Archives for "Statute of limitation"
Credit Repair: Collection Solutions
Getting contacted by a collector is never a good thing. But there are laws that govern the behavior of collectors, and there are steps you can take to control the situation. Here are the rights and remedies that anyone facing a collector should know.
Fair Debt Collection Practices Act (FDCPA)
The FDCPA is the consumer protection act designed to prohibit abusive practices by debt collectors. The FDCPA specifically defines a collector as any person that collects debts owed to others, and may include attorneys that collect debts on a regular basis. Note that the language indicates “debts owed to others”, and therefore excludes original creditors from its scope.
Getting Started
When a debt collector initiates a collection effort they must send you a written notice indicating: 1) How much you owe, 2) The name of the creditor to whom the debt is owed, 3) Notice that unless you, within thirty days after receipt of the notice, dispute the validity of the debt or any portion thereof, the debt will be assumed valid by the debt collector, 4) That if you dispute the debt in full or in part within thirty days, the debt collector will obtain verification of the debt and mail it to the consumer, and 5) Upon written request within thirty days, the debt collector will provide you with the name and address of the original creditor, if different from the current creditor.
Exercising Your Rights
Your rights under the FDCPA, as indicated above, allow you to dispute the validity of the debt in full or in part within 30 days of receiving written notice. Your legal rights, as in all credit repair efforts, are the tools that you will use to establish the facts. An extra benefit of disputing the validity of the debt is that the collector must cease all communication until they have furnished the documentation that you have requested. In many cases, especially with older debts where documentation could be hard to obtain, you may never hear from the collector again.
Bringing an Attorney into the Picture
If you have an attorney, the debt collector must contact the attorney instead of you. This is a good way to put an end to abusive collection calls. The collector will undoubtedly be on best behavior when communicating with an attorney and a good deal of grief may be avoided. In many cases unscrupulous collectors sense weakness in the consumer and take advantage, often acting illegally to extort payment. We highly recommend hiring an attorney for anyone that feels out of their depth and uncomfortable when speaking with a pushy collector.
Cease Communication Letter
If you would like the debt collector to stop contacting you altogether you can send a letter asking them to stop. Once they receive your letter, they are allowed to contact you only one additional time for the purpose of telling you that they intend to take a certain specific action. This strategy is often recommended by credit repair companies, but be aware that in some cases, especially with recent or large collections, your letter may push the collector into taking legal action to recover, such as filing a lawsuit.
Statue of Limitations
Statutes of limitations (SoL) for collecting debt are typically far less than the SoL for reporting on your credit report. Debts may be collectable through the courts for as little as three years. If a debt is beyond the SoL the collector may attempt to pursuade you to pay, but as he cannot enforce the collection, his efforts have no “teeth”. Communicate your knowledge of the SoL to the collector. As an aside, should a collector attempt to collect a post-SoL debt by filing a lawsuit, you must appear and raise the SoL defense to have the lawsuit dismissed. It is also crucial to understand that the SoL clock starts with the original creditor. For most states the clock starts on the day you made your last payment on the account. This date can not be reset by the passing from creditor to collector, or from one collector to another. But beware that in some states partial payment can reset the SoL clock. Check your state statutes of limitation, easily found on the internet, or speak with a credit repair expert before assuming anything.
Bad Behavior
The FDCPA prohibits a wide range of specific inappropriate behavior by collectors. Prohibited practices include contacting you before 8 a.m. or after 9 p.m., calling you at work if you tell them that your employer does not approve, use of threats, obscene language, repeated calls designed to scare you into making payment, implying affiliation with the government, or implying that you have could be arrested for not paying a debt. In the credit repair business we are regularly asked about specific collection practices. Many of the stories we hear detail outrageous and illegal behavior…
Pick up the Phone
If you feel that a collector is behaving in an improper or illegal manner, the ultimate resource for answers is the FTC. If you find yourself on the telephone with a collector in such a situation it is entirely appropriate for you take careful notes: Ask their name (the FDCPA prohibits the use of false names), ask them to repeat anything that you are uncomfortable with, and then call the FTC. They welcome phone calls. The toll-free number is (877) FTC-HELP. That’s easy!
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Statute of Limitation Tips
Statute of Limitation Violations
The Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACTA) amendment to the FCRA of 2003, is the federal legislation that governs the credit reporting industry. Statutes of limitation for reporting time limits are provided by this legislation. Knowing how these time limits work is essential to any effective credit repair effort.
In Plain English
Let’s try to put some of this jargon into plain English. The term “statute of limitation” in the case of your credit reports, simply refers to the maximum amount of time that a derogatory item can continue to be reported. When the statute of limitation passes for any negative item on your credit report, that item should vanish. There are an amazing number of violations of these time limits that may appear on your report. Some violations are intentional as in the case of many of the collection accounts that we see, and others are due to a simple failure of the highly complex credit reporting system. A careful credit repair effort can eliminate these violations.
An Interesting Point
In a moment we will review statutes of limitation for the most common types of derogatory information. But you might find it interesting to know that the Federal Trade Commission permits the credit bureaus to delete information at any time at their discretion. There is no requirement that the bureaus wait until the passing of a statute of limitation date to stop reporting.
Collections and Charge Offs
Collections and charge offs must cease reporting seven years plus 180 days from the initial delinquency that led to the collection status or to the charge off. The initial delinquency is the date of the first 30 day late status that led to the collection or charge off. This period of time cannot be reset by any subsequent payment or for any other reason. The clock starts with the original creditor. Collectors such as assignees, attorneys, or collection agencies must abide by the same original statue of limitation expiration date. Neither the original creditor nor collectors can extend these reporting limits. Any attempt to do so is illegal. Unfortunately this law is often ignored. Effective credit repair efforts require a very exacting examination of these dates.
Bankruptcy
Chapter 7 bankruptcies can report for 10 years from the discharge date. Chapter 13 bankruptcies can report for 7 years from the filing date. But be aware that if the Chapter 13 is not completed the reporting limit is extended to 10 years. I mentioned above that the credit bureaus are allowed to delete information from your report prior to the expiration of statute of limitation. Any credit repair effort should take this flexibility into consideration. Bankruptcy is a case where we highly recommend requesting removal. If you are five or more years past discharge your request may be honored.
Tax Liens
Paid tax liens can report for 7 years from the date of payment. Unpaid tax liens can report for as long as they are in effect. Please be aware that most unpaid tax liens are released by the IRS after 10 years. The IRS will usually provide a lien release upon request after the 10 year limit has past. When you provide the release to the credit bureaus they will cease reporting. There are cases that allow the IRS to re-file. Please speak to your CPA or tax attorney for clarification before contacting the IRS!
Judgments
Generally, unpaid judgments will cease reporting 7 years after the filing date. However, unpaid judgments are a case where state statute of limitation will overrule federal statute. Your state may allow unpaid judgments to report for longer than 7 years. State statutes of limitation are easily found on the internet. Paid judgments may be reported for 7 years from the filing date. No state statutes may overrule federal limits for paid judgments.
Gone but Not Gone
Derogatory information that falls off of your credit report due to an expiration of the statutory time limit does not get deleted. This obsolescent information should not continue to appear on your credit report, but it is not gone. If you apply for a loan for over $150,000, life insurance with a death benefit over $150,000, or a job that pays over $75,000, your potential lender, insurer, or employer has the right to view your prior history. This fact adds some additional support to the case for credit report vigilance. If you are attempting credit repair and have erroneous info on your report it is best to dispute it now. Waiting for the statue of limitation to pass may not produce the clean result that you want. Disputed items that get deleted are literally removed from your credit report.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.