Getting a Collection Agency to Stop Credit Reports

When one of your debts is turned over to a collection agency, your credit report may be adversely affected. More often than not, collection agencies make negative entries into a person's credit reportsin addition to the negative entry already made by the creditor. There are times, however, when you may be able to have the negative information listed by the collection agency removed.

Bad Debt Statute of Limitations

The statute of limitations, or the maximum time allowed by law, for reporting most types of bad debts is seven yearsunless the debt is associated with a government entity or federal student loan. Often, collection agencies will not receive information on the bad debt from the original lender for some time after the debt has gone into default; however, the statute of limitations begins with the original lender, not with the collection agency.

This also applies to times when collection agencies purchase bad debt at a discount from the original lender. Sometimes, collection agencies purchase bad debt in the hope that they will collect the original amount of the debt and earn a substantial profit; however, collection agencies are not allowed to reset the clock on the original debt. Therefore, if the statute of limitations for the debt has expired, you can demand that the credit bureau removed the negative information.

Disputing Inaccurate Information

Collection agencies frequently receive bad debt information secondhand; therefore, there are often inaccuracies or inconsistencies in their details about the original loan and payments. If there are inaccuracies listed in the negative account, you can dispute the account with the national credit bureau. After you've disputed it, the collection agency must verify the account with the credit bureau within 30 days, or the negative account will be removed.

Therefore, you should always look for any inaccurate information listed on collection agency accounts. You should check for inaccurate dates, amounts and other information. If the information is inaccurate, demand that it be removed. 

Write Letters to Demand Removal

Write letters to the collection agency to dispute any amounts that are listed incorrectly or do not reflect payments that have been made. Although the collection agency is not obliged to respond to you directly, writing letters to the collection agency and sending them certified mail will help should you ever need to take legal action against the collection agency.

The Last Resort

In some cases, you may actually have to file a civil lawsuit against a collection agency to stop them from reporting inaccurate information on your credit report. There are many remedies available for consumers under the Federal Credit Reporting Act, or the FCRA. To file an FCRA lawsuit, you should seek the services of an attorney. An attorney will be able to tell you if the collection company’s violations warrant action under the act.