Dear Michael: “My daughter has medical bills from 2008 when an emergency situation arose and she was not covered under insurance. She recently checked her credit report and contacted the collection sites to see if they were really hers. If you contact the collection agency, does this restart the ‘7.5’ years on your credit report? Would it make any difference to see when the last contact or mail was sent to her? What if she didn’t live there anymore and the mail was returned to sender?”
That 7 and one half year credit reporting time frame is never really restarted unless an account is brought completely current. When a debt stops being paid, or perhaps in the case of a medical bill that never saw a payment, that then appears as a derogatory on your credit reports, is when the credit reporting clock starts ticking. Calling debt collection agencies and lenders about a debt does not change anything about credit reporting.
I do see people confuse restarting credit reporting limits with how calling or sending letters to debt collectors might restart the time limit to be legitimately sued for collection. I am going to post more than you were potentially asking about, because I do not think I have a dedicated post about how verbal or written acknowledgment of a debt can restart the time collectors must follow in order to file legitimate lawsuits.
Acknowledging or reconfirming a debt passed your state time limits to sue.
There are state specific laws that govern when your debt can be “reset” for the purposes of suing you in court in order to get a judgment and expand their options to force payment. This is commonly referred to as acknowledging your debt, or reconfirming it. More often than not this happens with a debt collection agency or debt buyer.
Most state laws speak only to reconfirming your debts and resetting the SOL to sue when you submit a written acknowledgment of the debt, or remit a partial payment (no matter how small). When in doubt about this issue, you will want to speak to someone with experience in consumer law and how your state courts have ruled on this issue in the past.
There are places online you can read about only negotiating with debt collectors in writing. And I think, over time, people have blurred the line of what debt collectors can legitimately do to sue, with credit reporting limitations.
Sending debt collectors only written offers to pay a reduced lump sum to settle debts has long been bad advice, as those written offers to pay can mistakenly restart the SOL to be sued. Negotiating over the phone is preferred, followed by any written agreement being sent by the debt collector, and not you. Are there exceptions to this? Absolutely there are, but this is enough of a concern to suggest phone calls over written communication with collection agencies.
Now… your daughter was only calling to verify the debt on her credit report was hers. That’s great because:
1. She did this over the phone.
2. She was trying to validate the debt as hers, not admit to the debt.
There are stark differences, and consumer rights you avail yourself, when disputing or requesting validation of a debt from a collection agency compared to what can be considered a creditors rights when you reconfirm or re-acknowledge a debt. You also have the right to dispute off of your credit reports any incorrect and out of date information .
Should you be concerned about restarting your debts?
There are different camps people fall into when it comes to communicating with debt collectors. Some folks preach how you should never communicate with debt collectors; others say only communicate in writing; and never admit the debt. Because most of my debt and credit career has consisted of helping people understand their options for resolving debt, and often with a collection agency, I have a different take.
I believe people should communicate with debt collectors when there is a goal to achieve. Here are some different goals I know people want to achieve when it comes to collection agencies.
- You want to stay under the radar until the debt passes the SOL to be sued in your state.
- You want to communicate, or not, if it serves the purpose of limiting your risks of being sued.
- You want to resolve a collection agency debt so that your credit reports can be updated to show a paid collection.
- You want phone calls and letter form collectors to stop.
- You want to make sure a debt is yours, or that the amount owed is correct.
- You want to be certain you would be dealing with the right debt collector.
If you do not have a purpose to communicate with a debt collector, you are often better off just biding your time until you can either no longer be sued, or the derogatory item is removed from your credit reports.
It is helpful that some states have passed laws that require debt collectors to clearly disclose that your states limitation on whether they can sue you has passed. And some larger debt collection agencies have settled with regulators to disclose expired lawsuit limits to all consumers they try to collect from, regardless of state of residence. I do hope that national law changes currently being contemplated include, at the least, the disclosure about your debt being time barred from being sued.
Lastly, I should point out that while derogatory credit reporting from unpaid credit cards and medical bills may not be reset from phone calls or letters you send, if you can still be sued for a debt, a judgment will create a new negative entry about the same debt, and that will cause fresh damage, and generally for a whole new 7 year period.
Based on the 2008 dates for when the medical debts were created, they should be deleted off of her credit reports soon. Post the dates you see the collection agencies are reporting for these accounts in the comments below. I may have more feedback based on what you share.
Anyone with questions or concerns about what collection agencies can do to mess with your credit reports, or how collectors view you as a potential lawsuit target, is welcome to post in the comments below for feedback.