For those of you just coming to grips with old bad credit, here is some good news.
SEVEN YEAR LIMIT
The Fair Credit Reporting Act requires that the credit bureaus remove any negative credit from your report after 7 years, with the exception of bankruptcy which is 10 years. Unfortunately, the credit bureaus are poor in following these regulations and often must be reminded. Usually a phone call or letter is sufficient in most cases. Simply remind them of the law.
STATUTE OF LIMITATIONS
Every state has statues of limitation for collecting debt. Once this period has elapsed the debt is called “time barred” and cannot be legally collected. That does not mean that a collector won’t make an attempt to do so, or try and convince you to pay it. Check your state to see when debts are no longer collectable.
Some other good news, if you are dealing with a debt collection company. Be sure they have their house in order before you pay the debt. Even if you know this is a legitimate collection, there are certain laws that collection agencies must follow before they can collect or report a debt to the credit bureaus. (FDCPA- Fair Debt Collections Practices Act)
- They must be able to show you they have a license to operate in your state
- The must have a contract between the original creditor and themselves sating they have the right to collect your debt
- They must be able to show you a contract with your signature showing you are responsible for the debt
- They must be able to document any fees and how the amounts owed were arrived at
Without this documentation, collection agencies do not have the right to collect or report debt. If they have already done so, the negative reporting must be retracted. If they don’t you can file suit in small claims court and collect up to $1000.
PAID FEDERAL TAX LIENS
These can be easily removed by completing a form the IRS has provided and mailing it to them. The liens must have been paid in full or you have an agreement to pay them in full before this will be removed from your credit profile.
These are a few of the tools you have in your arsenal to protect you from unscrupulous debt collectors and the credit bureaus.