends up on the wrong report. Periodically recheck your credit reports to ensure that any removed accounts don’t return erroneously.

Your second issue is handling the debt collectors. Using the contact information on your credit report, send a letter to each of the collectors requesting verification that the debt belongs to you. The Fair Debt Collection Practices Act, or FDCPA, requires that any collection attempt stop until you are provided verification.

Once you have a better idea of what you actually owe, check your state’s statute of limitations for each type of debt you owe. Any debts over the statutory limit can’t be collected in court. So you’ll need to write the collectors and tell them you know these debts are past the statute of limitations and you don’t want to be contacted about them again. If they sue, consult an attorney about suing them back under the FDCPA. If they knowingly threaten action they don’t intend to take, or if they take you to court knowing the debts are expired, they may be liable for damages.

For your debts that are still collectable, you’ll need a repayment plan. Prepare a budget that includes all of your income and spending. That way, you’ll know for sure how much you can pay each month. Then, arrange a payment plan or lump sum payment. If you can’t come to an agreement with your creditors, I suggest you try working through a nonprofit credit counseling agency. They may be able to cut through the clutter quickly based on existing contacts they have with most creditors and many collectors.

You are correct that paying these collection accounts will not immediately improve your credit report or credit score. Your credit will improve as you pay off accounts and add positive payment information to your credit report. My rule of thumb is that however long it took you to get into this mess is about how long it will take to get clear of it. So I’d plan on being back in good financial shape with an improved credit report and decent credit score in about five years.

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