Information & Rights for Debtor Accounts

Federal and state laws dictate the rights for collecting and reporting information relating to debtor accounts. Original creditors, debt collection agencies, debt buyers and credit reporting agencies may each play a role in a debtor's account. Original creditors initiated the account, but they have the right to sell delinquent debt to a debt buyer or to turn the debtor account over to a debt collection agency. Credit reporting agencies compile information from all three sources to calculate a debtors' credit rating.

Collection Activities

The FDCPA --- Fair Debt Collection and Practices Act --- is a federal guideline for collecting debtor accounts. The guidelines apply to third-party debt collection agencies and debt buyers, but not to original creditors. FDCPA guidelines dictate the acceptable methods for collecting debtor accounts. For example, debtors have the rights to request that a collector validate any collection claim, only contact debtors in writing and not contact debtors at work. In addition, collectors may only request the debtor's contact information when speaking to anyone other than the debtor, unless it is the debtor's legal representative.

Credit Reporting

Original creditors and third-party debt collectors have the right to report information relating to a debt to all three credit reporting agencies. The accounts will positively or negatively impact the debtor's credit rating, based on the specific information reported. For example, if a debtor stops paying a debt, the creditor may report the account as a delinquency, which is negative. Debtors who pay their accounts on time will see a positive impact on their credit rating. Debtors have the rights to request confirmation that the account listing is valid from the credit reporting agency. If the account information is not confirmed as accurate, the credit reporting agency must remove the listing from the debtor's record.

Judgments

Creditors have the right to file a lawsuit for a judgment against debtors with delinquent accounts. If the court awards a judgment against the debtor, it becomes a part of the debtor's public record and will remain as part of the credit report for at least seven years. Individual states dictate how long the judgment remains valid and some states give creditors the right to renew judgments. Credit reporting agencies have the right to report judgments as long as they are valid.

Statute of Limitations

Debtors with delinquent accounts should be aware of their state's statute of limitation regarding specific debtor accounts. The statute of limitations defines the window of opportunity for debt collection. For example, creditors issuing accounts to debtors in Michigan have six years to collect the debt, but the same creditors issuing accounts to debtors in Mississippi have only three years to collect the debt. The statute of limitations varies based on the type of debt --- open accounts, oral contracts, promissory notes or written contracts. The statute of limitation time clock starts on the date of the last activity on the account. Each time a payment is made on the account, the clock begins anew.