When it comes to debt collection, debts that aren’t yours can be more difficult to handle than your own debts. Inaccurate debt collection may result from someone opening an account on your behalf and failing to pay the bill, and sometimes paid debts are mistakenly sent to collection agencies. In some cases, unethical debt collectors create fake debts in hopes of scaring consumers into paying without questioning whether the debts are even real. If you have any doubts about whether the debt belongs to you, it’s important to follow the right steps.
Determining Whether the Debt Belongs to You
Don’t assume that just because the collection looks strange and you don’t remember having an account with that creditor, the debt collection isn’t yours. There is always a possibility that there is a bill that has been missed or that you simply don’t recognize the name of the original creditor. For example, a loan may have been sold to a different service provider or, as is the case with commercial credit cards, the bank that issues the credit card has a different name than the store you signed up with for the credit card.
Reporting Limits and Statute of Limitations
The amount of effort you put into disputing depends on how much the collection agency can take legal action against you for the debt based on the reporting time limit and statute of limitations in your state. The credit reporting time limit is the maximum time the debt can be reported to credit bureaus, which is seven years from the last date of delinquency for most accounts. In 2022, for example, debt collectors can’t report debts from 2012. The statute of limitations is the time frame in which the debt can legally be enforced. It is unlikely that a debt collector will sue you after the debt has expired under the statute of limitations, but in this case, it won’t matter because the debt isn’t yours.
Disputing the Debt
You have the right to request verification of any debts that collection agencies ask of you. Once you request verification, the debt collector must cease collection efforts until they can show that you owe the debt and that the collector has the right to collect the debt. Until they prove that, you should not receive any calls, letters, or updates from credit reporting agencies or lawsuits.
You can dispute the debt with the debt collector by sending what is known as a “debt verification letter,” which simply states that you do not believe the debt is yours and that the debt collector must send proof of the debt to you. Send your letter via certified mail so that you have proof of when it was sent and received.
Check Your Credit Report
It’s one thing to suffer credit damage due to collection accounts that belong to you, but it’s unacceptable to face credit problems because of collection accounts that don’t belong to you. If collection agencies are contacting you about a debt, there’s a good chance the debt has been reported to credit reporting agencies. Obtain a copy of your credit report from the three major credit bureaus – Experian, TransUnion, and Equifax – and check whether collection accounts have been reported. You should check all three because some collection agencies report to all three while others report to only one or two. If you find a debt, dispute it with the credit reporting agencies.
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Your collection accounts can affect your credit score, prevent you from obtaining credit cards and loans, and make you pay higher interest rates or security deposits. You have the right to an accurate credit report, which means you can dispute collection accounts that do not belong to you. Write a letter to each of the credit reporting agencies mentioning the inaccurate debts on your credit report. Explain that the account does not belong to you and provide copies of any evidence you have that supports your claim.
Do Not Ignore the Debt
Not seeing the debt or thinking about it is not a good strategy for dealing with debt collection, even for collections that are not yours. If the debt is not listed on your credit report, is beyond the credit reporting time limit, or is beyond the statute of limitations, you have little to worry about. Even when all these things are true, you cannot assume that the debt collector will not update the debt and add it to your credit report. They may also file a lawsuit anyway, hoping that you won’t show up in court, so they can win a default judgment against you.
You can stop the debt collector from contacting you by sending a simple message to stop contacting you about the debt. In the message, you should only request that the debt collector stop contacting you regarding the debt. Once the debt collector receives your message, they can contact you once more to inform you of the action they will take, if any. After that, it is illegal for that collector to contact you about this debt. Send your message by certified mail.
Note: Requesting that a debt collector stop contacting you does not stop them from using other collection tactics, such as suing you or listing the debt on your credit report. It’s best to inform the collector that the debt is not yours, provide evidence of any payments you made, or request verification from the collector.
When Debt Collectors Act Inappropriately
You may be able to sue a collector who continues to collect a debt after you have followed all the correct steps to dispute the debt and asked for verification. A lawyer with experience in handling debt collection issues can tell you if you have a valid lawsuit and help you file claims. You should also consult a lawyer if a collection agency sues you. Even if the debt is not yours, you want to have the best possible legal defense.
Get the Consumer Financial Protection Bureau (CFPB) involved if the debt collector or credit reporting agencies do not respond properly. For example, if the debt collector continues to collect from you after failing to respond to your debt verification letter, or if the credit reporting agency continues to list the debt on your credit report after you’ve disputed it. You can file a complaint on the CFPB website.
Frequently Asked Questions (FAQs)
What can you do if a medical bill has been incorrectly sent to collections?
If a medical bill has been mistakenly sent to collections, you can contest it by sending a debt verification letter to the debt collector. Then, contact the three major credit bureaus to dispute the account on your credit report. However, do not make the mistake of assuming that medical debt cannot affect your credit score. Although the latest scoring models (FICO 9 and VantageScore 3.0 and 4.0) prioritize other types of debt more, medical debt can still lower your credit score.
How
Can you tell if a debt collection message is fake?
A legitimate debt collector should be able to provide you with the name of the original creditor or tell you how to obtain that information. They should also be able to provide confirmation of the debt. Be wary of any impersonating debt collector claiming to be a government official, asking for sensitive information like your social security number, threatening you with jail, or saying they will disclose your debt to your employer or contacts.
Source: https://www.thebalancemoney.com/debt-collection-that-is-not-yours-4121109
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