Here is the situation.  You may have once gotten into bad credit but managed to recover by paying all your debts and closing unused accounts.  It has been more 10 years and now you are enjoying a good credit standing. Nonetheless, just when you thought you’re ready to apply for a home loan, you receive a call from a debt collection agency demanding payment for a credit card account that you do not remember ever using.  Even worse, the agency may threaten you that such a report of unpaid charges can badly damage your present good credit.  If this happens, what can you do?

One consumer was suddenly receiving calls from a so-called “debt repurchaser” – an agency that buys old debts from other debt collection agencies, demanding payment for credit card charges that has been long paid off through a credit counseling agency.  Unfortunately, the consumer has lost the receipts so the “debt repurchaser” continues with its attempt to collect the supposed “debts”.

If you think people who don’t pay their bills are the only ones at risk of debt collection, think again.  Apparently, many consumers are chased by so-called “debt repurchasers” and debt collection agencies to pay for debts that has been paid long ago or for debts that were not even their own.  If you are confronted with the same situation, knowing about your “statute of limitations” on debts can help you in dealing with mistaken or fraudulent debt collection attempts that may come your way.

Law on old debts.  Under the Federal Law, all charges or negative information must be deleted from a consumer’s credit report after seven years.  The counter starts 180 days after you miss your first payment.  That means, no debt collection agency or debt repurchase company can resuscitate sever-year old debts or sell them to another agency.  However, a record of bankruptcy can stay in your credit report for up to 10 years and some unpaid tax liens can remain indefinitely.

Statute of limitations on debts. Generally, “statute of limitations” give creditors a specific time period to take legal action or file a case to force a borrower to make payments, which can range from three to six years. The “statute of limitations” vary from State to State and also the type of debt involved.

Take note that there are types of debt that are not covered by the statue of limitations such as federal student loans, child support in some states, and income taxes.  Use the internet to check a list of “statute of limitations” on all States.  You can also seek advice from an attorney regarding your rights and limitations.

GOOD READ:  How to Manage A Past Due Account

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About the Author

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Bad Credit Credit Cards

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About Melanie Mathis

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. Connect with Melanie Mathis on Google+