QUESTION: I have a hospital bill for $850 that I incurred in 2012. It was turned over to collection within 6 months or less, and I have never paid anything on the bill. On 2/15/17, I read about disputing, writing to all three credit reporting agencies with “dispute reason: Contract was canceled. Dispute comments: No contract.” I did this, and now notice on my credit report that it was moved from open accounts to closed accounts, and it says “collection/chargeoff derogatory.” It shows I still owe $850, and that amount is added to the total debt of all my open and closed accounts on the credit report. Here in Michigan, there is a 6-year statute of limitations on this bill, so it is still in current status.
My question is, can the collection agency sue me, when they are the ones who owned this debt at the time of the chargeoff? (I’m asking because all advice online says after a chargeoff, the debt MAY still be turned over to a collection agency, who could then pursue it. That’s not the case with me–it was already with a collection agency.) So, I am wondering if the collection agency allowed the chargeoff, and essentially is giving up on pursuing it?
Also, Lisa I am wondering, if I do have to pay it, if I should contact the credit reporting agencies and have it moved from “closed” accounts to “open” accounts again. Thanks!
ANSWER: The first thing to be aware of is that you can be sued for an unpaid debt as long as the statute of limitations has not passed. It sounds like the original creditor sold the debt to a debt collector. If this is the case, the debt collector can resale the debt to a different debt collector. It’s not uncommon when a debt collector fails at collection efforts, they will sell the debt to another collector.
A collection account must be updated to reflect “closed” on your credit reports if the debt collector’s authority to collect has been terminated by the original creditor; or, if the debt collector sells the debt to another debt collector.
If this is the case, the debt collector is supposed to delete the account from your credit reports in order to avoid multiple debt collectors reporting simultaneously on your credit reports for the same debt. Normally, a collection remains open until it is either paid or the collection authority of the debt collector is terminated.
If you have a closed collection on an unpaid debt, you can seek deletion. But you have to be aware that the collection agency may not have closed the account. It may be a mistake. If so, the collection agency can reopen the account which may cause your credit scores to lose points because it looks as though the collection account is more recent.
Contacting the credit bureaus to request a closed collection account be reopened is a mistake. Before you do anything, you might want to give the debt collector a call and inquire as to whether or not the debt collector still has an active assignment or ownership of the debt. If not, they should delete their credit reporting per the policy of the credit bureaus.
