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Q:
Can they collect? Can my credit be hurt?

I received a letter from a collection agency for two credit cards from 1996 totaling approx $5,000. These MIGHT be valid, and yet I think at one point they were charged off. The reason for my confusion is that I am an alcoholic, and drank chronically for many years. I am sober for the last seven years and have meticulously rebuilt my credit and my life. Now, I really don't know what to do. a) Can they collect? b) Can my credit be hurt? -Joseph

Joseph,

First of all, congratulations on your seven years of sobriety.

To answer your question, have you pulled a copy of your credit report lately to see what is being reported? For example, did the creditor(s) obtain a judgment for payment at any time? If not, there are two laws to protect you from being forever obligated to debt.

Each state has a statute of limitation on how long a debt is considered legally collectable. The time frame is generally between four to six years from when the payment becomes due. There are only a few states that have a statute of limitation longer than six years. This doesn't mean you still don't owe the money. You still do. It just means a creditor can't obtain a judgment against you if you challenge the debt in court because you feel the debt is past the statute of limitations. To learn about your state's laws, contact your local consumer protection office. For a list of state and county consumer protection offices, please visit the Federal Citizen Information Center's Web site.

The federal "Fair Credit Reporting Act" (FCRA) states the longest any derogatory information can remain on your credit bureau file is seven years from the beginning of the delinquency that lead to the account being placed for collection or seven years from the date of last activity on the account. Even if you start to repay on the account, the seven year time frame does not re-start. The account still must be permanently removed from your credit bureau file.

In your case, it appears this old bill is past the statute of limitation and is past the FCRA seven year time frame for being reported. That means this debt may not be legally collectable and cannot legally be reported on your credit bureau file anymore.

Best of luck,

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