Your Debt Collection Rights

by Gerri Detweiler


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Myth #1: A debt collector can't come after me if my debt is too old.

In every state, there is something called a "statute of limitations" that covers different types of debts. In most states, the statute of limitations runs between three and six years. In a few cases, it goes as long as fifteen years.

The fact that the statute of limitations has expired on a debt doesn't mean a debt collector still can't try to collect from you. But, they don't have any leverage to force you to pay. If they sue you, you can go to court, raise the statute of limitations as your defense, and they would lose the case.

Watch out though. If you make a payment on a debt or even agree to pay, the statute of limitations may start all over again.

Myth #2: I can just tell a debt collector to stop contacting me.

Many "experts" online recommend you send a letter to the collection agency and tell them to leave you alone. It's true that if you send a "cease communication letter" to the debt collector, they must stop contacting you, except to tell you they are taking legal action against you.

So why wouldn't you just send a letter asking the debt collection agency to leave you alone? The problem is sending one of these letters leaves the debt collection agency no option but to take legal action against you if it wants to collect. In fact, telling the collection agency not to contact you again may mean your debt is automatically sent for legal action.

We don't recommend you send a cease communication letter unless you are confident the statute of limitations has expired, or if you don't owe the debt and could demonstrate that in court. Otherwise, we recommend you stay in communication with your creditors and collection agencies and find a way to resolve your debt.

Myth #3 If I make a small payment a collection agency can't take me to court.

The notion that by making a token payment you can keep your debt from escalating is simply false. In fact, making a payment when you really can't afford to, or when you don't owe the debt, can backfire against you.

Anytime you are contacted by a debt collector, you have the right to request written verification of the debt and/or to dispute the debt if you don't believe it is correct. If you can't afford to pay a debt, then you need to explain to the collection agency that you can't pay now, and offer to stay in touch with them. Tell them you are willing to work something out as soon as the circumstances change. (Keep in mind if you can't pay the debt, you may be sued.)

Myth #4 Paying off a collection account will help my credit scores.

We've heard numerous times from people that think by paying off a collection account they will improve their credit scores. Again, that is simply not true. A collection item on your credit report is regarded as seriously negative, whether it is paid or unpaid.

There are two things to keep in mind regarding your credit report and collection accounts.

The first is that collection accounts can only be reported to the credit agencies for seven and a half years from the date you first fell behind with the original creditor. That's true whether or not you pay that account off. The second is that paying off or settling a collection account can still be beneficial in the sense that it will prevent the debt from growing larger, or from ending up in court. (If you lose in court, the creditor or collector will get a judgment against you, which starts a brand new 7.5 year reporting period.)

Also keep in mind the older the collection account becomes, the less of an impact it has on your credit scores. That's especially true if you are actively building positive references that will eventually outweigh the old.


Gerri Detweiler is the co-author of a new book, Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts. Get your free worksheet that you can use to track your conversations with debt collectors.

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