What Do You Do If You Think You Do Not Owe the Money to a Creditor?

Receiving a telephone call or collection letter from a creditor may catch you off guard, especially if you don't think that you owe a debt. Unpaid debts can have an effect on your credit rating. For this reason, it's imperative to resolve any unpaid balances or dispute unfamiliar debts.

Submit Evidence

A creditor may mistakenly forget to record a payment or lose record of a payment. If you paid the debt in question and don't owe additional funds, explain this to your creditor and provide evidence to support your claim. You can go through your bank records and get copies of canceled checks as proof of payment.

Debt Validation

If a creditor contacts you by phone or letter, and you don't recognize a debt, rather than accept that you owe the debt and pay the balance, ask the creditor to validate the debt in question. Submit your request in writing and use certified mail to ensure that your creditor receives the correspondence. The creditor must respond to your request and provide proof that you owe the debt in writing.

Consult an Attorney

When a creditor continually pursues collection of a debt that you don't owe, get an attorney involved to help you resolve the situation. Attorneys can contact the creditor on your behalf and demand validation of the debt, and also research the statue of limitations in your specific state. The statue of limitations refers to the time frame that a creditor has to sue for an unpaid debt. Some creditors may attempt to file a lawsuit past this time frame, but they're legally unable to collect this debt in court.

Consequences of Ignoring Debt

Regardless of whether a debt is legitimate, ignoring collection letters and telephone calls doesn't solve the situation. Creditors can report information such as collections and charge-offs to the credit bureaus, and this information can significantly lower your score and hurt your odds of getting approved for other types of financing. Addressing unfamiliar debt is key to keeping your credit report clean and avoiding delinquencies.