How to Write a Collection Agency About Debt That Is Over the Statute of Limitations

Many people stumble in the course of building a credit profile. Bankruptcy, divorce, the loss of a job, struggling to pay for college or severe medical debt can derail the efforts of even the most conscientious to maintain good standing. If your mistakes are in the distant past, congratulations on setting your course aright. However, predatory debt collectors can sometimes crawl out of the woodwork to try and capitalize on old mistakes. Make no mistake -- if the debt has exceeded your state's statute of limitations, you are completely in control of the outcome. They cannot sue you.

Instructions

Decide Whether to Pay

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How have your money habits reflected on you?

Evaluate your overall credit profile. Although the collection agency can no longer legally sue you to recover any monetary value of the debt, the information could still remain on your credit report until it exceeds the federal statute for inclusion and you actively request to have it removed. If your credit use in the intervening years has been positive, the blemish may not have much of an impact. If you've since used no credit, it may carry more weight.

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A small debt will have only a minor impact on your credit score, even if it is old.

Determine if the debt is easily manageable. It is likely that the collection agency has added innumerable penalties, interest, and fees to the amount of the original debt. However, since they have no legal recourse, they are likely to take what they can get. The original debt with no penalties included is a safe estimation of the maximum you may have to pay -- if that amount is relatively small, take that under consideration.

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Homeowners may not find repairing minor credit blemishes to be a priority.

Outline your immediate credit needs. The time between the state statute of limitations for debt recovery and the moment you can request for a negative item to be removed from your credit report forever is typically only one to two years. If you have no need to make a major purchase of a house or vehicle, it may be in your best interest to wait it out.

Contact the Collector

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Make sure you have paperwork detailing your credit activity.

Gather the paperwork that provides the facts to be detailed in your letter to the collection agency. This includes a copy of the original debt with the amounts owed, with the date of last activity (the last time you made a payment), and the letter from the agency. If you have only been contacted by phone, request all future communications to be in writing so that you have a record of the specific demands.

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Composing the right letter may convince the collector to stop frequent calls.

Outline what you want to accomplish. If you wish to settle the debt, decide beforehand what amount is acceptable to you and can be paid in one lump sum -- never agree to a payment plan. If you simply want to stop the calls and letters, verify that your information is accurate and resolve to take a proactive stance.

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You can easily find books and websites that demonstrate the proper form of a business letter.

Write the letter in the form of a business communication. Type it on a computer to either be printed and mailed or sent via e-mail; do not hand write it. Place your name, address, and the date on the upper right corner. Address the first line to the contacting agent, if you know it, or To Whom It May Concern if you don't, followed by a colon. Type and sign your name at the bottom after the body of the letter.

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You may feel persecuted by collectors, but calm action will prevail.

Leave emotion out of it. When writing the body of the letter, do not include angry statements about how upset the communications have made you or whether you think the debt was unfair -- the collection agency does not care. State the facts: the date of last activity was thus; this state has a statute of this many years, the debt can no longer be collected. Be courteous and concise.

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Point out that you are aware of your state's collection laws regarding age of debt.

State what you want to happen. If you want to make an offer to pay the debt, give the exact amount you're willing to pay and request a written bill that states explicitly that the debt will be satisfied before you pay it. If you want the calls and letters to stop, state firmly but respectfully that the agency has no legal recourse to collect the debt and that you have no intention of paying it at this late date.

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A collection agency can file some uncollected accounts against its taxes.

Be realistic. The statutes do not invalidate the debt but only posit that you can no longer be taken to court to force payment, and the agency retains the legal right to make communications to you concerning a valid debt. However, the agency can usually write off uncollected debt as a tax benefit. If you are courteous and provide correct information, they are more likely to either go ahead and write off the debt or accept your offer of payment.

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Both regular mail and e-mail are considered legally defensible documents in collection activity.

Mail or e-mail the missive to the collection agency. Keep a copy of the letter for your records. Be sure to read any future communications so as to be aware of the collection agency's response. If you agreed to pay the debt, do so promptly after receiving the settlement letter and request that the information be updated on your credit reports.