A 10 Year Old Debt That I Have Has Been Sold To A New Collection Agency. They Are Now Reporting This As A New Account On My Credit File. In Texas, What Are My Rights?
I am glad that you included your location, so I could do some research on your state laws. The Fair Credit Reporting Act, which is a federal law, would give you the right to challenge any item that is 7 years or older. The age of the debt is determined by the date of last activity. This would generally be established by the date of your last payment on that debt.
From what I was able to find online, Texas has a very unusual position on these kinds of situations. They have a statute of limitations of 4 years on the legal timeframe for a debt to be collected (as do most states, but typically from 5 to 10 years). This should mean that 4 years after the date of your last payment, that debt is no longer legally owed (If the creditor has gone to court and sued you and obtained a judgment, that is enforceable for a much longer period). Of course, I am not an attorney and there may be exceptions to this that would have to be considered. Oddly enough, even though the debt may no longer be legally enforceable after 4 years, Texas allows the debt collector the right to continue to take collection action. This includes placing the item on your credit report as a bad debt, making collection calls, sending letters, etc… One might wonder, why would a debt collector pursue a debt that is not legally enforceable? The answer is that some people will pay just due to the harassment of the collection efforts (letters & phone calls), to repair their credit, etc…
The good news, is that Federal Law takes precedence over State Law. If you can establish a 7 year period from the date of the last payment on this debt, you should be able to have this item removed from your credit report completely. This would be done by writing a dispute letter to the credit bureau. Sample dispute letters for this purpose and many other kinds of disputes are available in my credit scoring e book. We also have a letter that will stop the phone calls as well.
If you feel that you actually do owe this debt and have the ability to pay it, you should do so simply for moral reasons. If the debt has inflated to an amount several times what you originally owed (due to various fees, penalties, and interest), you should be able to get a debt collector to settle for the actual original amount or maybe even less. Collection agencies buy bad debts for sometimes as low as a penny on on the dollar! Settlements can be for a fraction of what you owe (many times a third or less). If you are settling a debt that is beyond the statute of limitations, you should be able to do so for a very reduced amount.
Agree or disagree, click on comments below.
My main website is www.ChristianMoney.com
James L. Paris
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