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Removing Collection Accounts That Arent Yours From Your Credit Report

Removing collections from your credit report that arent yours is a little trickier than deleting old collection accounts. Many, many, many people claim that collection agency debts arent theirs when, in fact, they are. Disputing a collection as "not mine" is the number one dispute the credit bureaus see, so dont expect to get very far there. Your goal is to convince the collection agency to delete the tradeline of its own volition.

The first thing you do is to write a letter to the company requesting the name and address of the original creditor for the account. You need that information before you begin.

Step One: Sending a Validation Request
This is nothing more than a formality. The collection agency cannot validate an account that isnt valid – but they will. Send a letter to the company, CRRR, requesting that it validate the account. Do not include any other information with your letter, such as "this account is not mine" etc. The collection agency will send you a printout containing the same basic information about the account that you see on your credit report. With any luck, some of that information is incorrect. You want this in writing. It will come in handy later.

Step Two: Calling the Collection Agency
Surprised? You should be. Im normally the first birdie to sing a warning against ever calling a collection agency. In this case, however, it can really work to your benefit. So lets face the beast head-on, shall we?

When you call the collection agency, youll have to go through an automated system to reach a collector. When the system asks you for personal information such as your Social Security number, just sit there. The system will not disconnect you. This isnt the same as calling the credit card company that really doesnt want to talk to you anyway and will disconnect you at the first opportunity. Collectors want to get you on the phone, and if the debt isnt yours, you dont want to give them any more information than they already have.

When you finally get a human being on the line, be polite. Explain your situation honestly, making sure to set yourself apart from the pack as much as possible. I recommend the following introduction:

"Hi, my name is ________. I noticed a tradeline on my credit report recently from your company requesting payment in the amount of _______. The account number for this account is _______. Would you like me to wait while you pull that up in your system?" 

This shows both professionalism and kindness. Youre demonstrating those aspects first because you want them returned. Its a heck of a lot harder for a debt collector to start yelling at you about what a deadbeat you are when you start out the conversation on such a civil note. Lets continue..

"I know everyone calls and says this and its probably become so common that it makes you want to scream, (short chuckle) but this debt rightfully belongs to someone else. The name/Social Security number/address/etc. on the tradeline isnt mine. I am willing to do whatever is necessary to help straighten out the situation, both to help myself and to help your company pursue the correct debtor." 

You say, "I know everyone says this" to demonstrate that you do know they hear it all the time. By pointing out that you are aware that everybody claims this but in your case its true, you set yourself apart as believable. You chuckle to mark the unpleasant humor of the situation and to add an element of humanity – humanity that you hope will be returned – to the conversation. You also note how helping you also benefits the company to give the collector additional incentive to help you.

The first thing the collector will ask for is your Social Security number. Heres how you respond:

Collector: Can I get your Social Security number please? 
You: I mean you no disrespect and I want to get this situation resolved as much as you do, but try and understand my paranoia here about giving out information that can be used against me. After all, any information I give you can be used in an effort to collect the debt – even if those collection efforts are aimed at the wrong individual. 


Your goal is to get the collector to tell you who to call to resolve the situation. A special number of a top supervisor, perhaps. The name and address of the person in charge would also be helpful. Any information you can glean from the collector that most debtors dont have access to will help you resolve the situation and stay out of court. Try saying this:

"My goal in calling you today is to get this situation resolved as quickly as painlessly as possible for both of us. Who do I need to talk to within your company to accomplish that?" 

If the collector wont help you, call back and try again. Your odds of getting the same representative are low. Sooner or later, someone will tell you who to talk to. Do not let your voice betray any shred of frustration or anger. Unlike most customer service representatives, debt collectors arent trained to be nice at all costs. If you bite, the debt collector will bite back and any chances you had of getting the information you want will go up in smoke.

Once you get an address or e-mail address of someone in a high-ranking position within the company (get the addresses of more than one, if possible. You want to send this letter to as many people as you can) send out a letter asking for help. Im going to provide you with a sample you can tailor to your own situation. The italics in the letter are for your own clarity. Dont include those

Dear Mr./Mrs. ___________


My name is ____________. I am writing to you today with a situation youve probably encountered 1000 times, with only one or two cases out of that thousand being legitimate. I am one such legitimate case. The debt your company claims I owe isnt mine.


I discovered this debt on my credit report with an incorrect name/Social Security number/etc. I requested the name and address of the original creditor for the account and I have never held an account with _______ or I currently hold an account with _________ but it is up to date. I recently requested validation of the account and received a response containing incorrect information. This benefits me, since it proves that your company is pursuing the wrong individual for this debt. I am writing to you rather than simply moving forward with a credit bureau dispute and litigation because I am hoping we can resolve this outside of court.


I am willing to comply with any requests your company has that will prove my innocence in regards to this debt. Please understand, prior to receiving the validation response, I was hesitant to do so because I know that some collection agencies will simply replace the incorrect information with my information in an effort to collect the debt, not caring that they are pursuing the wrong person. I no longer have that fear because the validation I have in writing from your company contains the incorrect data you currently have on file and protects me in the event that data changes. It also serves as proof that the person youre looking for isnt me. Thus, exonerating me is not only beneficial to me, its also beneficial to your company since it frees you to pursue someone who will pay this debt.


Please contact me at (email address) so that we can discuss this matter further. 


Sincerely,
Your Name


I know how crazy this may sound to the die hard "Dispute-till-you-drop" camp, but I learned the hard way that collection agencies arent all fire and brimstone. Higher-ups within the company dont depend on commission to pay their bills, and theyre more likely to help you out of sheer human compassion. Given that few people anticipate this from collection agents, the trick works more than youd think.

Once upon a time I had a client whose boyfriend had a collection debt on his credit report that was actually his nephews debt. The two shared the same name and, being ignorant of the way the system normally works, he called the collection agency himself, explained the situation and asked for help. He got it. The collection agent who answered the phone directed him to another employee at the company who was willing to straighten out his file. In the end, my services werent necessary and I was delighted by my clients boyfriends success.

The point being, you might just get the help youre looking for if you ask for it.

If the Collection Agency is No Help Removing An Account That Isnt Yours

Just because the collection agency might help you, that doesnt mean its a certainty. Whether youre dealing with a genuine collection agency or a junk debt buyer makes a significant difference in whether or not you can get the negative report removed from your credit report with a few well-placed telephone calls and letters. Its much tougher to get a junk debt buyer to take you seriously because, if the account is old enough to have been sold to a junk debt buyer, then the debt collectors assume if the debt genuinely wasnt yours you would have already taken care of the problem. In addition, junk debt buyers have a lower successful collection rate that mainstream collectors because the debts they purchase are so much older. This makes them more gung-ho to collect from you, regardless of whether or not you can prove you legitimately dont owe the debt.

Time to play hardball.

Sending An Intent to Sue Letter to the Collection Agency

Remember when I mentioned that collection agencies dont want to go to court? Its normally not worth their time or the money it would cost to defend themselves from consumers – especially when they arent certain just what evidence a consumer has against them until after the discovery period.

Step Three: Sending an Intent to Sue Letter to the Collection Agency
If that collection account on your credit report isnt yours, notify the collection agency of that fact via an intent-to-sue letter. Let the collection agency know, in no uncertain terms, that the entry is incorrect and thus in violation of the FCRA because you never owed the original debt. Dont provide the company with copies of any evidence you have against them. Dont provide anything. You dont want to inadvertently give collectors legal ammunition that can be manipulated and later used against you in court. Just write the letter and point out the following:

1. The account isnt yours and was placed on your credit file by mistake. 


2. You never had an account with the original creditor and you can prove it.


3. You can prove that the entry on your credit report contains information that indicates the debt is owed by someone other than you.


4. Reporting incorrect information to the credit bureaus is illegal.


5. You have the right to sue under the FCRA and you intend to do so unless the entry is immediately removed from your credit report. 

And then you wait. With any luck, one intent to sue letter will be enough to convince the collection agency that you mean business and it will delete its negative entry from your credit report.

If the Collection Agency Doesnt Fix Your Credit Report

If threatening to sue the collection agency isnt enough to set a fire under them and get the entry deleted from your credit report, its time to dispute the entry with the credit bureaus. Unfortunately, this is little more than a formality. The credit bureaus validation process is little more than contacting the collection agency with a, "Hey guys, is this correct? It is? Okay thanks." But youll need to prove in court that the collector violated the FCRA knowingly. That means notifying the collector that the information is incorrect before you contest it with the credit bureaus. When the collection agency validates the information as correct, that proves that the company violated the FCRA by knowingly validating an incorrect entry.

And theres always a chance that the entry will get removed. You just never know. Its worth a shot. When the  credit bureaus validate the collection that isnt yours on your credit report, its time to take the fight to the courts and sue the collection agency. You could also try the "one-two punch" but Ill write more on that later. For the time being, Im exhausted and this post is long enough as it is. Theres so much information to include. *sigh* Ah well, such is the purpose of a blog. Bit by bit, well get there.

If youre one of the many Americans who are lying low and waiting for old collections to fall off your credit report, you may be in for a nasty shock. Some unethical collection agencies tamper with the dates they report to the credit bureaus. By changing the dates associated with the account, the collection agency can ensure that a derogatory entry remains on your credit report for longer than the law allows. This process is known as "re-aging" and it is illegal.

How Debt Collectors Re-age Debts

You may end up waiting longer than 7 years...

Lets say your original debt was a defaulted credit card debt and you stopped making payments in January of 2005. In June of 2005 – 180 days later – the credit card company assigns your defaulted account to a collection agency and updates your credit report to lect that the debt you owe was charged off. When the collection agency gets the debt, it adds a new derogatory trade line to your credit report. Now you have both the original creditors derogatory entry and one from a collection agency.

The Fair Credit Reporting Act dictates that most debts can only remain on your credit report for 7 years and 180 days from the date of first delinquency. The date of first delinquency is the date that your payments to the original creditor were first classified as late.

What many debtors dont realize is that the DOFD applies to all entries for a given debt. Because few creditors send accounts to collection agencies until they are 180 days delinquent, collection agency entries rarely remain on debtors credit records for the full 7.5-year period. The absolute latest a collection account should disappear is at the same time as the original creditors charge-off. In other words, it simply isnt legal for a collection agency to leave derogatory information on your credit report for longer than the original creditor.



SOL and the Credit Reporting Period

Dont confuse the statute of limitations for lawsuits with the credit reporting periods statute of limitations. These are two totally different time frames. The statute of limitations for lawsuits ers to the amount of time a debt collector can legally sue you in your state. Each state has different statutes of limitations. The credit reporting period – 7.5 years – is federally mandated and the same in every state. Generally the statute of limitations for lawsuits expires long before the credit reporting period.

This is covered in more detail here: The Credit Reporting Period vs. the Statute of Limitations

Re-aged Collection Accounts

If you pull your credit report and the original creditors derogatory information is gone but a collection agencys negative trade line lingers on your report, theres a good change the collector re-aged your debt.

Re-aging sets back the clock on your debt.

When a debt collector re-ages accounts, it reports a date of first delinquency that is much later than the actual DOFD. In the above example, our DOFD was January of 2005. The collection agency gets the account in June of 2005. If the collection agency reports the date of first delinquency as the date it received the account – in June – the derogatory information will remain on your credit report until June of 2012, rather than being removed in January of 2012, as federal law dictates it should be.

Although clearly illegal, this nasty little trick is incredibly common. I see it literally All. The. Time. A collection agency that regularly alters the dates on its accounts could theoretically ensure that a collection account remains on your credit report indefinitely.

What To Do About Re-aged Collection Debts

Removing a re-aged collection account from your credit report is much easier if you have proof to back up your claim of re-aging. This is one reason I recommend that all individuals print out their credit reports from each credit bureau once each year. The dates lected in the original creditors trade line prove your claim of re-aging – but thats much harder to do once the original creditors trade line ages off your account. Most credit card companies dont keep charge-off records longer than 18 months, so getting proof from the original creditor after the fact is difficult, if not impossible.

If you have proof, send it to the credit bureau along with a letter explaining that the collection account is obsolete and should have been deleted, as the 7.5 year period for that particular debt has already passed. Make sure to use the word "obsolete" in your dispute. Disputes are coded and while I wont get into that right now, I will say that you want your dispute to have the "Obsolete" code.

You can also take your re-aging issue up with the collection agency itself. A well-written "I have every right to sue you" letter along with proof of the re-aging is often enough to coerce debt collectors to remove derogatory information from your credit report. Make sure you point out that you want the trade line deleted. Anything less is against federal law.

By James Chessen, ABA Chief Economist

“The banking industry’s performance continues to improve significantly. Increases in business lending, strong capital levels and a reduction in problem loans speak to an industry that’s gaining strength. Challenges remain, including the daunting fiscal decisions ahead for both the United States and Europe. The manner in which these issues are resolved will have a significant impact on our country’s pace of economic growth. The banking industry has worked hard to fortify itself for these and other challenges that lay ahead.”

Business Loans Grow for Eighth Consecutive Quarter

“Banks continue to aggressively seek out business loans, and our industry’s double-digit lending growth over the last year is a testament to those efforts. The industry’s business lending increased by 15.1 percent year-over-year. Unfortunately, the atmosphere has started to change. Our business customers are telling us that they are hesitant to expand or take on more debt in today’s uncertain environment. In addition, the housing sector continues to be a drag on total lending volume, and will limit loan growth to a gradual pace for the foreseeable future.”

Bank Earnings Grow Despite Challenges

"Strong business loan growth and aggressive cost controls are helping banks maintain earnings despite a challenging economic environment. At the same time, knowledge that interest rates will remain low for years means businesses feel no urgency to borrow. Ultimately, the pace of the economy will determine whether businesses decide to expand operations and how quickly banks’ core lending business will return.”

Problem Loans Fall, Failures Continue to Decline

“The industry’s asset quality continues to improve, with problem loans falling to levels not seen since the first quarter of 2009. The number of problem banks fell to the lowest level in ten quarters, and bank failures continue to fall dramatically. Banks, not taxpayers, are solely responsible for all of the FDIC’s expenses, paying about $13.5 billion in premiums over the last year.”

Capital Continues to Grow

“The industry’s capital ratios are at or near record levels, a strong foundation that provides an important buffer for any economic circumstances or challenges that could arise. Banks have added almost $316 billion in capital since 2008 when the financial crisis took hold. Total industry capital is now almost $1.6 trillion. Banks also have set aside more than $176 billion in reserves to cover possible loan losses. Capital plus reserves gives a total buffer protecting the industry of more than $1.78 trillion.”

“Initial claims provides consistent hard data regarding jobs in our economy. Historically, it has acted as a leading indicator for the unemployment rate. The sharp decline in initial claims suggests that the unemployment rate is set to continue to fall in coming months.”

James Chessen, ABA Chief Economist

Update:
Payroll employment grew 227,000 in February, exceeding expectations of 210,000. This is the third consecutive monthly gain over 200,000. .

Yesterday we talked about tax liens, how they work and what they do to your credit scores. Today we are going to talk about how long tax liens remain on your credit report and how to get them removed. If youre coming in late and want to start at the beginning, I am including a link to yesterdays post at the bottom of this one. Youll also find a link in the right-hand column.

Ok, moving on.

How Long Do Tax Liens Stay On Your Credit Report?

If youre even the slightest bit credit-savvy, you already know that the vast majority of negative information, such as collections, foreclosures, Chapter 13 bankruptcies, etc., must be removed from your credit report after seven years. There is no extension period. The reporting period is the reporting period. Once it expires, federal law requires the credit bureau to remove the obsolete item.

Sometimes tax liens adhere to this rule and sometimes they dont. It depends on their status. Lets look at what the Fair Credit Reporting Act has to say about tax liens:

Information excluded from consumer reports.  Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information: ....

...Paid tax liens which, from date of payment, antedate the report by more than seven
years.

Sounds promising, right? Seven years of credit damage and then youre done. But not so fast...Read that one more time. It says paid tax liens. A paid tax lien will be on your credit report for seven years from the date you paid it off. That means, if youre making payments, the clock doesnt start on the credit reporting period until you make that last payment.

But tax liens arent like collection accounts. You cant just ignore a tax lien and expect it to fall off your credit report in seven years.

How Long Do Unpaid Tax Liens Stay On Your Credit Report?

Government debts have this nasty habit of not adhering to the standard seven-year reporting period for debt, and unpaid federal tax liens are no exception. How long do they stay on your credit report? Are you ready for this?

There is no set reporting period for unpaid tax liens on your credit report. 

Tax liens are starting to smell a whole lot like defaulted federal student loans, arent they? So, theoretically  if you leave your tax lien unpaid, it can stick around on your credit report forever. Of course, that doesnt happen. The credit bureaus will begrudgingly remove those old, unpaid tax liens after about 15 years. Because the time frame is so long, youll have to keep a close eye on your tax liens. Theyre likely to get overlooked when removal time rolls around. Yes, I know its done via computer, but that computer system seems to make heinous mistakes on a regular basis, so betting the farm that the credit bureaus will remove your tax lien after a pre-set period of time isnt wise.

An unpaid tax lien is a prison sentence for your credit.

I dont know how successful a dispute would be. Ive never worked with anyone who attempted to dispute an old tax lien as obsolete after 15 years, so I cant tell you whether the credit bureaus would be quick to remove the item or whether theyd shoot back with "unpaid tax liens can remain on your credit report indefinitely. There is no reporting period." and then let those liens hang around for an extra six months or so before quietly deleting them from your credit history.

The Ten-Year Statute of Limitations for Tax Debt

Please dont get the 10-year statute of limitations for tax debt confused with the credit reporting period for tax liens. I see this a lot. The 10-year statute of limitations for tax debt refers to the amount of time the IRS has to enforce its lien (i.e. seize your assets). It has no bearing whatsoever on credit reporting periods and how long a paid or unpaid tax lien will remain on your credit report.

Related Posts:

What Does a Tax Lien Do To Your Credit Score?

Can a Collection Agency Take My Tax Refund?

Customs brokerage is a profession that involves the "clearing" of goods through customs barriers for importers and exporters (usually businesses). This involves the preparation of documents and/or electronic submissions, the calculation and payment of taxes, duties and excises, and facilitating communication between government authorities and importers and exporters.

Custom brokers may be employed by or affiliated with freight forwarders, independent businesses, or shipping lines, importers, exporters, trade authorities, and customs brokerage firms.

Importance
Credit reports, along with additional records such as a criminal history, help government officials verify an applicants identity, but, more important, those reports help gauge an applicants integrity. Customs brokers control millions of dollars of goods entering the U.S. A poor credit history, especially if it includes serious negative entries such as a tax lien or bankruptcy, may indicate the applicant is in poor financial standing and may be more prone to accept bribes or sell information.

Considerations
Nothing on a credit report automatically disqualifies an applicant from becoming a customs broker. The hiring manager assesses an applicants entire profile. A credit score damaged by late payments to unexpected medical bills, for instance, might hurt the an applicants chances less than a poor credit rating resulting from poor financial management. The government cannot discriminate against an applicant only because of a previous bankruptcy filing.

Explaining Bad Credit
The June 2009 Customs and Border Protection (CBP) application which is the most current application as of the time of publication allows applicants to explain any serious derogatory items in section 18. Applicants should note if the acquisition of bad debts was beyond their control and that all attempts were made to resolve the situation. For instance, an applicant can argue that filing bankruptcy was a responsible action, because he used a government process to handle the debt rather than ignore it.

Tip
Start repairing your credit well before you apply to the Customs Border Patrol. Even if your credit history only slightly impacts your ability to obtain a license, a good credit history is helpful in other facets of your life. For instance, a poor credit score may prevent you from obtaining loans at favorable interest rates, and other employers may reject an application based on a poor credit history. The first step to repairing your credit is repaying as much debt as possible and paying bills on time. Before you even get to the background check, you must pass the customs broker licensing examination.