By Alesha M.
When delving into the process of "Curing Debt Woes" there are some basic guidelines one can follow that may assist with removing derogatory accounts from the credit reports. It is absolutely possible for an individual to take on creditors and come out successful when attempting to create a more accurate financial report card for themselves. The process can be confusing at times as we hear so many differences in opinions about how to approach this however, once you have taken the leap; all the steps are pretty simple to follow. In this series of post I will be listing knowledge I have gathered to describe the process for resolving derogatory accounts so your credit reports is represented with the most accurate snapshot of your financial history.
You may ask: Why is it important for me to have an “accurate report”? The answer is simple… by creating a more accurate portrait of where you are with debt along with a snapshot of your current financial health will benefit you when seeking loans, lines of credit and other types of lending services where the Interest Rate is adjusted based on what is being reported. Poor credit and too much debt equals, no lending to higher interest rates. Less debt and an accurate credit report (resolving past credit issues) can equal healthy lending and fair interest rates.
The first thing one would want to ensure is that derogatory information does not appear on the credit report, where the process is a bit longer to get items removed (although not at all impossible). Did you know there is a Statue of Limit on derogatory debts? The statute of limitations (SOL) for a delinquent debt is the time limit for the creditor to file a lawsuit that can result in a judgment being placed on your credit report. Judgments have a huge adverse affect on you overall credit score and typically do not get removed.
According to www.cardreport.com , “The Statute Of Limitations only covers lawsuits, and SOL expiration does not affect other types of collection action or reporting of the account to credit bureaus. The creditor or collection agency may theoretically continue with letters and telephone calls forever (although third-party collectors are subject to the "cease and desist" provision of the Fair Debt Collection Practices Act.) However, they will generally put much less effort into collecting "Out-Of-Statute" debts, and may give up easily. Out-Of-Statute debts can still be reported to credit bureaus for the time limits specified in the Fair Credit Reporting Act.” Follow this link to find the statue of limit for your state, http://www.cardreport.com/laws/statute-of-limitations.html.
This information is pertinent as it can affect lawsuits that lead to judgments levied against your credit report. It also is grounds to stop collection calls from third parties who have taken over you debt from originating creditors.
Now that you have the “what” and “why's” here is the “how”......
1. Never admit you owe a debt- If a creditor calls you regarding a debt, understand you have the right to remain silent or ask for proof of the “alleged “ debt that would include the originator of the debt, the original debt amount (minus fees and interest) and the date the debt become delinquent.
2. If debt is a certain amount of years old with NO activity one is free to clear the debt.
3. Make sure to verify the age of the debt against the statue of limitation for your specific state. (see link in previous paragraph)
4. Paying a debt that is beyond the Statue is not required. Be bold, never claim the debt.
5. Once all information is verified in your favor address the issue with the collector in written form. Explain the account is no longer collectible. This is referred to as a letter of dispute. Explain any further attempts to contact you or to list this on a credit report is an act against your rights under the fair credit reporting act and that you will seek damages if your rights are violated.
6. If judicial proceedings follow request a dismissal based on these grounds
7. Remember it is up to a creditor/collector to prove you owe the debt. If they do so it is then up to you to prove you do not.
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