Unpaid debt never goes away. But once an unpaid debt reaches the legal statute of limitations a creditor or debt collector cannot sue in court for payment of the debt. And, after 7.5 years the charged-off account must be removed from your credit reports by the original creditor and collection agency (if it has been transferred or sold to a debt collector).
Question: Some time in 2003/2004 I switched my cell phone service from AT&T to another company but AT&T told me that I broke the contract. I disputed with their opinion since I left only after the 2 years ended but AT&T told me that I changed one of the features at the end of the contract which restarted my contract. Eventually they sent it to the collection agency and collection agency couldn’t collect anything from me so they eventually sent it to credit reporting agency.
At that time I was naive about stuff and also going through some tough time with other stuff so I didn’t take any actions. But now I am getting a letter from collection agency on this again. It is almost 7/8 years that the original disputed issue started. Shouldn’t it be already removed from my record? What are my options? Some advice will be greatly appreciated.
Answer: First, let me say this clearly — unpaid debts may never go away. As long as the debt remains unpaid, junk debt buyer after junk debt buyer can and probably will pursue you for the unpaid debt. (By junk debt buyer I mean collection agency.)
Unpaid collection accounts can be sold over and over again, going from one collection agency to another, until the debt is paid. In fact, even if the statute of limitations has passed on the debt and it becomes legally uncollectible, some bottom-feeder debt collectors may still sue you for the debt.
Should you be sued by a collection agency NEVER IGNORE THE LAWSUIT. Debt collectors are counting on you not filing an answer to a lawsuit and getting a default judgment against you. If the statute of limitations has passed, that would be your affirmative defense in answering a lawsuit which should get it dismissed.
Second, for each collection agency which sends you a letter regarding the debt, you should request debt validation. More than likely in the letter received by the latest collection agency, it included the “mini-Miranda” stating you had 30 days to request validation.
Even if the statute of limitation has passed never ignore correspondence from a collection agency. You want to know where and with whom an unpaid debt stands at all times because they may “silently” park that unvalidated account on your credit reports. You may find that simply requesting debt validation will run the collection agency off because most never have any documentation to prove you owe the debt.
Third, the credit reporting period for the original account is 7.5 years. After 7.5 years from the date an account first became delinquent and no further payments have been made, the account can no longer appear on your credit report. This means the original creditor and any collection agency currently or in the past is legally prohibited from reporting the debt on your credit reports.
But the only way to know if an item has been removed from your credit reports is to order your credit reports. It is not a good idea to assume just because the 7.5 year credit reporting period has passed, the original account and corresponding collection account magically drops off. You have to confirm it is no longer reporting by reviewing your credit reports. Good luck to you.