Don't pay a collector's dubious old debt without firm proof

No! They can't collect and they're probably a scam

To Her Credit columnist Sally Herigstad
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, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

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

Answer for the expert

Dear 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 restarts the statute of limitations!

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 a copy.

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.

See related: Avoid restarting the clock on time-barred debt, Know your rights: Fair Debt Collection Practices Act, Debt collection sample letters

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Updated: 11-21-2017