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The Basic Rules Collectors are governed by the Fair Debt Collection Practices Act (FDCPA). Collectors do not always play fair, so it is best if you know the rules. Collectors cannot report a collection to the credit bureaus unless they have sent you a letter detailing the debt and the identity of the original creditor. They must also provide an explanation of your right to challenge the debt within thirty days of receiving the letter; if used properly this is a powerful credit repair tool. Read that Letter If you receive a collection letter don’t be intimidated. Collection letters provide a thirty day challenge period. The collection industry is far from perfect. If you are in a credit repair program you are probably aware that debts are sold and resold. Many are past the statute of limitations for collectability. Some are past the reporting period limits for the credit bureaus. And a surprising number of collection letters are sent to the wrong people altogether. Evaluate the Issue Don’t jump to any conclusions. Is the debt yours? Did you pay the original creditor? Was the debt discharged in a bankruptcy? Is the amount correct? How old is the debt? You have more rights than you think. Many people needlessly pay collectors for debts that are beyond the stature of limitations, and even past the time limits for reporting to the credit bureaus. An intelligent credit repair effort is always economical. Don’t throw your money away. Understand Your Statute of Limitation The statute of limitation for collecting through the courts is often misunderstood. Statutes of limitation are state and debt type specific and are, in almost all cases, far less than the seven year reporting period limit for credit reporting. State statutes of limitation for credit card debt, for example, range from 3 years to 6 years, except for Wyoming, where legislation favors collectors by providing an 8 year limit. Count Your Statute of Limitation A large part of every credit repair effort involves researching dates and may take a bit of work. Use Time Limits for Credit Repair Success What does this mean for your credit repair effort? If a collection is beyond the statute of limitation the collector cannot get a judgment. Many collectors bank on debtors not knowing this fact and rely on the implicit threat of legal action to encourage payment. The collector can report the debt to the credit bureaus until the reporting period expires, but nothing more. Here is a great credit repair tip. If you let a collector know that you are aware of the statute of limitation they should be happy to negotiate a much smaller payment. Or if you don’t want to pay, you can wait it out without fear. Check Your Reporting Period Limits The reporting period limit for most derogatory information is seven years. The time limit starts with the date of original default. Here again, the default date was the date of the first missed payment. If you were thirty days late in January of 2003 and never made another payment, your default date is January of 2003. Check the dates carefully. Most people in programs are aware that the dates on credit reports are often inaccurate. Double check everything. Validate the Debt Now that you have examined the collection letter and determined your rights it is time to challenge the debt; this is called debt validation, and is useful for your credit repair effort even if you identified the debt as legitimate. If you request the validation of a debt within thirty days of getting a collection letter the FDCPA requires collectors to provide proof they have the legal right to collect and an objective accounting of the amount they say you owe. An objective accounting of the amount should originate from the original creditor. Dealing with Aggressive Collectors If you find yourself being harassed by an aggressive collector there are a variety of tools you can use to stop the annoyance. If the debt is beyond the statute of limitation you can send a letter to the collector demanding they cease all communication immediately. The FDCPA requires that they comply with your request. If the debt is within the statute of limitation the use of a cease communication letter may be a strategic credit repair error, as the collector may opt to sue in response. But it might help to know that you can ask them to stop calling you during working hours by telling them that your employer does not approve of you taking calls. Copyright ? 2007 James W. Kemish. All Content. All Rights Reserved.
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