Old Bills and Charge Offs

Losses of employment, divorce or a death in the family are just a few of the reasons people forget or are unable to pay their bills. When a debt goes unpaid for longer than 180 days or more, a creditor can discharge the bill via a charge off.

When a creditor deems an account as charged off, they transfer the account to their bad debt ledger. Once the debt receives this designation, the creditor can seek the assistance of a bill collector or sell the outstanding balance to a collections agency. If recovery attempts fail, the third-party debt collector can then elect to sell the bill to yet another collections entity. Bill collectors trade frequently in old bills and charged-off collection accounts. The act occurs so often that there is a good probability that some, if not most, of the original account documentation is lost.

Older bills and charge offs are collectable for only a limited period. In addition to each state’s statute of limitations on debt recovery, the Fair Debt Collection Practices Act (FDCPA) governs how debt collectors and their collection agencies may behave when attempting to collect a debt.

For example, although a debt collector may call you and demand payment on this type of long-forgotten account, the FDCPA prohibits them from telling whomever they please about it (like your boss or a neighbor), calling in the middle of the night, or using foul language or a threatening tone of voice, among other prohibitions. Moreover, it requires bill collectors to be able to “validate” the debt against a list of consumer protection requirements in order for them to collect or even report the alleged debt. Incidentally, it is this last requirement that credit repair attorneys may be able to leverage in order to improve your credit report on your behalf.

When dealing with debt collectors by phone, the best approach is to say as little as possible. Regardless of the pressure tactics employed, refrain from acknowledging the debt or agreeing to any form of payment arrangement. In some states, acknowledging that you owe the outstanding balance is all it takes to turn an old debt into a new one. The best way to respond to a collector attempting to recover an old debt if you’ve decided to address the matter on your own is to obtain their contact information, say goodbye and hang up the phone. Then write the collection agency a letter asking for specific information about the old bill. Without acknowledging ownership of the debt, request that they send you the date of last payment, the name of the original creditor and proof that they are a bonded collection agency for your state.

Once you receive the collector’s information, review a copy of your credit report from each of the three major credit reporting agencies — Equifax, Experian, and TransUnion. Remember that another federal statute, the Fair Credit Reporting Act (FCRA), requires the credit bureaus to remove charge off accounts from your credit report no later than seven years after the date of last activity. It is unfortunate, though, that your credit reports will not link collection agency listings with their original creditors. For that reason, a single alleged debt can become listed multiple times on one credit report, a common condition that likely violates your protected consumer rights. Regardless of how many times the debt is sold, the delinquent balance should only be listed once on your credit report. Again, a credit repair law firm may be able to assist in removing such examples of unfair credit reporting.

Moreover, in the event the original creditor sold the debt to a third-party collector, make certain that your credit report reflects only the date of the charge off, not the date the collections agency acquired the outstanding balance.

Legally, the bill collector cannot change the charge off date on purchased accounts. Purchasing a charge off from an original creditor is supposed to make no difference in the length of time the derogatory information stays on an individual’s credit report. However, some debt collectors have demonstrated unscrupulous behaviors. In an attempt to breathe life back into old bills, they will alter, or “re-age,” the charge off date — an error that can severely lower your FICO score

If you are unable to locate any information about an old bill on your credit report, it is possible the collector is attempting to hold you liable for an outstanding balance that does not belong to you. Each year, many Americans pay bills just because a threatening bill collector demanded it. Alternately, it could also mean the old bills are so antiquated that the credit bureaus have dropped it from your report. Moreover, it is possible that your state’s statute of limitations on the bill has also lapsed and the debt is no longer legally collectable.

Charge offs, collections statutes of limitations and disputing old bills with the credit bureaus can be a long and perplexing task. Crafting legal intervention letters and making phone calls takes time away from family and other loved ones. Since 1991, Lexington Law Firm has helped consumers reclaim their personal time while taking action on their bad credit. Our credit repair services are innovative and proven and affordable. If you are ready to get started on credit repair, start now by taking advantage of our free online consultation, and save your valuable time for the people and tasks you love the most.