Can a collection agency re-open a nine year-old unpaid debt?
October 12, 2005 8:17 PM   Subscribe

Can a collection agency reopen a nine year-old unpaid debt?

I used to be terrible about paying bills, but I'm much better now and I finally have excellent credit. Most of the old delinquent accounts were paid off, but on one of the oldest, I chose to wait out the seven-year credit reporting limit instead of paying it. Two years ago it went off my credit report right on schedule.

Today I received a letter saying that the debt has been purchased by "LVNV Funding LLC" and that it is being collected by "Merchant’s Credit Guide, Co." Doing a bit of googling, it looks like they're both owned by the same company, and that I likely don't owe them anything. I'm sending them this letter disputing the debt tomorrow. My question: is there any way they can reopen this so that it somehow ends up on my credit report?
posted by letitrain to Work & Money (13 answers total) 1 user marked this as a favorite
NO. Though they try. Please read the following:Accurate negative information generally can be reported for seven years, but there are exceptions:

Bankruptcy information can be reported for 10 years;
Information reported because of an application for a job with a salary of more than $20,000 has no time limitation;
Information reported because of an application for more than $50,000 worth of credit or life insurance has no time limitation;
Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer; and
Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.
Tax liens stay on 7 years from the date PAID.
Some other rules to keep in mind:

The Statute of Limitations has nothing to do with the length of time something can stay on your credit report, they are two TOTALLY separate things. Again, there is absolutely NO relationship.

The length of time a negative mark can stay on your credit report starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account. Some collection agencies update their reporting status on you to keep the account active with the bureaus to extend the time the account appears on your report. Very crafty and underhanded of them, because most often the account is updated and the period of time the account is active appears to be extended. Challenge this! If you do, bureaus will correctly remove it 7 years from origination. Period. In other words, paying a collection will not keep it on your credit report for a longer period of time if you are diligent.

posted by Independent Scholarship at 8:39 PM on October 12, 2005 [1 favorite]

I forgot to mention that if you go to the link above, they also include a letter from the FTC with their opinion on this matter. Good luck!

posted by Independent Scholarship at 8:44 PM on October 12, 2005

Response by poster: In other words, paying a collection will not keep it on your credit report for a longer period of time if you are diligent.

Had I known that then, I would have just paid it. It's a small amount, but I was afraid to "restart the clock." Now I have to deal with this collection agency.
posted by letitrain at 8:52 PM on October 12, 2005

You won't have to deal with them after you send your letter regarding your state Statute of Limitations. If you are still within the SoL, yes, you will have to deal with them until the statute runs out. It is five years for legal collection in my state. It can stay on your Credit Report for ONLY seven years from the first charge-off to a collection agency. (Considered last date of activity.)

posted by Independent Scholarship at 9:22 PM on October 12, 2005

Best answer: Merchants Credit Guide Co

I sent this very company a 'Request for Validation' letter via Certified Return Receipt Mail at the end of August. As I understand it, they have thirty days to get a reply back with the original details of the debt (to whom, for how much, when,) something they may not want to or be able to pull together if it's junk debt they bought fourth hand (or outright fraud.) I think this is different from the SoL letter I've seen mentioned already; maybe someone can come along to clarify that bit.

Knock on wood, I haven't heard back from them yet. Good luck, and consider a follow-up.
posted by trondant at 10:24 PM on October 12, 2005

Response by poster: Wow trondant, reading through your link really got me angry. The stuff Merchant Credit Guide Co is doing should be illegal. If not full-on fraud, it's definitely deceptive. I wonder how many people they've convinced to send in money?
posted by letitrain at 12:22 AM on October 13, 2005

I had a collection agency question about six weeks ago on AskMeta. Someone directed me to

This site is somewhat difficult (for me) to find what I need but it has been extremely useful, (check the bulletin boards). People are very good about answering your questions when you post them.

I hope this helps. (FWIW I am in the middle of disputing a five year old claim that just showed up on my report. It's a cable company and since they have my "personal information" the credit reporting agencies think that's enough to prove it's mine. I've never denied having done business with them, I just don't owe them money).

Good luck!
posted by 6:1 at 3:29 AM on October 13, 2005

Best answer: Buying "zombie debt" (legally uncollectable if proper defenses are invoked) for pennies on the dollar and then trying to collect it from unwitting consumers is not only perfectly legal, but a growing multimillion-dollar business.

Typically, here's how it works...

You've got some old, uncollectable debts from a time in the past when you were having money problems.

These days, you're doing okay, and your credit rating and scores reflect that.

A fairly simple database search matches those two facts up. You get flagged as "has money now, might pay up."

And the strongarm guys show up and try to bully you into paying a debt that, in all likelihood, the statute of limitations expired on long ago.
posted by enrevanche at 3:31 AM on October 13, 2005 [1 favorite]

Response by poster: enrevanche, one of the themes I saw in trondant's link is targeting recent mortgage shoppers. I just bought some land, so I think you're right, I was flagged.

I'll follow up if I have any more contact with them after sending the letter.
posted by letitrain at 8:02 AM on October 13, 2005

Note to future searchers: unlike other kinds of debt, there is no statute of limitations on student loans, according to this.
posted by acridrabbit at 10:21 AM on October 13, 2005

Crap. These MF's got me to pay, about six months ago. I knew I shoulda fought harder.
posted by dragstroke at 11:24 AM on October 13, 2005

It's my understanding that they can collect if you have recently told them you would pay it. If they call and say "You owe us X$ from 9 years ago." and you say "Yeah, I'll get that to you." you've reestablished the contract. Or established a new one. It probably needs to be more formal than that and maybe I'm pulling this out of my ass, but I seem to remember something along these lines.
posted by jaysus chris at 3:52 PM on October 13, 2005

I don't work for a collection agency, but I work in the collection department of a law firm (though IANAL), so I pretty much know what's legal and what's not.

It definitely sounds like what evanranche discussed. The statute of limitations on consumer debt (credit cards, car loans, personal loans) in New York State is five years from the date of default.

(Unless there's a judgment has been filed against you, then that's 20 years. But that doesn't sound like the case here.)
posted by gnomeloaf at 5:35 PM on October 13, 2005

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