There is typically a time limit within which creditors can pursue repayment if you stop making payments on your debts. After that time, they can no longer legally pursue the debt. But that doesn’t mean you can just forget about the debt. Learn more about how debt collection and statutes of limitations work.
When can a debt collector report your debt to a credit reporting company? This is a frequently asked question with a somewhat ambiguous response. To help you understand your rights and what to expect, we’ll break down the laws and regulations pertaining to credit reporting and debt collection in this guide.
The Fair Debt Collection Practices Act (FDCPA)
The FDCPA is a federal law that protects consumers from unfair debt collection practices. Among other things, the FDCPA requires debt collectors to follow certain rules before they can report a debt to a credit reporting company.
Specifically, a debt collector must:
- Contact you: Before reporting a debt to a credit reporting company, the debt collector must first contact you and give you a chance to dispute the debt. This can be done in person, by phone, by mail, or by electronic communication.
- Validate the debt: The debt collector must also validate the debt, which means they must provide you with proof that you actually owe the debt. This proof can include a copy of your original agreement, a statement from the original creditor, or other documentation.
- Wait a reasonable amount of time: After contacting you and validating the debt, the debt collector must wait a reasonable amount of time (generally 14 days) before reporting the debt to a credit reporting company. This gives you time to dispute the debt or make arrangements to pay it off.
What if the debt collector doesn’t follow these rules?
If a debt collector reports your debt to a credit reporting company without following the rules outlined above, you may have grounds to file a complaint with the Consumer Financial Protection Bureau (CFPB) or take other legal action.
How often can a collection agency pull my credit?
In order to collect the debt, debt collectors are permitted to obtain your credit report as frequently as necessary. But they are only permitted to notify a credit reporting agency about the debt once every 180 days.
How long does a collection stay on my credit report?
A collection can stay on your credit report for up to seven years from the date of delinquency. However, if you pay the debt in full, the collection may be removed from your credit report sooner.
What can I do to protect my credit score?
There are a few things you can do to protect your credit score from the negative impact of collections:
- Dispute any errors on your credit report. You can get a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) once a year at AnnualCreditReport.com. Review your credit report carefully and dispute any errors you find.
- Pay off your debts as quickly as possible. The sooner you pay off your debts, the less time they will have to negatively impact your credit score.
- Consider hiring a credit repair company. A credit repair company can help you dispute errors on your credit report and remove negative information. However, be sure to choose a reputable company and do your research before you sign any contracts.
You can defend your rights and your credit score by being aware of the laws and regulations governing credit reporting and debt collection. Please do not hesitate to contact the CFPB or a licensed financial advisor if you have any questions or concerns.
What Are the Four Types of Debt?
Debt generally falls into a few main types. Each type works fairly similarly when it comes to debt collection.
Regardless of how the original account was set up, if you miss payments on a debt, it can become delinquent and go to collections. Here are the main four types of debt:
- Secured. Secured debt is when you pledge something as security for a loan. That makes debt collection simple: the collateral can be repossessed.
- Unsecured. Since unsecured debt is not secured by collateral, collection procedures may be difficult. This can include lawsuits and wage garnishment.
- Revolving. An open line of credit that you can keep using while you pay it off is known as revolving credit. Credit cards are a common form of revolving credit. Typically, this kind of debt is unsecured, but those with bad or no credit can choose secured options.
- Installment. Installment debt is a one-time loan that must be repaid over time in a number of installments. Examples include auto loans, student loans, and mortgages. Installment debt can also be secured or unsecured.
What Debt Isn’t Subject to the Statute of Limitations?
Time-barred debt refers to debt that’s beyond the statute of limitations. If the debt was valid in the first place, that doesn’t mean you don’t owe it, but the creditor or collector cannot use the legal system to compel you to repay the debt.
How I REMOVED A COLLECTION from my CREDIT REPORT in 24 HOURS!
FAQ
How often can a debt collector pull your credit report?
Can a collection agency report the same debt multiple times?
How many times can a debt collector contact you?
Can collections report every month?
How long does a debt collection stay on your credit report?
When the debt in question is legitimate and you can’t convince the debt collector to delete it from your report, your only remaining option is to wait. After seven years from the date the account first became delinquent, the collection should fall off of your credit report.
When can I remove a collection account from my credit report?
Once the debt is resolved, you may be able to remove the collections account from your credit report before the seven-year mark. If you’re certain the debt you’re being asked to pay is a mistake — because you never owed it, you already paid it, or aspects of the reported debt are inaccurate — take these two actions:
What happens if a debt is sold to a collection agency?
Once a debt is sold to a collection agency, they can begin reporting that account to the credit reporting agencies. The collection agency becomes the legal owner of the debt and has the right to begin collection efforts. Once reported, both the original account and the collection account will appear on a credit report.
When can a collection account be reported?
A collections account can be reported when a debt collector acquires the debt, or not at all. Reporting is up to the collection agency’s discretion. Be cautious if you’re being contacted by a debt collector for an alleged debt you owe that’s not on your credit report. If you don’t recognize the debt, ask for more information to validate the debt.