Old Debt

[csd42]

What is the name of your state? California

I joined a gym in 1999 when I was a college student. I had gone twice when I was diagnosed with mono and advised by a doctor not to exercise until I had completely recovered. I cancelled my gym membership at that time due to illness - I was sick for approx. 2 years before full recovery.

A year or so after I started getting letters from collection agencies trying to collect approx. $800 for the gym membership. At that time I wasn't good at taking care of financial matters so I ignored these requests. Now, in 2005, I am getting weekly automated phone calls (which I ignore) and requests for payment now totalling $1,400.

A debt management plan advised me to ignore this until it fell off my credit record, yet looking at my credit reports they are selling it so it shows up as new debt every two years. (The credit reports don't list the original gym, just the collection agencies who now own the note.)

Since I want to rebuilt my credit (that is the only black mark remaining), I sent them a letter asking for the following information:

What the money you say I owe is for;
Explain and show me how you calculated what you say I owe;
Provide me with copies of any papers that show I agreed to pay what you say I owe;
Provide a verification or copy of any judgment if applicable;
Identify the original creditor;
Prove the Statute of Limitations has not expired on this account
Show me that you are licensed to collect in my state
Provide me with your license numbers and Registered Agent

(CA Statute of Limitations is 5 years - which would mean the original debt has expired, if they go from the original account, not when the collectors bought it.)

Instead, I got back a letter on their letterhead showing that the original debt was to a gym for approx. $800 with approx. $600 in fees. The letter showed the account numbers for the gym and the collector, my personal information including social security number, and none of the information requested. Since I do not have a lawyer - or cash to hire one for such a relatively small debt - I am not sure how to respond. Since I cancelled that account I do not want to pay it - plus that would leave the black mark on my report for another 7 years when I thought it was almost off. Any advice please?!

Thanks!

[Debt Guy]

OK. There are two issues here.

The first is the CA statute of limitations. It begins to run from the Date of First Default. DOFD is usually 30 days after the last payment you made (after which the account was never current). If that was sometime in 1999, then the debt is out of statute. You can still be sued but the SOL is an affirmative defense that will allow you to have the case dismissed. So, don't ignore any subpoena.

The second is the maximum reporting period for negative items -- which is 7 years after charge-off. Usually accounts are charged off six months after default. As a rule of thumb, you can use 7 1/2 years after the DOFD.

So, you are still within the 7 1/2 years for reporting on the credit report.

But -- to be reported an item must be accurate. If they are reporting anything other than the original DOFD, then it is not accurate.

I would do two things.

First, write a letter to the collection agency. Ignore any rubbish you find on the internet and keep it simple. Use you name, address, social security number and attach a copy of one of their letters if you have it. Just say "I dispute this debt in its entirety" and "this debt is time-barred under CA law" and "cease and desist all contact with me". Send the letter certified mail return receipt requested and keep copies of everything.

Second, write a letter to the credit reporting agency. You can find samples in the credit repair section at [url]www.creditinfocenter.com[/url]. Just say that the date of last activity is wrong.

Now, getting this off your credit report is not a slam dunk. When you dispute, the CRA will go to the CA and ask if the info is correct. If the CA says "yes" then the CRA will not take any action. If that happens, you only option is to sue the CA for false reporting under the FCRA. If you sue, then the burden of proof is on you.

Make sense?

[csd42]

Yes, that does make sense Debt Guy! I guess I'll start with that. Thanks and wish me luck!

csd42