How To Deal With Collection Agencies ~ Part 3 (State Statute Of Limitations For Credit Cards)

A lot of the bad credit that is on credit reports is from collection agencies.  But, there are original creditors too that report, so you may have 2 or more negative entries on your report for the same alleged debt.  This tool, the State Statute of Limitations (SOL) is great for both.  Now, most states have reasonable SOL's but there are a few that are absolutely insane!  When an alleged debt is outside of the SOL it is considered Time-Barred and non-collectible.  But, that doesn't stop many of these collection agencies, and some creditors, from still going after you.  What is completely ridiculous, is that they legally can!  Well, that is, unless you put a stop to them.

How do you put a stop to them, through a demand for validation and then a follow up with a Cease & Desist (C&D) letter.  Some are arrogant and greedy enough though to file a civil claim against you.  That can easily be defeated by taking their lame attempt at validation (usually some printout or a copy of the last bill from the original creditor) that clearly shows a date from years ago.   I have actually seen them dummy up a new statement with a current date on it, supposedly from the original creditor, to try to re-age and trick the alleged debtor into giving up and just paying them.

I'm going to shout now, and bang my head against a wall - DON'T DO IT!!! DON'T PAY THEM!!!

Dig around for a true old bill or contact the original creditor for a copy of the statement.  Ask them to send you back a copy of the last bill that you paid or better yet, check your credit report. Usually, the original creditor will put a somewhat accurate date on the credit report, and Equifax has a little chart that shows when you did and didn't make payments.  That is proof of the Date of Last Activity (DLA), which is when the SOL starts tolling.  If you're sued, then that will be one of your exhibits in your answer to the complaint, proving that it is time barred and they have no recourse.  Don't forget, you want to keep copies of your letters demanding validation and their responses.  It is just more proof that they didn't validate, so they are in violation of the FDCPA (continuing collection activity without validating or verifying the alleged debt).

So, let's get to it. Here are the Statute of Limitations for Open Accounts, which represent credit card accounts, which are the main type of negative credit that annoys most of us, for every US state and several territories. 

STATE	NUMBER OF YEARS	ANY COMMENTS
Alabama	3 Yrs	Actions based on fraud - 2 yrs
Alaska	3 Yrs	Used to be 6 yrs
Arizona	6 Yrs  or  4 years On July 20, 2011 AZ changed its statutes to include credit cards as written contracts. If the default/DLA is prior to 7/20/11 then the prior 3 year statute of limitations (SOL) applies. If the DLA is after 7/20/11 then the new SOL applies.  Now, the new 4 year SOL is for credit card accounts obtained outside the state of AZ and the 6 year SOL applies to credit cards obtained in the state of AZ.  So check the billing address of your credit card account to see whether your credit card is inside or outside of AZ.	Judgments have to be renewed w/in 5 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Arkansas	3 Yrs	Medical 2yrs from service or last payment, whichever is latest
California	4 Yrs	SOL stopped if pymt made after SOL expires - In other words, Do Not Make Pymt after it expires! But, pymt w/o acknowledgment does not restart the SOL
Colorado	3 Yrs	Jdgmt can renew every 6 yrs
Connecticut	6 Yrs	Open is considered written
Delaware	3 Yrs	Considered a general contract
District of Columbia	3 Yrs	Oral promise restarts SOL!!
Florida	4-5 Yrs	Contract or Written instrument is 5 yrs but all other is 4 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Georgia	4 Yrs	From date of default, not last pymt. Making a pymt without acknowledging the alleged debt does not restart the SOL.
Guam	6 Yrs	For contracts such as medical bills, the SOL is 4 yrs from date of service
Hawaii	6 Yrs	Jdgmt can renew 10 yrs
Idaho	4 Yrs	Jdgmt can renew 5 yrs
Illinois	5 Yrs	Pymt or promise to pay extends it to 10 yrs from that date
Indiana	6 Yrs	Pymt, acknowledgment or a promise to pay restarts the SOL
Iowa	5 Yrs	Pymt, acknowledgment or promise to pay restarts SOL
Kansas	3 Yrs	Written contracts SOL is 5 years. Many sources claim SOL for credit cards is 5 yrs but that is not so according to Article 5, 60-512 of Kansas statutes.  Pymt w/o acknowledgment doesn't restart the SOL
Kentucky	5 Yrs	Judgment 15 yrs
Louisiana	3 Yrs	Jdgmt can renew 10 yrs
Maine	6 Yrs	Jdgmt is 20 yrs (don't let that happen to you! Pymt w/o acknowledgment doesn't restart the SOL
Maryland	3 Yrs	Reaffirming through written, orally or a pymt restarts SOL
Massachusetts	6 Yrs	Judgment 20 years, probate claims 1 yr from date of death. Pymt w/o acknowledgment doesn't restart the SOL
Michigan	6 Yrs	Jdgmt can renew 10 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Minnesota	6 Yrs	Pymt or written acknowledgement restarts the SOL
Mississippi	3 Yrs	Jdgmt can renew 7 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Missouri	5 Yrs	Jdgmt can renew 10 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Montana	8 Yrs	Written acknowledgment or pymt restarts SOL
Nebraska	4 Yrs	Pymt, partial pymt, or written acknowledgment restarts SOL
Nevada	4 Yrs	Pymt w/o acknowledgment of alleged debt doesn't restart SOL
New Hampshire	3 Yrs	Pymt restarts the SOL
New Jersey	6 Yrs	Jdgmt can renew at 20 yrs - that's insane!
New Mexico	4 Yrs	Written acknowledgment or pymt restarts the SOL
New York	6 Yrs	Pymt w/o acknowledgment doesn't restart the SOL
North Carolina	3 Yrs	SOL runs from date of each individual charge
North Dakota	6 Yrs	Written acknowledgment, promise to pay, or payment restarts the SOL
Ohio	6 Yrs	Jdgmt can renew at 5 yrs
Oklahoma	5 Yrs	Jdgmt 5 yrs
Oregon	6 Yrs	Jdgmt 10 yrs
Pennsylvania	4 Yrs	Written acknowledgment, promise to pay or pymt restarts the SOL
Puerto Rico	3 Yrs	Jdgmt 15 yrs
Rhode Island	10 Yrs	Jdgmt 20 yrs.  Just slap me silly if I ever go nuts and move there!
South Carolina	3 Yrs	Written acknowledgment or partial pymt restarts the SOL
South Dakota	6 Yrs	Jdgmt 20 yrs.
Tennessee	6 Yrs	Jdgmt 10 yrs
Texas	4 Yrs	Pymt w/o acknowledgment doesn't restart the SOL
Utah	4 Yrs	Jdgmt 8 yrs. Written acknowledgment restarts SOL
Vermont	6 Yrs	Jdgmt 8 yrs
Virgin Islands	3 Yrs	Jdgmt 20 yrs
Virginia	3 Yrs	Jdgmt can renew at 10 yrs. Pymt w/o acknowledgment doesn't restart the SOL
Washington	6 Yrs	Jdgmt can renew at 10 yrs
West Virginia	5 Yrs	Acknowledging debt, promise to pay, any pymt restarts SOL. Be careful, it may apply to verbal/oral acknowledgment.
Wisconsin	6 Yrs	Pymt restarts the SOL
Wyoming	10 Yrs	Jdgmt 21 yrs. Again, just slap me silly if I ever go nuts and move there!

This information is believed to be correct as of the date of this post, but state laws and statutes can change.  You should also check your state statutes to verify that this information is correct, just to be on the safe side. Even though some states show that making a payment without an acknowledgement does not restart the SOL, to be on the safe side, Don't Make A Payment! Don't verbally or in writing admit that its your debt. Don't reaffirm, especially if you are near, at, or past the SOL. Doing any of these things will make the negative information stay on your credit longer. You're trying to improve your credit, not make it worse, right?

Again, just because you have hit the SOL for an alleged debt, it doesn't mean the lowlife, scumbag, junk debt buyers can't keep hounding you and keep trying to collect. If you are outside of the SOL, you will need to send them that C&D letter to make them go away.  I have a sample of one of the C&D letters I use on the post from April 30th, 2013 titled How To Stop Collectors and Creditors From Calling You. (It will open in a new window if you click this link).  

If you don't mind them calling you multiple times a day or using auto dialers, or any other violation of the FDCPA, FCRA, or TCPA (Telephone Consumer Protection Act), you can keep a notebook or log book and start documenting, then hit them with a "Notice of Demand" for their violations, notifying them if they don't remove the negative entries from your credit reports, you will be taking them to court.  There is a procedure for this, but I do have some friends that successfully have made some of them pay them as well as deleting the alleged accounts.

Well, hopefully this information will help you in your fight for better credit reports and good riddance of those pesky collectors.  If you need help with your credit repair, feel free to call or email me. I do respond and answer my phone.  If its a job you don't want to take on by yourself, again, just email or call me. My contact info is Waaaay up there at the top on the right (I know, this is a looooong post!). I would love to help you get the credit report that rightfully belongs to you!

Will Paying Off Old Collections and Judgments Improve My Credit Score?

One question I get asked a lot is "Will paying off old collections help or improve my credit score?"  The answer to this is No!


Oh, you want an explanation?  Okay, here it is.  If you've read some of my old posts, you'll know that I often say, once bad, always bad.  In other words, if you have a bad trade line or bad credit entry on your report, especially from a collection company, whether you pay it or not it is bad.  If you pay it, it is just a paid bad credit entry.  So, you don't want to pay it, you want to get it removed.

What if you feel like you have a moral responsibility to pay the debt?  My suggestion, get therapy and get over it!  Okay, I'm kind of kidding.  But think about it.  If its a collection company, did you sign a contract with them - uh, nooooo.  You don't sign a contract and set up accounts with collection companies, they buy old bad alleged debts and then try to make you think you owe them.  But you don't owe them.  You NEVER owe them.

Did you watch the video about how loans and credit really work? I love that video.  He makes it so clear.  First of all, banks and creditors don't lend money. They create it with a few strokes on a keyboard.  They don't lend credit - well, actually they do, but that is illegal.  It is fraud and they get away with it all the time because these different entities have brainwashed and manipulated your thinking to make you believe you actually owe money that was never lent to you.  

Besides the fact that none of these creditors every really lend any money to anyone, they insure this made up debt and after 3 months of no payment, they put in a claim for insurance monies and at 6 months, they charge it off and take tax credits as well.  So, how are they hurt? Oh, well, they get hurt in that they didn't make as much of an obscene profit as they were hoping for, but, they still got money from you that you didn't really owe and they got interest for money they never lent, and they got tax credits and they got insurance monies.  

What did you get in return? You got to buy something with credit collateralized by your signature, which they insured and sold many times over and never applied the money they got from the sale of your promissory note to the phony baloney credit you used. You got harassment and credit dings, and higher interest rates and extra exorbitant fees. You probably got denied credit.  Wow, now there's mutual consideration and fair trade.  What you actually got is a void contract that they never disclosed to you, that they actually had no right and have no right to receive any money from you.

So, what good comes of paying collections or judgments? Well, if you're trying to get a loan or some new credit, the lenders/creditors like that you pay your alleged debts. But your score doesn't really go up too noticeably.  It may go up a little bit when you pay off a judgment because it really helps your debt to credit ratio.  But, what you may not realize is that when you pay these old, alleged debts, it resets your date of last activity (DLA) and that's like fresh bad credit and then you get to fight with the bureaus for another 7 to 10 years to get the crap off.

Oh, and paying off accounts with a settlement agreement.  Should I even go there? That makes me want to scream!  If you pay off an alleged debt with a settled, less than full payment, you know what you get for that moral decision?  You get a new DLA on your credit report and you get a form 1099-C to pay taxes on cancelled debt. Yes, taxes on the magic money that the creditors already got a tax break and big fat insurance bonus on. And you get a lower credit score because you didn't pay in full, as agreed. And, since it was probably already a bad debt, now you have a paid bad debt.

Do you see why I don't like the idea of paying off these old alleged debts?  Judgments, sometimes you just don't have a choice because they put liens and garnishments on you. The best thing to do before you get a judgment, is to set yourself up with some asset protection to block them from getting anything from you.  Then, in 10 years, most likely they are not going to renew the judgment and you're good to go. If you've already had a judgment put against you and your wages have been garnished or you've paid it already, make sure you get that notice of satisfaction and make sure they record that with the courts or they will be screwing you over on your credit for many years to come.

If your credit has these negative trade lines, bad credit, derogatory credit entries and you are ready to fight but need some help, please email or call me.  If you don't fight back and if you don't try to repair your credit reports, they will just stay bad.  Collectors, creditors and the bureaus will not go out of their way to remove old bad credit on their own most of the time. It is up to you to make them do it. I would love to help you get your credit back to when it was looking much prettier.  My contact information is up at the top on the right. Please call me or email me so I can help you get started.

You Have Rights When It Comes To Your Credit Report

You do know you have the right to repair your credit don't you?  Well, the bureaus and many creditors would love for you to believe that what is put on your report has to stay there for 7-10 years. That is absolutely not true! In fact, there are tons of laws written to protect YOU, not them!

You have the right to challenge and dispute Anything on your credit reports that you don't agree with. It doesn't matter if it is basically true or not, you have that right. Just because you once signed a contract with a creditor, doesn't mean you can't dispute that item, especially if it has been sold to a 3rd party collection agency. Further, if anything is not correct, and I mean ANYTHING, that they put on your credit report, you can get it removed.  The law says that they have to report Only 100% Accurate information. I have seen enough credit reports over the last 2 decades to know that if you have negative credit, then you have some mistakes on your credit report.  

Think bad credit has to stay for 7-10 years? Nope, it doesn't. What the law actually says is that it cannot stay on longer than 7-10 years. It does not say anything Has to be reported at all. The limit is for the provider of the information and the credit bureaus, not you! But, all states have statutes of limitations. Your state may be less than the 7-10 years. Mine is. Mine is 4 years. What is significant about that is collectors/creditors cannot report you after the statute of limitations because it is time barred and one of the actions considered as collection activity, which is prohibited after it is time barred, is reporting on your credit report. If you dispute a time barred credit line and the reporting party verifies with the bureaus, that is also considered collection activity and it is not allowed, by law!

You have a right to a free credit report from every bureau every single year. You can use these free reports to start cleaning your credit.  You can challenge bad credit based on wrong dates, wrong amounts, wrong types of accounts, heck, many times what you need to dispute is with a collector or collection agency.  You had better dispute those. You never signed a contract with them, you signed with an original creditor. You by law, don't owe them a dime!

3rd party collectors are considered "strangers to the transaction" and the law goes on to say that they are mere volunteers who paid an alleged debt, but not with your permission or a request from you to do so. AmJur states that "the right of subrogation [the right to substitute] does not exist for a stranger to the transaction. This means not only do they not have the right to collect from you, they really don't have the right to report on you. They have NO CONTRACT with you.

Start cleaning your credit - its Your Right!  Start by getting your credit reports from Experian, TransUnion, and Equifax. Send letters to every collector demanding validation and make sure you remind them that they have no contract with you. Make sure you keep a copy and make sure you mail it certified with return receipt. That is important because it is your proof that you have put them on notice. When you do, you further protect yourself from them because the law says that until they validate the alleged debt, they must cease all collection activity. Remember, verifying with credit bureaus is considered collection activity, so it is against the law if they do it.

Once you get your green cards [return receipts from the post office] back, send off letters to the bureaus disputing the validity and accuracy of each of the collectors you just sent the validation demands to. Warn the bureaus that you have demanded validation from each one and none have provided validation. Let them know that if any of them verify and they update the report to show anything was verified, they are now liable for damages as well. They knowingly let information that is barred by law onto your credit report.

You can improve your credit. You can remove negative entries from your report. You don't have to wait 7-10 years, so don't. Do it now or get someone to help you do it. It does take commitment and consistent effort, but it is your right and so much better than paying off alleged debts to some grimy collection companies that have no legal right to demand anything from you. Play the game and beat them - that's your right too!