Wednesday, October 8, 2014

Can a Debt Collector Refuse to Respond to a Debt Validation Letter?

If you're one of the many people who have received calls and letters from collectors regarding debts you weren't even aware existed, sending the collection agency a debt validation letter is one way to ensure the debt is yours before you pay it.

What many debtors don't realize is that, while federal law gives you the right to request debt validation, it doesn't require the collection agency to actually provide it. It merely prohibits the debt collector from continuing with any collection activity (except credit reporting) until it validates your debt. There are some situations, however, in which a collectors will ignore your debt validation request altogether.

1. The Validation Period Has Expired

A debt collector has all the time in the world to respond to your debt validation request, but you have a limited amount of time to send one. The Fair Debt Collection Practices Act notes that after its initial contact with you, a debt collector must send you a written statement notifying you that you have 30 days to send a validation letter.

You have 30 days to demand validation--don't squander it!


That doesn't mean that you can't request validation after the initial 30-day period expires: you can. After all, not everyone receives the collection agency's initial notification letter. Technically, the 30-day validation period begins when you first become aware of the debt. Proving that you weren't aware of the debt's existence, however, can be tough--especially if the collection agency is claiming it send you the required notification. So if the 30-day period has expired--regardless of the circumstances--the debt collector may use this as an excuse to ignore your debt validation request.

2. The Debt Collector Isn't a Third Party Collection Agency

The federal laws in the FDCPA that give you the right to demand validation only apply to third-party collectors. A third party creditor is any company that buys a debt from the debt's original creditor in order to collect it and make a profit. Collection agencies that recover debts on a contingency are also third-party creditors--even though they don't actually own the debt.

Some collection agencies, however, are owned by the debt's original creditor. Certain large credit card companies, for example, have a collections department owned and run by the original creditor itself. These "in-house" collection agencies aren't considered third party creditors and the FDCPA's collection laws do not apply to them. Thus, don't be surprised if they ignore your debt validation request.

3. The Collection Agency "Didn't Receive" Your Request for Validation 

Never send validation letters via regular mail.
If you send a debt validation letter but the collection agency never actually receives it, how will they know you even sent one? They won't. And then the validation period will expire and poof! The collector can now safely ignore any and all of your validation requests.

Of course, the odds of your letter getting lost in the mail are small. If you don't send it certified mail, return receipt requested, however, it doesn't create a paper trail. There's no proof that the collection agency received it and it may mysteriously vanish. Don't make this mistake. Send all communication with debt collectors via CRRR. Always.

4. Blatant Breaking of the Law

I almost hate to include this one because today so many collection agencies are mom and pop outfits that do their very best to uphold the letter of the law. Unfortunately, the following scenario does still occur and should be addressed.

Debt collectors (just like you hard-working folks) love loopholes. In the absence of loopholes, however, some collection agencies--mostly junk debt buyers--have been known to blatantly break the law. Because there is no time frame to adhere to, ignoring your debt validation letter isn't illegal--but, if you send your letter during the 30-day validation period, refusing to validate and continuing to conduct collection activity is.

Note: The one exception to this rule is credit reporting. A collection agency may report or update previous reports with the credit bureaus regardless of whether or not it has responded to your request for validation.

Why would a debt collector leave itself open for a lawsuit? It's playing the odds. Debt collectors know that filing a lawsuit without legal assistance is daunting for most people. If these debtors could afford an attorney, they likely would have paid their debts. In addition, few debtors truly understand their rights well enough to defend those rights in court without help.

Even if a small handful of debtors' sue and win, collection lawsuit awards are tightly regulated. In most cases, consumers can't expect to win more than $1000 per infraction (there are exceptions, but not many). If this gamble--even though its against the law--brings in more money than it costs, some collectors won't hesitate to take that risk.

5. Collection Agency Can't Validate--So It Doesn't

Debt collectors often buy debts in bulk. While this lets them pick up accounts on the cheap, it has its drawbacks. One common problem is that they may get very little information about the debt other than the debtor's name and how much he/she owes. They'll still pursue it, of course, but clearly aren't able to validate it.

The right thing to do for a collector that cannot adequately validate your debt is to cease all collection activity and "drop" the debt. They aren't supposed to sell it pending a validation, but many do so anyway.

Collectors rarely "drop" debts because there are no federal guidelines that establish what does and does not constitute legitimate validation. For this reason, a collection agency can send you a simple printout of how much you supposedly owe, call it validation and resume collection activity.

6. They Already Have a Judgment

If the collection agency has already sued you, won, and has a judgment against you, you can probably
Court judgment=validation not necessary
forget all about having your debt validated. They may send you a record of the judgment and they may not. Either way, a court of law has already deemed your debt legitimate and granted the debt collector the right to recover it. It's a fair bet that the collection agency will refuse to respond to any debt validation letter you send post-judgment. Any objections that arise at this point must be addressed by a court.


Related Posts:

Debt Validation After 30 Days

Does Requesting Debt Validation Restart the Statute of Limitations?

What To Do When a Collection Agency Validates Your Debt

Thursday, September 11, 2014

Q&A: I Changed My Name, Will Debt Collectors Find Me?

Dear Mr. Edwards,

Nearly three years ago I had a visit to the emergency room. I was sick for almost a month before letting my soon-to-be husband convince me to be seen, or rather force me. I had no insurance and was very hesitant to go. He paid the required $250 at the hospital with his credit card, and they told him that that was all that was owed for the entire visit and that we would not be billed for anything. What liars. 

Eventually I received a letter of collection for $500. I still have not paid it, as I've been either out of work or working part time, and now I am unemployed with a baby at home. At the time of my ER visit, I had a different last name and different address. I have since married, moved twice, and changed my phone number. My question is, will they still be able to find me in the next few years before the statute of limitations in my state goes into effect? 

What's more, will they have access to my husband's bank account and property and the ability to garnish his wages or place liens on his possessions? I am just so scared to track down my bill because I am afraid the amount has tripled by now, and there is absolutely no way we can pay it. But I am also worried that they can ruin my husband who has worked so hard for what he has, though it isn't much. Should I wait it out or take a risk and track down the debt? Please advise.

Thank you again for all your help.
God bless you.

J


J, 

I can understand your trepidation to go hunting down this debt. Hopefully I can ease your mind a little bit about some of your concerns. I'm going to separate my answer into sections. This makes it easier for you and future readers with similar problems to navigate between topics. 

Can the collection agency find you with a new name and address?

Technically yes, the collection agency can find you. The most likely method they'd use would be to locate you via your credit report. Your credit report should contain both your maiden name and your married name. It also contains your Social Security number which you probably provided at the hospital when you checked in. Just for future reference, I see no reason to provide an ER with your Social Security number if you're uninsured. They have to treat you regardless of whether or not you "remember" your SSN. 

When the hospital turned your debt over to the collection agency, it also turned over any information it  had on you: your full name, your address, etc. The collection agency plugged this information into its credit reporting software and boom! The software matches your information to the appropriate credit record. 

Changing your name, address and phone number may make you harder to locate for an individual, but for a collection agency with access to your credit reports, locating you wouldn't be rocket science. As soon as you update your name and address with your credit card company (or any other lender with whom you have an account that appears on your credit report), the credit card company updates its system to reflect your new information. That new informations subsequently gets reported to the credit bureaus and added to your credit report--which the collector, as a legitimate creditor, can pull and review at any time.

Can the collection agency enforce your judgment against your husband?

With the exception of government creditors, no creditor has the right to attach liens to property, seize property, garnish wages or levy bank accounts without first suing the debtor and obtaining a civil judgment. In most cases, creditors can't enforce your judgment against your spouse. Unless your husband was sued, he doesn't get garnished/liened/levied. 

The exception to this rule occurs in community property states. Community property states hold both spouses equally liable for debt. Now listen up, this part is important: Even if you and your husband live in a community property state, he is only liable for debts you incurred while already married. Your hospital bill was incurred prior to your marriage. 

So breathe easy. No collection agency can garnish him, seize property from him or freeze his bank accounts. Be careful though. A collection agency with a judgment against you can do those things to you, and if you share joint ownership of bank accounts and property, your husband's assets may still be at risk. State laws vary concerning what joint assets judgment creditors can and cannot seize. Wish I could be of more help there, but I don't know which state you live in. 

Check both you and your husband's credit reports 

Regardless of what you decide to do from this point on, you need to pull your credit report from all three credit bureaus. You can do this for free once a year without having to give a credit card number if you pull your reports through AnnualCreditReport.com.

Another issue you need to face head on is the prospect that your husband may have sustained some credit damage from this fiasco. Legally, he was only your boyfriend at the time you visited the ER and he was not (and still isn't) on the hook for that debt. He is, however, the one that paid the $250. Given the backwards and just plain ineffective way that many hospitals handle billing practices, its a good idea for him to pull his credit reports when you pull yours--just as a precaution. Credit reporting and collection mistakes are quite common.

What to do if you already have a judgment

It's very possible that the collection agency has already sued you and obtained a judgment against you. Any outstanding judgments should show up in the "Public Records" section of your credit report. Since you don't have a job, you aren't in danger of wage garnishment, but judgments are generally enforceable for ten years (some states differ, but not by much). If you get a job before the judgment expires and the judgment creditor still has its eye on you, you could face garnishment. And, like I mentioned previously, joint assets may be at stake. 

Depending on whether or not your state has a time limit for contesting judgments, you may be able to file a motion requesting a hearing to expunge an existing judgment. You have grounds to request such a hearing for a variety of reasons (once again, all this varies by state) but regardless of your state you should be able to contest the judgment if you were not properly served with a summons (which you clearly weren't). 

Waiting out the statute of limitations for debt collection 

You mentioned that you are flying under the radar waiting for the statute of limitations to expire, but we need to make sure that you're waiting out the right statute of limitations. 

Your original state's SOL freezes as soon as you leave the state and the SOL generally begins anew when you move to a new state (There are some exceptions, but this is the way it usually works). Now, if the creditor isn't aware of the fact that you moved away from your original state, the SOL clock continues to run until it expires. Its safer, however, to go by the SOL in the state where you live. 

Keep in mind that the SOL only protects you if you use it. A collection agency can still file suit after the SOL expires. If you don't respond to the summons and use the expired SOL as an affirmative defense, you could end up with a judgment on your record for a debt that was supposed to be time-barred. 

The likelihood of a lawsuit

Want more good news? You aren't a very good candidate for a lawsuit and the collection agency, if its found you, probably already knows that. You don't have a job and your husband is immune to legal action. The only real concern would be any major assets in your name, such as a home or car, that a collection agency could attach a lien to. 

Don't quote me on this because collection agencies are often unpredictable, but I strongly doubt they'd bother to sue you over a $500 debt (and no, it probably hasn't grown to immense proportions like you fear. We'll get to that in a minute.). That's a downright piddly amount compared to what some people owe and likely isn't even worth their time. 

Interest Charges on Collection Accounts

It makes sense to worry about interest on most collection accounts, but not on hospital bills. The Fair Debt Collection Practices Act states the following: 
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
Put simply, a collection agency cannot charge you interest on a debt unless a signed agreement between you and the original creditor gave the original creditor the right to charge interest. This refers primarily to credit card companies. Once a collection agency has the debt, it can continue charging interest and the debt skyrockets. 

The same isn't true of hospitals. They aren't creditors per se, they are businesses to whom you owe a single debt for a single service. They can charge whatever they want for their services (and often do) and so they have no need to charge interest to make a profit. If the hospital didn't charge interest, the collection agency can't either.

Additional Collection Agencies and Junk Debt Buyers

It would be nice if after a certain length of time a debt--and any liability attached to it--just vanished into thin air. Unfortunately, that doesn't happen. If the collection agency cannot convince you to pay, it will simply pass the debt on to another collection agency and the cycle continues. 

Keep in mind that after the statute of limitations in your new state expires, you'll have an airtight defense against any lawsuits you know about, but junk debt buyers are notorious for intentionally serving summons papers to the wrong address in an effort to procure a judgment in their favor by default--especially if the SOL has already expired. Be wary.

Also, the credit reporting period expires 7.5 years from the date of your hospital visit. When that happens, federal regulations prohibit collectors from reinserting the information. That doesn't mean, however, that junk debt buyers won't try to change the debts and add the collection back on your credit file long after the credit reporting period expires. I strongly recommend that you print out your current credit reports and keep your original hospital bills in the event you ever need to dispute the account if it shows up as zombie debt years down the road. 

If you have any other questions, don't hesitate to let me know. Just post them in the comments section of this post and I'll find them. 


Best of Luck,
Lee



Wednesday, September 10, 2014

Does Getting Your Car Impounded Hurt Your Credit Scores?

If you want to see unbridled fury, you need look no further than the guy who's just watched as a tow
truck loaded up his car and headed to the impound lot. If you aren't familiar with impound lots, they're nothing more than prison for cars. And this is not a figurative statement. I've seen impound lots that had the whole metal-bars-and-barbed-wire thing going on. I guess they're concerned that someone, furious as having his car impounded, might just try to break in and take it back. If that's your plan, I'm sorry to burst your bubble of bright, shining hope here but stealing your car back?  Not gonna happen. It's car prison, remember? You'll have to pay bail.

Why Cars Get Impounded

The average American hears "impounded car" and automatically thinks of drug dealers and the cars  they use to smuggle and market their wares. Using this logic, as long as you aren't the Godfather, a drug mule or anything in between, you should be safe from having your car impounded. Right?

WRONG.

"Oh, that could never happen to me!" you say, but reality just isn't that kind. Below are just a few reasons your car could get towed to the impound lot. Remember, this is just a generalized list. Impound laws and procedures vary by state.

  • Road Rage (if you act on it in a dangerous or threatenng manner.)
  • Driving without a license
  • Driving 45 mph over the speed limit
  • Having expired tags and registration
  • Your car is evidence in a crime or contains evidence of a crime
  • You abandon your vehicle

Can't Pay Impound Fees? Tough Luck

The impound lot may be prison for cars, but the daily impound fees are closer to that of a swanky hotel. Basically, it could cost you several hundred dollars to get your car out of impound. This is true even if your car was impounded from the side of the road after you ran out of gas and made a 10 minute ride up to the gas station with a friend to get some (happened to me).

Impound fees increase every day that you don't redeem the vehicle. When you simply can't afford to pay your impound fees, one of two things will happen.

1. Your lienholder will pay off your impound fees and repossess the car itself. This only occurs if you still owe money on the car and have stopped making car payments since the vehicle was impounded. The lienholder then sells the car at auction.

2. The impound lot sells the car at auction.

Collections After an Impound

The fees your car incurs while impounded are your legal responsibility--even if the circumstances surrounding the vehicle's seizure were blatantly unfair. After a period of time which varies by state, the impound lot sells the car and applies that balance to your outstanding impound fees and, of course, any liens your car carries. If your car sells for enough money to cover these debts, its time to drop to your knees and thank your lucky stars that someone up there likes you. You no longer have a car, true, but you don't have a missing car and a huge debt load hovering over your head.

If the impound fees exceed the amount your car sold for at auction, you could find yourself in some serious credit trouble. The impound lot will likely turn your debt over to a collection agency. The collection agency will then add it to your credit report. And that's whe the real horror show begins.

How an Impound Affects Your Credit Scores

Although everyone's mileage will vary, you can expect to lose 100 points or more after a collection account for impound debt gets slapped on your credit report. The FICO scoring formula is kept very hush hush, so you won't know exactly how much an impound will hurt your credit score until it shows up on your credit report.

Impound fees can hurt your credit scores.

As much as it pains you to hand over your hard-earned cash to the very people who you may feel stole your car, paying off the collection account now can help you in two very crucial ways:

1. You won't get sued. 

Getting sued sucks. The consequences of a lawsuit suck even more. The collection agency wlll likely add its own legal fees to your unpaid impound fees--spiking your debt to unreasonable proportions. They'll then collect it a number of ways:
  • Garnishing your wages
  • Levying your bank accounts
  • Attaching liens to other property you own
  • Seizing certain assets (Have another car? Not for long)
And in case I forgot to mention it, court judgments in the collector's favor will also show up on your credit report. A judgment hacks away at your credit rating like a bad executioner. Court judgments aren't bound by the standard seven-year reporting period. A judgment over unpaid impound fees will remain on your credit report for the length of time the creditor has to legally enforce it: ten years in most states.

2. The collection for your unpaid impound fees will begin to age.

The Fair Isaac Corporation (the company responsible for the FICO credit scores that lenders use) knows that the most recently reported information on your credit report is the most accurate indicator of the credit risk you pose to lenders. This is good news for those with bad debts that haven't been updated in years, because the older the account, the less it hurts your credit scores.

Paying your delinquent impound fees may make steam shoot from your ears, but it helps ensure that the collection account connected to the debt doesn't get regularly updated by the collection agency. Federal law requires that the collector update the debt as "paid" with the credit bureaus, but afterward it will just sit there until the credit reporting period (seven years) expires.

Note: Paying a collection does not result in the collection agency removing it from your credit report any sooner. It also doesn't improve your credit scores. Paid collections for impound debt--or any other type of debt for that matter--are just as detrimental to your credit rating as unpaid collections.

If you don't pay up, the collection agency may just decide to "refresh" your impound debt on a regular basis--ensuring that it does the most damage possible to your credit scores before you either pay it or the credit reporting period expires.

How An Impounded Car Affects Your Credit

An impound itself doesn't have a direct effect on your credit scores. It's the consequences of not paying off the impound that's a problem. Worse still, impound fees increase by the day. So if you don't have the money to bail your car out of impound by the end of the first week, the fees might climb beyond your ability to pay.

Generally, the better your credit scores are when a derogatory item hits your report, the more damage that entry will do. For a person with credit scores above 750, a collection account and civil judgment are the credit equivalent of a nuclear bomb. Be smart when it comes to your impounded car--even if that means swallowing your pride and paying a debt you believe you don't rightfully owe. If you don't, you could lose the car and your decent credit rating. That's not a fair trade for your pride.


Related Posts:

Can a Collection Agency Put a Lien on Your House or Car?

Can a Collection Agency Take My House?

Make Yourself Judgment Proof



Monday, September 8, 2014

Q&A: Collection Agency Keeps Updating Credit Report--Does This Hurt My Score Each Time?

Lee,

I have a creditor that keeps reporting a major derogatory to my credit report every week. Sometimes twice a week. Will this bring my score down every time they report it? Its a $180.00 balance.

--Anonymous 


Anonymous,

First, let me say that I'm surprised a collection agency is updating that frequently. I have some good news and some bad news. 

The good news is that you don't lose credit points every time the collection agency updates your credit report when updates occur that frequently. If the collection agency were updating your account every six months or even every year, your credit scores would probably drop somewhat each time, but very frequent updates, while detrimental to your credit scores, don't have the same immediately noticeable negative impact that more infrequent updates do. In the long run, however, the credit impact of both will likely be similar. Let me explain: 

One of the aspects of the mathematical formula that the Fair Isaac Corporation uses to calculate your credit score is the age of each account on your credit report. The exact formula is a trade secret, so there's really no way to estimate how much of an impact a collection agency's regular credit report updates will have. We do know, however, that the age of the accounts on your credit report accounts for roughly 10% of your credit score. 

If a collection agency merely adds its tradeline to your credit report and never bothers to update it (this is quite common) it has an immediate negative effect on your scores, but that effect lessens over time. Because the tradeline isn't updated, the scoring formula doesn't view it as being "fresh." Older entries that aren't updated affect your credit scores less and less as time goes by. 

When a collection agency regularly updates its tradeline, however, it ensures that the scoring formula continues to view the collection as a recent item. This, in turn, prevents your credit scores from gradually outpacing the collection account as it ages. An updated collection account carries the same negative weight the day its removed from your credit report as it did the day it was first inserted. 

Here's the good news. The fact that the collection agency keeps updating your credit report has no bearing whatsoever on the date the credit bureaus will remove the negative tradeline. The collection account should come off 7 years from the date the original debt fell 180-days delinquent (this is usually, but not always, the original creditor's charge-off date). If the debt is relatively recent, there's a good chance that these frequent credit report updates will slow down and eventually stop sometime in the future. 

Best of Luck,
Lee

Sunday, September 7, 2014

Q&A: How to Fix Credit Before Refinancing Second Mortgage

Lee,
I have been reading and trying to learn for 2 years now. I am wondering if you can give some insight. 
I had to do something and the only thing I could do was default on all credit cards. 
Every card we had was defaulted while we did that, I have paid my mortgage,2nd mortgage and car payment with no late pays. 

My second is an interest only loan that is due in 2018. I have to refinance or will lose our home..do you think in this case trying a pfd or settlement would be my smartest option so o can try to rebuild before the 2018 date? My sol is 6 years..

--Anonymous


Anonymous,


First of all I want to applaud you for your efforts. You wouldn't believe the number of questions I get in the comments section of a post when the answers to the question are in the post. Now, on to refinancing that second mortgage of yours.

I don't know when you defaulted on your credit cards, but those defaults alone may not derail your efforts to get your second mortgage refinanced when 2018 rolls around. Defaulted credit cards and the collection accounts that result from them can only remain on your credit report for seven years and 180 days from the day you defaulted (Remember: the credit reporting period is the amount of time an entry can remain on your credit report. The statute of limitations is the amount of time a creditor has to sue you). I don't know when you stopped making payments, but its possible that all or most of the negative information will be gone by the time you refinance. 

Attempting to settle your debts isn't likely to do you any good. Sure, the collection agency (I'm assuming those debts are in collections by now) may agree to a settlement, but nothing you pay them now is going to improve your credit scores. The only thing that paying a collection agency will do is restart the statute of limitations for a lawsuit. You don't want that. You want to sit back and fly under the radar while your state's six-year SOL times out. 

A far better idea than paying the collection agencies to settle is to put that money away, wait for the statute of limitations to expire and pay a good attorney to help you isolate violations and get these negative accounts removed from your credit report. Nothing scares collection agencies quite as much as formal statements from an attorney--especially when the debt is time-barred and the collection agency no longer has any legal leverage. 

You can always attempt a pay-for-delete, but unless you have the full amount of the debt on hand it has the potential to backfire on you. Paying only part of the debt restarts the clock on the SOL and agreeing to pay in installments (they'll demand direct bank drafts) gives the collection agency access to your bank accounts. Believe me, you do not want that. Worse still is the fact that debt collectors have no qualms about suddenly "forgetting" that they agreed to delete their tradeline in exchange for payment. If you do have the cash on hand to successfully negotiate a pay-for-delete and the collector agrees, it is absolutely vital that you get the agreement in writing, on the collection agency's letterhead and signed by an actual person before making any payments. 

Even if you can't get all of the negative information removed by the time you have to refinance your second mortgage, any collections that remain will be old. The FICO scoring formula attaches greater importance to your most recent accounts. This means that old negatives don't hurt your credit scores nearly as much as newer negatives. 

Your goal here is to make sure you spent the time from now until you refinance your second mortgage doing everything within your power to accrue only positive credit information. Always pay your current creditors on time, keep low balances on any remaining credit cards or store cards, etc. If it were me, I'd purchase my credit scores once every six months just to see where they're headed. Do NOT buy your scores from the credit bureaus. They sell Vantagescores which don't mean anything. You want your FICO scores. You can purchase those directly from Fair Isaac at MyFICO.com. 

Getting your hands on another credit card may be difficult right now, but would be extremely helpful in the long run. The FICO scoring formula takes the types of credit you carry into consideration. Balancing out credit cards (revolving debt) with loans (installment debt) is crucial to earn the highest number of points. If you're married and the defaulted credit cards were in your name only (leaving your spouse's credit unmarred) I'd recommend asking her/him to apply for a new credit card and add you on as an authorized user. The account would then appear on your credit report and help you rebuild your credit scores before you attempt to refinance that second mortgage of yours.

In the long run, the main thing your lender is going to be worried about is whether or not your unpaid creditors have the right to sue you and attach a lien to the property you're refinancing. The expiration of the statute of limitations for these defaulted credit cards will work in your favor when refinancing your second mortgage.

Best of Luck,
Lee

Monday, August 18, 2014

Can My Credit Report Have More Than One Collection for the Same Debt?

Which collector should you pay?
Here's a horror story for you: You let a debt fall delinquent and the creditor sells it to a collection agency. Two years later you pull your credit report and discover not one, not two, but three collection accounts on your credit report for the same debt. Needless to say, your credit scores are in the toilet. This may sound farfetched, but multiple collections are a relatively common result of sheer carelessness.

Just as original creditors eventually sell unpaid debt to debt collectors, collection agencies also sell "uncollectable" debts to other debt collectors. The problem debtors often run into is this: debt collectors, like original creditors, often report their company's accounts to the credit bureaus. This results in a collection tradeline appearing on your credit report.

When the collection agency sells the debt, the new collection agency may also report the debt to the credit bureaus. If the previous debt collector doesn't bother to delete its tradeline from your credit report when it sells the account, your credit report will eventually contain several different collections for the same debt.

Multiple Credit Report Entries for the Same Debt Are Against the Law

It's perfectly normal to have two entries on your credit report for the same debt if those entries are the original creditor's account and the resulting collection account. Any further entries for the same debt are prohibited--even if each tradeline contains different account numbers (which they almost inevitably will). This isn't in the interest of protecting you, but rather in the interest of protecting future creditors.

Your credit scores are based on the most accurate portrayal possible of your past financial history. Multiple collections for the same account deal a devastating blow to your credit scores--making you appear to be a much higher lending risk than you actually are. By ensuring that multiple collection accounts can't appear on your credit report for the same debt, federal regulations protect lenders from making judgment errors that could ultimately affect their profit margins.

Prohibiting multiple collection accounts also protects the collection agency's interests. If you see a plethora of collection accounts on your credit report, you'll probably be confused about whom you should pay. This could lead to you paying off an account with a collection agency that no longer owns the debt. Unfortunately, that payment can "vanish" into thin air. The collection agency that actually owns the debt will continue to demand payment and the collector that actually received the payment may conveniently have no record of receiving it. This cheats both the debt's actual owner and the consumer.

How Long Can These Multiple Collections Stay on Your Credit Report?

Federal law restricts collections to only seven years on your credit report. This seven-year clock begins on the date the debt first falls 180 days' delinquent. This generally coincides with the date that the original creditor charges off the debt and sells it to a collection agency.

All the collection accounts that appear on your credit report for the same debt must fall off when the original creditor's tradeline falls off. This means that some collection accounts may only remain on
After 7 years, all collections must come off.
your credit report for a few years---if that. For example, if a debt collector reports a debt six months before the credit reporting period expires, its tradeline won't stick around for a full seven years. In order to comply with the Fair Credit Reporting Act, the company must delete the tradeline in six months.

Is There Any Way to Remove Multiple Collections for the Same Debt?

I plan on making a more in-depth post about this soon and providing a step-by-step guide to help you get rid of any clone collections. For now, however, just know that you aren't stuck with these tradelines forever. The Fair Credit Reporting Act, which governs credit reporting practices in the U.S., provides you with a dispute process.

You aren't limited to only disputing incorrect information. You can also dispute information that is obsolete, such as multiple collections or accounts that appear on your credit report for longer than the credit reporting period allows. You can dispute via mail, over the phone, or even online. Just be sure that you dispute multiple collections as multiples. If your dispute goes into the system as an accuracy complaint, the collection agencies in question are a lot more likely to validate the accounts and they won't get removed.

Long story short, you aren't alone. It's very common for consumers who've had financial difficulty and ended up with several delinquent debts to discover that their credit reports reflect more than one collection account for the same debt. As tempting as it may be to ignore the hassle, removing any additional collections will help you maintain the best credit scores possible until the credit reporting period expires.

Related Posts:

How Much Do Medical Collections Affect Your Credit Score?

Improving Credit Scores After Collections

Removing Re-Aged Collection Accounts From Your Credit Report

Friday, August 15, 2014

Q&A: Can I Open an Account in Another State to Avoid Collector's Bank Levy?

I have a question. I am trying to resolve my credit issues and recently my account was levied by a debt collector. Can I open an account in other State and avoid this levy again.Will they find the bank.How can the collectors get the info.

Thanks!
 Y 


Y,

Unless the collector is collecting a government debt, such as a defaulted student loan or unpaid taxes, the company must have a civil judgment against you before it can levy your bank account. The right and proper way to stop a bank levy is to successfully contest the judgment that created the levy in the first place. You don't mention which state you're in, but state laws vary on how long you have to contest a judgment after its filed.

If you're still within the time frame to contest the judgment, you'll need to have grounds to do so. Once again, acceptable grounds for this will vary by state, but in general you can contest a judgment for the following reasons:

  • The original debt doesn't belong to you
  • You had a death in the family, were hospitalized or have another valid reason for missing court. 
  • You were never notified of the lawsuit (improper service) and therefore couldn't defend yourself
  • Clerical errors in the judgment paperwork
  • The statute of limitations in your state expired before the lawsuit was filed

Of course, getting rid of the judgment isn't always an option. In that case, you have the legal right to open up a new bank account in another state, but there's no guarantee the debt collector isn't going to find it. Out-of-state and online banks are also subject to a collection agency's levy--but only if the debt collector knows where you bank.

Let's say you hypothetically stop using your current bank account and open a new one. It isn't going to take long for the debt collector to realize you've stopped depositing money into your account and have probably switched banks. If the debt collector can figure out where you're banking, it can simply serve the new bank with a writ of execution and levy the new account. If it can't figure out where you bank, it can get the information via a post-judgment interrogatory.

If the debt collector petitions the court for a post-judgment interrogatory, you'll be called back into court and forced to disclose the location of your hidden assets. In this case, they'll simply force you to tell them where you're banking. If you refuse, you could be charged with contempt and possibly even face jail time.

The collection agency could also decide that, if it can't get the money from your bank account, it will get the money by garnishing your paycheck. Unless you live in South Carolina, a debt collector with a judgment has the right to garnish a certain percentage of your paycheck. All the collector needs to know is where you work, and that's a lot easier to figure out than where you bank. Judgment creditors may also have the right to seize other assets, such as investments, and certain forms of property--depending, of course, on your state's judgment enforcement laws.

As far as your question about how collectors get their information goes, they can get information about you a variety of different ways. A post-judgment interrogatory provides the debt collector with whatever information it needs. Your credit report contains valuable information about you, such as your address, Social Security number, whether you're paying other creditors on time and, sometimes, your employer. Collection agencies have also been known to stalk debtor's social media profiles for information. If a collection agency can't find you, federal law says it can call your loved ones and ask for your location.And, of course, who could forget the age-old process of skip-tracing? You'd be surprised how easy it is for a collection agency to gather information about you.

Legally, I am not allowed to tell you how to avoid paying a judgment because I can't give a debtor advice on how to commit fraud. What I can tell you, however, is that a good attorney is worth his/her weight in gold here. Legal help is pricey, but hiring a lawyer is probably a heck of a lot cheaper than continuing to allow the debt collector to levy your bank account.

Hiring an attorney may be beneficial but it isn't a requirement. If you have valid grounds to contest the judgment but can't afford an attorney, you can file a motion with the court on your own. Just make sure that you read up on the legal process and your state's specific rules and procedures. You may also qualify for legal aid, depending on your location and your income.

Oh, one more thing: certain forms of income are exempt from garnishment. If you have exempt income in your bank account, the debt collector may seize it anyway unless you fill out an exemption form from your bank and officially declare the funds exempt. See Funds Exempt from Garnishment for more information on which forms of income are exempt and how to declare your exemptions in order to legally escape your bank levy.


Best of Luck,
Lee

Wednesday, August 13, 2014

Q&A: Collection Agency Sent Bills to Wrong Address

Hi Lee,

My name is Melissa and I came across your page form a google search. I am hoping you might be able to provide some guidance. 

In April, I received an email notifying me that there was a change to my credit report. There was a debt from 2010 (an ambulance ride to the ER) that was added. After some digging, turns out the account was sold in July 2010 to the collections agency. The agency is telling me they never received it until March 2011. Initial bills were sent to an address I haven't lived at in years, also had two other addresses on file, places I never lived, nor know anyone that lived or lives there. I have since began the dispute process. 

I am getting statements printed out from my bank from that time to see if there were any payments made to make sure this is in fact an unpaid debt. 

My question: Am I responsible after all this time? This is clearly an error on their part. At the time, I asked the hospital representative if all bills were set up on a payment plan and she verified that they were and I made monthly payments. If this was left off, why did it take 4 years for it to come to my attention? I live in NJ, however I am in the process of moving to NYC. The bill is for something that happened in Florida.

Any insight, recommendations or information would be greatly appreciated. Thank you!

--
Melissa 


Melissa,

The statute of limitations (which is the amount of time a creditor or debt collector can sue you for a debt) differs by state. In Florida, the statute of limitations is four years. In New Jersey and New York, its six years.

If you lived in Florida until July of 2014, the statute of limitations would expire and you would be free to move to another state without fear of getting sued--even if the new state's statute of limitations is much longer than Florida's.

The problem that arises here is that, if you move before the statute of limitations expires, the SOL is "tolled" in your original state of residence. That means that, as soon as the collection agency discovers that you are no longer living there, the clock on the statute of limitations just stops ticking. When and if you move back, the statute of limitations goes back into effect and begins to time out from where it left off when it was tolled.

If the collection agency was not aware that you moved out of Florida until now (and you didn't give them the date that you moved when you spoke with them) its very possible that the statute of limitations was never tolled and simply timed out on its own. That would mean you're safe no matter which state you move to. If the addresses the collection agency was sending letters to were in Florida and you didn't disclose your new address until after July 2014, you should be safe from a lawsuit.

If, however, the collection agency is aware of the fact that you moved, they can generally opt to go by the SOL in your current state. This is advantageous to the collector, since they'd have until July of 2016 to collect the debt. Now, this part is important, so listen well:


The date that the collection agency originally received the debt is irrelevant. The only date that matters is the date you made your last payment (or, if you never made any payments, the date that your payment was originally due). It makes no difference whatsoever that the collector didn't get its hands on the account until 2011. The SOL and the credit reporting period are calculated using the dates from the original account.

 If a collection agency could use its own dates to determine the statute of limitations and the credit reporting period, no one would ever be free from collection lawsuits and bad debts would hang around on your credit report indefinitely. So don't worry about the date they bought the debt or first reported the debt. It just doesn't matter.

You mention that you are contacting your bank to determine if you made any payments on the debt. Normally making a payment on the debt restarts the statute of limitations from scratch. In Florida, however, you have to provide the creditor with a written promise to pay in order to restart the clock (Just for reference, the same is true in New York). So unless you promised to pay the debt in writing, the SOL was never interrupted and may have timed out in Florida.

The statute of limitations and the credit reporting period are two entirely different things. The credit reporting period begins 180 days after your last payment and lasts for seven years. As I stated above, the date the collection agency bought the debt or originally reported the debt doesn't matter. They have to remove it after the credit reporting period expires. The credit reporting period is the same no matter which state you live in.

Your responsibility for the debt is a gray area. Technically, if you took the ambulance ride and the debt is legitimate, you are responsible for paying the debt no matter how many errors the hospital or collection agency made when trying to collect it.

You said you spoke to a hospital administrator that assured you all bills were set up on a payment plan. If you have that in writing, that gives you grounds to fight this. You'll still be responsible for paying it, but you can probably use that statement to convince the hospital to pull the debt out of collections (and no matter what they tell you, they CAN pull the debt out of collections--even if the account was actually sold and the debt collector isn't working on a contingency) and remove it from your credit report. If all you have is someone's word, you lack proof that this was a legitimate error. It's also possible that the ambulance company bills separately from the hospital itself and that's what caused the issue.

If the ambulance company does not bill separately from the hospital and you have a statement in writing from the hospital noting that all of your debts have been added to a payment plan It could be argued that, if they hadn't made these errors, you would have paid the debt before it ever hit your credit report. In general, however, you aren't absolved from your responsibility to pay a debt simply because you didn't receive a bill.

If the statute of limitations has expired, you are no longer legally responsible for the debt and they can't force you to pay it. Keep in mind that the collection will remain on your credit report regardless of whether you pay the debt or not, and paying a collection account does not improve your credit scores. You do have the right to dispute the debt both with the collection agency itself and the credit bureaus.

If you have the funds to do so, you might consider hiring a consumer law attorney to help you. I don't know the full details of your case, but the original creditor obviously made some blatant billing errors that cost you your good credit rating. A good attorney should be able to help you straighten this out, even if it means filing a lawsuit or two to strong-arm the hospital into taking you seriously and recalling the debt.

One last thing, while you're disputing the collection you should also consider disputing those addresses on your credit report for places you never lived. You don't want another creditor to bill you at one of those addresses only to have this nightmare scenario repeat itself.

Best of Luck
Lee





Tuesday, August 12, 2014

Q&A: NCO Re-aged Collection Debt on Credit Report/International Identity Theft

Lee,

I found your info by googling NCO Collection Agency.

I am a United States citizen living in Canada.  I moved here in Dec. 2002 and would visit home every few months as my parents were both ill and were both deceased in just over three years.  There is a collection account on my credit report that I didn't recognize at first.  I injured myself in the 3rd week of January 2006.  My father died on Jan. 28, 2006 and it honestly slipped my mind.  Quite frankly, it took me until this past April to even remember I had been hurt.  Now, there's this entry that shows NCO "opened" it on Aug. 16, 2007 and a "report" date of May 17, 2009.  To date, I have not been contacted by them. 

I was reading your comment to Lisa dated June 19, 2014 on collectionagencydebt.blogspot where you stated, "If the original default date was more than seven years and 180 days ago this shouldn't be on your credit report at all and you should be able to get it removed as obsolete." and wondered if this also applied in my case. 

Further complicating matters, someone in my hometown has apparently obtained cell phones under my name and social security number and (according to the credit reporting agencies) a mortgage.  It is one of the security questions and when I reply I have "no mortgage", I get an "incorrect answer" and a phone number to call.  My friend is the retired Chief of Police in my hometown and informed me that until I move back home, there is nothing that can be done from here.

Any advice you have to give is appreciated and I thank you for your time.

Sincerely,

Nancy



Nancy,

The seven-year credit reporting period is the same for everyone. so what I told Lisa would also apply to you. Debt collectors generally have to remove their negative tradelines when the original creditor removes its charge-off. Unfortunately, you owe a medical debt, and medical debts don't come with an original creditor. Particularly insidious collection agencies use this to their advantage. The original creditor's report is the yardstick that both you and the credit bureaus can use to determine if a collection is obsolete. Medical debts don't appear on your credit report if they're paid on time, so there is no original account for the debt on your credit report. Without an original creditor account on file, the burden of proof is on you to demonstrate that the collection agency is in error. 

Here's a fun fact for you. The Federal Trade Commission already hit NCO with the largest business fine in history for altering collection accounts dates to ensure they remain on debtors' credit reports far beyond the seven-year limit. The clock on the credit reporting period should start ticking when you stop paying the original creditor--not when the collection agency receives the debt. 

If you dispute this directly with the credit bureaus, NCO will probably verify it as accurate. What you want is some proof that the original debt was incurred in 2006, not 2007. An old medical bill for your injury that notes a late payment and how late the payment is (i.e. 30 days late, 60 days late, etc.) should work just fine. You can also check with your insurance company or the original medical provider for the date of service. The hospital records may not go that far back, but your insurance company might. It can't hurt to try.

Black out any information you don't want to share with NCO on your documents of proof (the details of your injury, for example, are none of their business) and make a photocopy of each item you're using as documentation. Highlight the date. Also print and photocopy the credit report pages from each of your credit reports that reflect the error.

Write NCO a letter stating that the account they are reporting to the credit bureaus is obsolete. Note exactly when you incurred the debt and refer to your medical paperwork as evidence. Point out that you never made any payments on this debt, thus the date of delinquency occurred in 2006, not 2007 and the debt should no longer appear on your credit report. Tell them that re-aging a debt is against the law, and that you have the right to sue (and will exercise this right) if they don't immediately delete this tradeline from your credit report. 

If they don't delete, make photocopies of the same information you sent to NCO and send the proof, along with a letter explaining that this debt is obsolete and must be removed, to each of the credit bureaus whose files reflect the collection. If you want to make absolutely certain that your dispute falls into human hands and doesn't get shuttled into the computer system (the computer system neither acknowledges or analyzes your evidence) write out the letter by hand. Make sure to send both the NCO dispute and all credit bureau disputes via certified mail, return receipt requested. 

I have to wonder though....why does this matter? You're living in Canada. I used to live in Canada. American credit doesn't mean squat over there. Although they have the same credit bureaus, their credit system is based on Social Insurance numbers, not Social Security numbers. You can't pull an American credit report using Canadian credit bureaus. Their system simply isn't set up that way. 

On to the case of identity theft. Identity theft is serious business. Most debts don't follow you to Canada, but if the identity thief racks up enough of it, sooner or later a creditor is going to find you and outsource that debt to a Canadian collection agency which will hunt you down on your home turf in Canada. Don't let this happen. 

You need to file a police report. I think what your policeman friend meant wasn't that you had no course of action to defend yourself but rather you can't fill out an identity theft report with the U.S. police. Go down to your local police station, explain that your identity was stolen and ask to fill out a police report. You can use a Canadian police report the same way you would use an American police report. Use your Canadian police report to file an identity theft complaint with the credit bureaus. 

Make sure to point out that the report was filed in Canada because that it where you're currently living. You don't want the credit bureaus to think that you're a Canadian citizen and dealing with Canadian identity theft concerns yet somehow reported the theft to the wrong bureaus. If that doesn't work (I can't see any reason why it wouldn't unless you keep running into idiots who don't know what they're doing. Believe it or not, the credit bureaus employ scores of these people) Wait until your next trip to the U.S. and fill out a police report about the identity theft there. According to the FTC, you can file a police report either with the police station where you live or the police station where the identity theft occurred. 

You'll also want to place a fraud alert on your American credit reports pronto. The following resource from the Federal Trade Commission should provide you with a detailed guide on exactly what to do when you find out your identity has been stolen: Federal Trade Commission: Identity Theft

I'm going to list some numbers for you to call if you run into problems along the way. 


  • Federal Trade Commission headquarters: (202) 326-2222
  • Experian:  1 (888) 397-3742
  • TransUnion Identity Theft Department: (800) 680-7289
  • Equifax fraud alert: 1-888-766-0008


If you are financially able, consider contacting a consumer law attorney within the U.S. You can do what's necessary to take care of these issues on your own, but its time consuming and extremely stressful. A good consumer law attorney has extensive experience doing this very thing. In addition, collection agencies and credit bureaus alike take lawsuit threats from an attorney much more seriously than lawsuit threats from the debtor. You also have to consider that this person committed a major fraud by purchasing a house in your name. You would retain the right to file a civil suit against the individual and force them to pay for your attorney. 

I cannot stress this enough: Do NOT ignore this. DO NOT. If this person has gotten a mortgage in your name, she knows that you are living out of the country and plans to simply live as you indefinitely. Someone has to bring her to justice. A fraud this significant can carry jail time and, lets face it, this lady belongs behind bars so that she can't turn around and do this very thing to someone else. 

Best of Luck,
Lee

Saturday, August 9, 2014

Why Don't Rent Payments Show Up on Your Credit Report?

Rent payments don't usually show up on credit reports.
When it comes to credit reporting, renters get the short end of the stick. This is very ironic when you consider that, if you buy a home, your mortgage becomes of the most important tradelines on your credit report. Your ability to consistently pay your housing debt on time shows lenders that you are financially responsible and a good lending risk. Unfortunately, you can be the most reliable renter on Earth and your credit will remain unaffected because, with few exceptions, rent payments just don't show up on your credit report. 

Why Don't Landlords Report Rent Payments to the Credit Bureaus?

In order for a creditor to report debt on your credit report, it must have a credit reporting contract with the credit bureau. Unless you've been a victim of identity theft, the credit bureaus won't share your information amongst themselves. This means that if a landlord wants your rent payments to appear on all three of your credit reports, the rental company must report the debt to each credit bureau individually. 

The problem that arises here is that, in order to make these reports, the landlord must apply for and be accepted into each credit bureau's reporting program. This isn't as simple as merely paying a fee and installing credit reporting software. Each credit bureau requires an on-site inspection (to ensure that your business actually exists), a monthly membership fee (not cheap, not cheap at all..) and special credit reporting software (also not cheap). 

The up-front costs and regular fees associated with credit reporting are pricey and, when multiplied by three (each credit bureau has its own fees and requirements), can prove too expensive for your average landlord to handle. Unlike banks and credit card companies, apartment complexes and rental companies generally aren't big conglomerates and the high cost of a credit bureau memberships cuts too deeply into their profit margins to be worthwhile. 

Can I Ask My Landlord to Report My Rent Payments to My Credit Report If I Pay the Fee?

I hear this question a lot. You can ask your landlord to report your rent payments to the credit bureaus, sure, but don't expect it to actually happen. A company isn't free to report singular accounts to the credit bureaus for a fee. It's all or nothing. Either your landlord jumps through the hoops of fire that are required to become a full-fledged information provider or not. Without a reporting contract, the landlord can't insert any information on your credit report. 

Note: Experian's RentBureau program is an exception to the rule above. If your landlord participates in the program, he/she can submit the payments you make to RentBureau. A Rentbureau membership is much cheaper than a standard credit bureau reporting membership--making it more accessible for landlords. The best part? Payments submitted to RentBureau appear on your Experian credit report and influence your credit scores. 

Rent Payments Don't Help Build Your Credit Scores, But They Can Destroy Them

As if shelling out a big chunk of your income and not getting credit for it (bad pun, I know) isn't bad enough, if you miss enough rent payments or move out without paying any remaining rent or fees, your landlord can sell the debt to a collection agency or sue you. Most consumers know how damaging a collection account is to their credit rating, and fear is a powerful motivator. Collection agencies have a strong incentive to maintain credit reporting contracts, so if your landlord sends your unpaid rent to collections, your credit scores will take a hit as soon as the debt collector reports your account to the credit bureaus. 

You'll also end up with damaged credit if your landlord decides to file a lawsuit against you to collect unpaid rent and/or fees. Winning the lawsuit nets your landlord a civil judgment which it can then use
You can be sued over unpaid rent.
to garnish your wages and bank accounts, among other things.

Having your wages docked and your bank accounts levied is extremely frustrating, but the longest lasting consequence of the judgment comes in the form of credit damage. Civil judgments appear on your credit report and are just as damaging as a collection--sometimes even more so.

Rent Payments May Appear on Alternative Credit Reports

Your credit files from Experian, Equifax and TransUnion aren't the only credit reports out there. For young people just starting out or those with limited credit histories, alternative credit reports provide lenders with a way of assessing a person's risk when that person lacks a traditional credit report and scores. Examples of items that help establish an alternate credit file include: 

  • Rent payments
  • Insurance payments
  • Utility payments
  • Cell phone payments 
  • Child support payments

In the wake of the recession, many debtors have been left with few options for salvaging their devastated credit scores. If their rent showed up on their credit reports, it could do just that. Rent is just as reliable an indicator of an individual's responsibility level as a mortgage. In recent years, demand has risen significantly for the credit bureaus to include rent payments in credit score calculations. Although your rent payments don't show up on your credit reports right now, the credit bureaus are working to establish programs, such as Experian's "RentBureau", that will take your rent payments into consideration when determining your credit scores.

Related Posts:

How Landlords Pull Your Credit Reports and Scores

Do Apartment Credit Checks Hurt Your Credit Scores?




Tuesday, August 5, 2014

Q&A: Collection Agency Not Updating Credit Report After Debt Settlement

Hello Lee,
I hope you can help me here. I called a collection agency to inquire about a debt I have settled and asked why this was not reported to the credit bureaus and they said they did even if my Equifax still shows it as unpaid. then they asked to talk about another account and I was surprised. It is an old account from 2005 that was not showing on my CR and my first reflex was to say I have no knowledge of this and she kept asking if this was my mine and still said I have no knowledge of it. can they use this to restart the SOL?


--Anonymous

Anonymous,

Ok, lets address the credit reporting issue first. Federal law requires the collection agency to report changes to your account and requires that the credit bureaus keep these records updated and accurate. All too often something gets lost in translation. I'm going to give you two methods of dealing with this, but I need to first point out that, if you're doing this to improve your credit scores, you're wasting your time. Collection accounts have the same negative impact on your credit scores regardless of whether you've paid them off or not. Although paid collections may illustrate to some lenders that you're making an effort to be responsible, paid collections are just as bad for your actual scores as unpaid ones. 

You have two options here: 


Option #1:
Make a copy of the credit report that shows the collection account as unpaid. Use a permanent marker to black out any identifying information on the credit report (because you never know what information they do or don't have, and you don't want to give them the tools they need to pursue you in the future). You'll also need to make a copy of your proof of payment to the collection agency. I sincerely hope you requested a zero balance letter. If not, provide a copy of the collection agency's written settlement offer and evidence of your payment, such as a cancelled check. 

Write a letter to the collection agency pointing out that your Equifax credit report still shows the debt as being unpaid. Feel free to point out that federal law requires the collection agency to update your tradeline with each credit bureau. Demand that they immediately update your credit records and, if you're feeling squirrelly, threaten to sue.  Oh, and make sure you send your letter via certifed mail, return receipt requested. This forces the collection agency to sign for the letter and prevents them from claiming they never received your dispute. 


Option #2:
Make a copy of the credit report that shows the collection account as unpaid. Make copies of your proof of payment along with a copy of your settlement letter, just as before. This time, however, you're going to write a letter to Equifax disputing the debt. Point out that the collection agency is not abiding by federal law in reporting this account correctly. Refer to the documents you've enclosed and request that Equifax investigate the entry and update it accordingly. 

If both methods fail, you could call and attorney and file a lawsuit. You'd be well within your rights to do so, and it might even be worth it if better credit were the result of all that hassle. The only way these disputes could improve your credit rating would be if the credit bureaus decide to delete the collection agency's tradeline rather than merely correct it. 

Ok, on to the statute of limitations. 

I wish I knew what state you're in, but it shouldn't matter. The odds are on your side that your nine-year old debt is no longer within your state's statute of limitations and the collection agency can't sue you. States have very strict guidelines dictating what does and does not restart the clock on the statute of limitations. Merely having a phone conversation with a debt collector isn't enough to renew the SOL on this debt. Heck, you didn't even admit that you owed it. You're in no danger on that front. Also, the collection agency can't legally reinsert the debt into your credit report, but I'd keep an eye on it just the same if I were you.

Given that you've just settled a debt with a collection agency, you need to know how to protect yourself. I know you didn't ask me about this, but its important that you realize that the collection agency may just turn around and sell the unpaid part of your settlement balance to another collector--letting the nightmare begin anew. Take the settlement offer and your proof of payment and put them away somewhere safe. If you get a call from a new collector in the future, you can use these documents as proof that the debt is no longer viable.

Best of Luck,
Lee