Is the debt valid & do I need to dispute it?

[gkisystems]

What is the name of your state (only U.S. law)? Illinois.

An uninsured driver ran a red light, struck my vehicle (a total loss), and continued traveling - striking and damaging a nearby house before coming to a complete stop. The other driver was cited. I was not cited and my car never touched the property of the homeowner. The uninsured at-fault driver has avoided my attempts to contact and has not reimbursed me for my loss of automobile which was not insured by me (value of about $3,000). I presume the uninsured at-fault driver is also avoiding attempts by the homeowner for reimbursement.

Here's where it gets interesting...

The homeowner's attorney demanded reimbursement from me to cover his home insurance deductible ($500). The homeowner's insurance company sent a letter stating they intend to seek reimbursement from me for the claim, but never sent a bill. I do not believe I am liable, so I did not respond to either letter.

Fast forward 1.5 years...

The homeowner's insurance company hired a debt collection law firm to collect over $6k from me. According to the debt collector, I owe this debt and it's long past due. Unless I notify the debt collector within 30 days of receipt of the notice that I dispute the validity of the debt, the debt will be assumed valid. If I dispute it, the debt collector will obtain verification of the debt or a copy of the judgment and mail it to me. Keep in mind that I have not been sued for this debt, therefore no judgement has been entered against me. If I am sued, I believe I would prevail - the other driver would not, however (but she has no money...presumably).

Questions:

1. Given the above facts of this scenario, I am not actually legally liable for anything, right?

2. Is it better to immediately dispute the debt or ignore the collection notice? I believe if I dispute the debt, I might be more likely to be sued - if for no other reason than simply acknowledging receipt of the allegation with a response. Since I think the statute of limitations is 2 years, I could give it another 6 months or so and be home free - right?

3. If I do not dispute the debt within 30 days, is it automatically a valid debt? The letter only says they will "assume" it is valid.

4. What is the impact on my FICO credit score of not disputing the debt within the 30 day time window? I do not believe the debt collector has my SSN (so I do not know if information will be reported to credit bureaus), but I'm not 100% positive of this.

5. Any other relevant tips or bits of advice?

 

[OHRoadwarrior]

You need to dispute the debt.

 

[gkisystems]

You need to dispute the debt.

Do I need to dispute it within the 30 days, or can I dispute it whenever I want? What are the impacts of either decision?

 

[OHRoadwarrior]

Do I need to dispute it within the 30 days, or can I dispute it whenever I want? What are the impacts of either decision?

If you do not dispute it within 30 days, they will deem it correct. You will not have FDCPA protections.

 

[ecmst12]

You should have let your insurance company handle this from the beginning. Hopefully it's not too late to get them to defend you now.

 

[davew128]

Why did you never notify your insurance company about any of this?

 

[ShyCat]

The OP already explained why his insurance was not involved:

The uninsured at-fault driver has avoided my attempts to contact and has not reimbursed me for my loss of automobile which was not insured by me (value of about $3,000).

 

[racer72]

The OP already explained why his insurance was not involved:

Sounds like a good time to get them involved.

 

[Zigner]

The OP already explained why his insurance was not involved:

The moment the OP received a demand for payment regarding the accident, it should have been turned over to his insurance company so they would defend him. It's likely that his insurance company could have made it go with no real effort. Now, 1.5 years later, it's likely that the insurance company will refuse to help the OP because he didn't report the claim in a timely manner.

 

[Mass_Shyster]

The homeowner's insurance company hired a debt collection law firm to collect over $6k from me.

You can also file a complaint with the Illinois Department of Insurance.

http://insurance.illinois.gov/Complaints/file_complaint.asp

 

[tranquility]

You've got to dispute the debt for a couple of reasons. One, has to do with how it is reported on your credit. Two, while it seems hard to extend the principle to this situation, you could have a problem with the theory of "account stated" form of action. I don't think it exactly applies as they are creating the numbers from whole cloth and without your agreement, when one gets a bill from a person and ignore it, it can be treated as a liquidated amount if not disputed. (Usually used in credit card situations.) Again, I don't know if the same legal theory would fit these facts, but it wouldn't hurt to prevent such a potential claim up front.

 

[Zigner]

You can also file a complaint with the Illinois Department of Insurance.

http://insurance.illinois.gov/Complaints/file_complaint.asp

What insurance law do you feel the other party's homeowner insurance company violated?

 

[ShyCat]

Sounds like a good time to get them involved.

I'm confused. How would his insurance company get involved if his car was not insured? If he had only liability insurance, or no insurance at all, "his" insurance company would say "not our problem", right?

 

[Zigner]

I'm confused. How would his insurance company get involved if his car was not insured? If he had only liability insurance, or no insurance at all, "his" insurance company would say "not our problem", right?

Somebody is making a claim against him stating that he is liable for the damage. It is the insurance company's contractual obligation to defend their client against this claim.

However, it's also the insured's responsibility to promptly report any possible claims to his insurance company. 1.5 years later is far from "prompt."

ETA: Of course, this is assuming that the OP has the proper liability coverage. If there is no insurance at all in place on the vehicle, then there is no insurance company at all.

 

[TigerD]

I read the OP's post as him not having insurance on his vehicle at all. He is learning a valuable lesson about driving without insurance. Can they (the insurance company) suspend his license in Ill. for that? In some states they can.


DC