Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Steward Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets. Ask Sally a question, or read her previous answers in the To Her Credit archive
Dear To Her Credit,
About three months ago, I received a notice from a collection agency that I
have a bill from a jewelry store. The letter was addressed to my maiden name
with my current address. The bill is 15 years old and from a store the
collection agency says has closed. I have no memory of buying anything from the store. I called and asked for
verification, and they sent a letter with the name of the store, an account
number, the balance and the last four digits of my Social Security number. Not
much else. The bill is for about $300 ($170 principal plus $130 interest). They
said we could just pay $170.
What information should they have to provide to show it is our bill? How do
we prove it is not ours if the store has closed? It may have been a case of
identity theft. If so what should we do? We live in Texas and the collection
agency is in Michigan.We are tempted just to pay. We want them to go away. -- Faye
No, no -- don't pay them just to go away! This case sounds like fraud to me,
and if you know your rights, they don't stand a chance of collecting from you.
Few of us remember everything we bought 15 years ago, but we'd probably
remember $170 worth of jewelry. In fact, we'd probably still have something to
show for it in our jewelry collection. I doubt this is yours.
The collection agency is counting on your memory of so long ago being a bit
fuzzy, however. How convenient for them that the store is closed.
Texas law is on your side, fortunately. The statute of limitations in Texas
is just four years. (Check out the statutes of limitations for all states.) That means they are asking you to pay what's called time-barred debt -- debt they cannot successfully collect. Not by demanding it, not by threatening you, not by suing you. They can't legally collect it.
States have statute of limitations laws to keep people from popping up with
bills like this long after anyone can remember the details or find any records
or witnesses with which to defend themselves. In the case of a dubious bill
from long ago, it's hard to prove you didn't buy anything. Many people
will do as you suggest and pay the bill to make it go away. Some people even
make small payments -- the worst thing they can do because from the collector's
point of view that acknowledges the debt and [%Link?type=article&id=3623&text="restarts the statute of
Instead of giving in, you should fight back.
You were smart to ask for verification. However, the evidence they've
provided is weak. Anyone could make up an account number and balance for an
out-of-business store, and the last four digits of your Social Security number
could easily be stolen. If the debt was legitimate, the debt collector should
have sent copies of your original credit application at the jewelry store and
statements. They should also have proof the debt was assigned to them.
All this is a moot point, however, due to the age of the supposed debt.
Simply write a letter saying the debt is not yours and is past the statute of
limitations of four years in Texas. Send the letter by certified mail and keep
If they persist in harassing you, go to a consumer law attorney. They often
give one free consultation. If the company is found to be in violation of
the law, they generally pay the lawyer fees.
Never reward scamsters by sending them money. If you won't fight back for
your own sake, think of the next victim, and the next, of this unscrupulous
collector. Take care of your credit.
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