Reader Question: Can Collection Agency Sue for Deleted Debt?

We received this reader question recently:

I disputed a credit card account that had gone to collections back in 2005 with Equifax. I received a letter dated April 25, 2005 from Equifax stating that they did an investigation, the item was deleted from my file, and if I have any additional questions about this item to contact the collection agency.

In December of 2006 I received papers saying I am being sued by the collection agency for this account that was already deleted form my credit file. Can this be done? Do I just send them a letter saying I know my rights so leave me alone? 

Unfortunately, getting an item removed from your credit report does not mean you don't owe the debt. The investigation process by the credit reporting agency involved checking with the company reporting the information. If the item you dispute is not verified within a certain time frame, it must be removed from your file. I suspect that's what happened here -- that the collection agency simply never responded to the dispute, and so the item was dropped from your credit report.

Your email refers to a December 2006 date notifying you of a lawsuit. If that is correct, then the lawsuit should have happened by now. You may need to check with your local courts to find out if the collection agency has already obtained a judgment against you. (It will also likely be listed on your credit reports as well.) If not, then it is possible the collection agency threatened you with legal action they did not intend to take. If that's the case, it may well be a violation of the federal Fair Debt Collection Practices Act (FDCPA).

You may not owe this debt if you have a legitimate dispute over whether you owe the money or if it is too old to collect (outside the statute of limitations). You can learn more about your rights here. I suggest you talk with a consumer law attorney if you believe the collection agency is breaking the law.

Let us know what happens!

Gerri Detweiler – Personal finance author, radio host and credit expert. Gerri contributes budgeting, debt recovery and savings information online.