Ride Free Fearless Money

Let’s be honest: credit reports can be stressful and there are few comparable feelings to knowing a collection call could come. Breathe. You have strategies to handle this.

Here I wrote a blog post about getting credit cards and checking your CREDIT SCORE, so check that out here*. This post is more detailed about what to do with the information on that report, or if you just need to handle debt/collections calls.

WHEN THERE ARE THINGS ON YOUR CREDIT *REPORT* YOU WANT TO DEAL WITH

A federal resource with template letters for disputing things on your credit report with the credit bureaus themselves:
http://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report

WHEN THERE ARE REPORTS OF DEBT YOU WANT TO ADDRESS WITH THE REPORTING COMPANIES

You’ll also potentially need to contact the organizations who are claiming you owe them money, to either ask them to prove it and/or ask them to contact you [or not] in certain specific ways.

For starts, this link from the US Consumer Finance department provides sample template letters you can send to people who are trying to collect debts from you to manage the situation. You may want to look it over and start with: http://www.consumerfinance.gov/blog/debtcollection/

Situation A – you have no idea what this is or why its on your credit report

Letter essentially saying “What is this debt you speak of, please provide proof?” This is a first step, since if they can’t “prove” you owe anything they must pull the blip from your credit report.
http://www.creditinfocenter.com/forms/sampleletter10.shtml

Situation B – you know exactly what this is and want them to stop calling you about it

From ConsumerFinance.gov:

Consumers have the right to tell a debt collector to stop all communication. It is important, however, to note that stopping contact from a debt collector does not cancel the debt or prohibit the collector from potentially pursuing other remedies, such as filing a lawsuit. This letter template could be beneficial for those consumers who feel they are being harassed by a collector’s communications. Download the “stop contact” letter

OLD DEBT

Every state/province has a statue of limitations for how long creditors can go after you for debt you may or may not be responsible for. If the debt is old, try:

Letter essentially saying “Creditor, stop harassing me for debt out of the statute of limitations or you owe me legal fines under FDCPA and I’ll call the Attorney General”:
http://www.creditinfocenter.com/forms/sampleletter20.shtml
ps this is called Zombie Debt

PRO TIPS

Never Admit You Owe: Until you are ready to make a settlement or pay up, speak of this supposed debt in the third person, like a distant cousin you just found out you were related to. “What? Who? Please verify.” Why? Because the timeline for the statute of limitations *starts over* when you assert responsibility for a debt.

Keep Copious, Detailed Notes: Record the dates, time, full name, phone number and extension, related client account & collections account numbers each and every time you talk to anyone about a debt, whether you believe you are at fault or not.

Use Certified Mail: Sending followup via certified mail does two things. One, it makes it look like you have a lawyer advising you, since certified mail is admissible in court. Second, it is admissible in court as evidence of your actions/good faith/proof of agreements et al. Send a copy to the creditor and to yourself, and anyone else who might be interested.

Invoke the Law: Both the Fair Debt Collection Practices Act [FDCPA] and the Attorney General in any state are resources you can invoke to make a collections agency stop harassing you, since you can threaten to sue and/or report them to the authorities, who will fine them.

Get all agreements in writing, before you pay and before you agree to pay. Send certified mail of your understanding of an agreement and with whom you spoke and when stapled to your check.

Seven Years to Freedom: Unpaid debt that has been reported to credit agencies stays on your credit report for 7 years. After 7 years, it’s gone. So, some debt might just be worth deflecting if it’s old.

LIMITATIONS ON DEBT

Listen. Much consumer debt will go away.** After 7 years it’s off your credit report, and usually its statute of limitations – the time you can be legally pursued for the debt — is less than that.

New York State rules: https://www.nycourts.gov/courts/nyc/civil/consumercredit.shtml

The NYS statute of limitations on debt is at most 6 years *from the date of default*, that is 30 days after you last made any kind of payment or admission that you owe the debt.

Please note: if you for example make a partial payment now, but perhaps didn’t get a written agreement that this will vacate the debt, in theory the creditor could “renew the debt” for another 6 years and claim the rest of the debt as delinquent.

Deep breathing: You can handle this. It freakin sucks AND you can take steps to manage collections, debt, and your credit report. How? By doing One Thing Today. Just one, then do it tomorrow – just one – and so forth.

*Reminder, you can request your credit *report* online for free here. Be sure to ask for reports from all three reporting agencies and PRINT or save as a PDF on your computer so you have a copy! https://www.annualcreditreport.com/requestReport/landingPage.action

**Unlike student loan debt which never goes away or and tax debt, which only is dischargable in bankruptcy and even then only in certain circumstances.