USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

What to do when collectors pursue your time-barred debt

By

Credit Care
'Credit Care' columnist Kim McGrigg
Kim McGrigg is Community Manager for Money Management International, where she provides personal finance education information to consumers.

Ask a question

'Credit Care' archives

Question for the CreditCards.com expert

Dear Credit Care,
Hello there. About eight years ago, I had an accident that prevented me from working. I am a helicopter pilot. Because of this, I couldn't pay my bills for about one year. Some of those bills are still showing on my credit report with different companies trying to charge me. I live in Texas. I tried to work things out with them, but they were very offensive to me and my family, so I decided to ignore them. How long can they charge me for? And how, if at all possible, can I make them remove everything from my credit? It has been over eight years. Thank you very much. -- Jaime

Answer for the CreditCards.com expert

Dear Reader,
It is unfortunate when a disruption in employment and income causes these types of financial woes. It sounds as if you have your financial life back on track, save for these few collection accounts. It also appears that you have had a negative experience with the collectors so far, and it is understandable that you no longer want to communicate with them.

You have a couple of options concerning these debts. The statute of limitations for collecting a debt using the courts in Texas is four years. Other states have different time periods for collecting debt and some different time periods for different types of debt. (You can learn more from the CreditCards.com feature "Credit card statute of limitations, all 50 states.")

The clock starts on the statute of limitations when your payments on the account became overdue. In some states, the clock may also restart with any payment that is made on the account or other actions. So, in Texas, at least four years would have had to pass without you making any payment. However, even though the statute has expired, the debt is still yours, and the collector can continue to contact you and seek payment, though they still must follow the rules outlined in the Fair Debt Collections Practices Act.

In addition, I recommend that you keep a close watch for mailed correspondence from the collectors stating they are filing suit. The debt cannot be legally collected, but if the collector files a suit, and you don't show up or provide the requested paperwork using the statute of limitations as your defense, the court may find in favor of the collector. So, your first option is to continue to ignore the collectors while keeping an eye out for any mail from them to avoid court-ordered payment in the form of a judgment.

Your second option is to seek the assistance of a third-party to help negotiate with the collectors on your behalf. You could contact an attorney who specializes in working with consumers on collection activity issues, or you could contact a nonprofit credit counseling agency. Both a certified credit counselor and an attorney can communicate with the collectors on your behalf and work out a repayment plan that is affordable for you.

Whatever action or nonaction you choose to deal with the collectors, be sure to contact the three major credit bureaus (Equifax, Experian and TransUnion). You should note the presence of the old accounts on your report, since the issues happened more than eight years ago, and request they be removed. That's because the Fair Credit Reporting Act typically allows negative items to remain on your report for only seven years. You can dispute the items online at the credit bureaus' websites or through the mail. You will need to have a copy of your credit report from each bureau to make the disputes. If you don't already have your free annual copies, you can get them at AnnualCreditReport.com.

Handle your credit with care!

See related: Avoid restarting the clock on time-barred debt, Pros and cons of paying off old debt, State statutes of limitations on card debt, 5 key laws that protect cardholders

Kim McGrigg is the community manager for Money Management International, the largest nonprofit, full-service credit counseling agency in the United States. You can find more money management advice on Blogging for Change and MMI's Facebook page.

Credit Care answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to Credit Care.

Published: October 24, 2011



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Three most recent Credit Care stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 10-20-2014

National Average 15.07%
Low Interest 10.37%
Business 12.80%
Balance Transfer 12.82%
Student 13.14%
Cash Back 14.98%
Reward 15.05%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

ADVERTISEMENT
ADVERTISEMENT