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Collections company is trying to collect on an old debt. Do I even need to respond?
I received a letter a few weeks ago and it's dated January 28th, 2015. I'm just gonna type out what the letter says.
"Please allow this letter to introduce Jefferson Capital Systems, LLC
as the owner and current creditor of your referenced account. NOTICE:
Unless you notify this office within 30 days after receiving this notice
that you dispute the validity of this debt or any portion thereof, this
office will assume this debt is valid.
If you notify this office in writing within 30 days after receiving
this notice that you dispute the validity of this debt or any portion of
it, this office will obtain verification of the debt or obtain a copy
of a judgment and mail you a copy of such judgment or verification.
If you request of this office in writing within 30 days after
receiving this notice, this office will provide you with the name and
address of the original creditor if different from the current creditor.
This information is not legal advice. The law limits how long you can
be sued on a debt. Because of the age of your debt, we (Jefferson
Capital Systems) cannot sue you for it and we will not report it to any
credit reporting agency. In many circumstances, you can renew the debt
and start the time period for the filing of a lawsuit against you if you
take specific actions such as making a written promise to pay. You
should determine the effect of any actions you take with respect to this
debt."
Then the letter gives me three options to pay off the debt. A 50%
offer when I give them a lump sum payment that is 50% off the original
debt. After they receive this payment, they will update my account to
reflect as paid and close their file.
Second option is the 60% offer. They will receive three payments.
Third option is to make 12 monthly payments on the whole debt.
Now here are some details. The total debt is $170.32. I incurred this
debt when I was 18 and opened up a checking account at what was then
Wachovia. I was irresponsible with money back then and I overdrew my
account. I was never able to get my account out of the hole again and
they ended up just closing my account and sending it to collections.
I'm 27 now. I'm baffled as to why this debt is showing up again. My
mother is positive that we paid this off (she handled this several years
ago when I was in my early 20's, I believe) and is adamant that I
should not have to pay this debt. I honestly don't know if we paid this
off or not. My mother used to handle my finances but now I do. I took
over and started being responsible for myself several years ago.
Anyway, I pulled my credit report from Equifax a few months ago and
this debt does show up there. I didn't do anything as I figured it
should fall off my credit report. I haven't pulled reports from the
other two bureaus as I wanted to stagger pulling my free credit reports
throughout the year.
But a few months ago (I can't recall exactly when) Credit Karma informed me that this debt fell off my credit report.
So now I'm not sure what to do. It's now March 1st. I guess I've
missed the 30 day deadline to respond. So now what? Should I have
responded or just ignored it given how old the debt is? On the Equifax
credit report I pulled last year, it says the date of first delinquency
is October 2007.
What do I do now?
Re: Collections company is trying to collect on an old debt. Do I even need to respond?
It might just be showing up again because a new company bought the debt and is now trying to collect again.
Contacting them, will restart the timeline.
My advice is more along the line to develop a system to deal with your mail in a timely basis. Open it daily and deal with what ever needs to be done ASAP - don't let things linger for weeks.
Take this with a grain of salt and do your own research, but I wouldn't touch this collection with a 10-foot pole. It should have already been dropped off your credit report/history because it is 7 years old (or close to it).
And I'm pretty sure (though not 100%) that to pay it or pay anything toward it, will "renew" the collection. Even if you pay it off, it could then still sit on your credit report for another 7 years. Because, OH! Let me tell you...just paying a collection off does not make it disappear from your credit report. In fact, ironically, an unpaid collection vs. a paid collection does not make much difference with your credit score. Your goal is to have that collection COMPLETELY no longer showing.
If it is still showing, write a letter to the three credit bureaus requesting the collection be dropped off your report because it is past 7 years and was paid on (month/year) of payment. For the latter piece, I would even just estimate that based on what your mom remembers....though even better if the documentation still exists.
From what the letter says, it even sounds like the collection agency themselves realize they are past the statue of limitations and are just trying to get whatever they can.
I'm currently learning a lot about this stuff as I have some old debts that I'm trying to clear up in order to improve my credit. I'm by no means an expert, but may have some valuable input.
It should have dropped off your credit report after 7 years. If it still shown on your report, write the credit bureaus, tell them the charge is older than 7 years and that you want it removed from your reports. If you can find documentation that it was paid, that's even better... send that to credit bureaus saying that that the collection status is incorrect and to remove the disputed item.
You do not need to pay them (unless you ethically feel obligated to do so), and doing so can hurt your credit by bringing that back to current status on your credit report. If you make one payment or agree to pay it, it resets the clock and they can sue you for it. And it can stay on your report for another 7 years. And if they do sue you for it, a filed judgment is much worse on your report than a collection. If going for loans or mortgage, they will often overlook old collection items, but won't overlook a judgment, since that can put liens on your property.
If you do as others said and try to do a settlement, instead of a full payment, it still will show up as a new negative item (settlement) on your report and hurt your score. If you do settle or pay it, I would only do so if they agree to remove the item from the reports in exchange for payment. You can ask them if they will take 50% payment in exchange for removing the item from credit. Sometimes they will agree to a full removal, but more often they will agree to report it as paid in full on credit reports. Then, have them send you that in writing before sending them money. Anything less than that will hurt your score by bringing it to a current issue, instead of an old one that could/should be removed from the report entirely. If they won't agree to show paid in full or removed entirely, it will cause negative impact on credit.
But, it won't hurt you to not pay it. They are past the point of recourse on it. That doesn't mean they won't still send you letters about it though. And you do have a right to have them removed from credit report, you just need to write the bureaus to do so.
First of all Jefferson is a legit collection agency. I have dealt with them in regards to one of my husbands debts.
Second, your mother needs to dig through her records to find proof that payment was made. If she can't find proof, then assume it wasn't paid because without proof you have nothing. Sorry, but that's the truth of it. If she paid it, then send them a copy of the proof. If you didn't then you need to decide if you are going to wait for it to go away or pay it.
You may want to order your credit report to make sure that you don't have a judgement against you. Normally debts only stay on your record for 7 years, from the time it was turned over to collections. However, if the collection company took you to court it (and you ignored the notices) and had a judgdement filed against you it can stay on for 10-20 years depending on the state. It can be revived again adding another 10-20 years. You don't want a judgement against you because it can be held against you if you try to get a mortgage, any other type of loan, or even an apartment and depending on type of job, it can prevent you from getting a job too. My big thing is that you don't want to ignore this if they are taking you to court. A friend of mine ignored the court notices figuring it would go away and guess what, not only did the court rule in favor of the collection company they charged him with court costs & 10% interest. That was back in 2001 and he didn't pay it. So the balance of $7780 that he originally owed is now $18,500 because he didn't address it. At this point I believe they are about to start garnishing he wages and based on what my state will allow for maximum garnishement, he is going to his paychecks hit for the next 4-5 years. Yes, this is extreme compared to your situation. But just wanted to show you the worst case scenerio for ignoring debits.