Expert: Regan Shinski - 3/24/2010

Question
Hi,
I have just received a collection notice in the mail from an electric company that I had almost 10 years ago.  The electric company has forwarded the debt to a collection agency and are now requesting payment.  Now, I purchased a home 2 years ago and this debt was not on my credit report and this is the first time I'm receiving any type of communication from the collection agency or electric company.  I did call to verify the address but set up no type of payment nor gave a verbal agreement to make a payment.  The service was also while I was living in Indiana.  My question is how long does the collection agency have to collect this debt from me?  I know that there is a statue of limitations but it is unclear for this type of service.  Any help you could provide would be great!  
Thanks

Answer
Hi Samantha:

You are kind of asking about two separate issues.  If you have not have this account for more than 7.5 years, it can't report to the credit bureaus.  There is no exception to that other than if they have a court-ordered judgement against you.  Even then, only the judgement can report, not the actual account or collection account.  If they are doing this, it's a pretty big violation of the FDCPA or FCRA and can be pursued by you.

On the issue of collection, this really depends on the timing and type of contract you had with the electric company.  If you had a written contract, the statute of limitations (SOL) is ten years.  If you had an open-ended account, the SOL is six years.  All the SOL really means is you have an affirmative defense against being sued.  So they can still try to collect from you - they can even file a lawsuit against you.  However if it is outside the SOL you are not legally responsible for the debt.  You would just go to court and claim or prove the SOL and it would be dismissed in your favor.

If this is your first communication from the collection agency and the letter makes a comment like "unless you notify this office within 30 days that you dispute the debt, we will assume the debt is valid..." you should send a certified letter to the collection agency asking for VALIDATION under the FDCPA.  If you want, you can also put in the letter that you want all future communications from them to be in writing and then they can't call you.

If you are on the cusp of the SOL, most people would say to stall or wait for their next move.  I would still send the letter I mentioned above but make a payment.  If you are sued, you can better evaluate the SOL and settle at that point if you need to.  Do NOT let a court enter a judgement against you though.  It can lead to serious negative ramifications in your life.

Good luck, I hope this helps.

Regan
mbscompany@aim.com