You have a very pleasant phone call with a debt collector. The person begs you to send in a just a small sum, say $10, to settle the payment and promises to never bother you again. Suddenly, you get a new bill with the date of the collection account reset to the current date. Is it legal?
Yes, most likely.
“You send in that $10, and that starts the statute of limitations all over again,” said Margot Saunders, counsel at the National Consumer Law Center. “Their promise is not enforceable.”
The statute of limitations on debt — how long a collector can sue you over a debt — varies by state. But that ticking clock can reset from the moment you pay part of it, or even if you say the wrong thing over the phone.
In some states, if debt collector calls the consumer and asks, “Do you admit that you owe this debt and you’re just refusing to pay it?” and the consumer says “Yes, I can’t pay it, but I agree I owe it.” That can count as a reaffirmation of the debt, which in some states restarts the statute all over again.
What should a consumer say?
“’I don’t agree I owe it,’” said Saunders. “There’s no reason to ever have a friendly conversation with a debt collector. You don’t need to be rude, but you also don’t need to give them any information, whatsoever.”
One of our readers commenting on our site may have been caught in such a technicality:
I have a collection on an account from 2010. It has been dated at 2015 by the debt collection company. This is illegal or re-aging, isn’t it? What can I do? I live in Alabama and 6 years is the max from original date of the contract.
What Does It Mean for Your Credit Report?
If you’re looking at a collection account on a credit report, the date may mean a couple of things, said John C. Health, a credit expert and attorney for Lexington Law, a Credit.com partner. It could indicate the date the account was first reported to that debt collector (which may not have anything to do with the statute of limitations), or the new date could reflect any new payment you made. A collection account can remain on your credit report for 7 years plus 180 days from the date of your last payment on the original account.
We’re not exactly sure what date our commenter is referring to — the last payment or the date of the contract — so it is a question best answered by an attorney.
“The statute of limitations will usually vary depending on whether the account is considered a contract, negotiable instrument or an account. State law will govern, so this reader will need to consult local counsel for help,” said consumer attorney Troy Doucet of Doucet & Associates Co. in Dublin, Ohio.
In some states, the debt contract runs from the last payment, in others, from the date of default, Saunders said. It’s a very state-specific question in terms of timing, what state law applies, when the last payment was made, and what kind of contract.
There’s also something else to consider, Heath said.
“They may not be accurate dates,” Heath wrote in an email to Credit.com. “You will want to focus on the date of last payment to determine when the statute of limitations begins.” Ideally, you have that date in your own records. If you believe the date is inaccurate, you can dispute it with the credit reporting agency where you got the report with the error on it. (You can read more about disputing credit report errors here.)
To get a good handle on your situation, start by getting your credit reports and credit scores. Free annual credit reports are available from Equifax, Experian and TransUnion – and you can get two truly free credit scores, updated monthly, from Credit.com.
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How Credit Impacts Your Day-to-Day Life