Reader R. kinda messed up his credit years ago. He’s a good boy now and his credit score is 700+, but now RSI Claims Process Services is hassling him about a 12-year-old credit card debt. They scared him into thinking they’re going to send him to jail and managed to squeeze a $100 “good-faith” payment out of him, but now he’s got second thoughts. And with good reason: the statute of limitations on the debt has well passed and threatening to send a debtor to jail is a violation of Federal law. Here’s his story and our advice…

R from California writes:

It all started about 12 years ago when I got my first credit card. I can make any number of excuses for myself but the bottom line is I was not smart with my credit. I let a Discover card go into collections and ruined my credit for the last 10 years.

I have maintained a checking and savings account in addition to many bills in my name including Verizon, Sprint, EB Mud, and PG&E. I got serious about getting my credit back in order about 3 years ago. No one would give me a credit card so I ended up getting a First Premiere Bank Master Card. I know people have terrible things to say about this company but paying there ridiculous yearly service fees, and monthly account fees in full each month helped boost my credit enough to obtain some real cards.

In the last 6 moths my credit score has inched its way into the 700+ range As a result I have received credit offers from real credit cards like CapitalOne and a BestBuy card with a surprisingly high credit limit. It was at this time i got my first call.

A company called RSI Claims Process Services, LLC called me about litigation involving me and a creditor. The “Judgment amount” was $5203.32 and didn’t go very far to explain any more. I was told they had mailed me about the issue and that I had not responded. She went on to tell me that I had probably thrown it out by mistake and that’s why they called me. It all sounded very serious. They were demanding payment or go to court. I talked to two people in the company and I realized that this was about my Discover card from 12 years ago.

Let me discuss this for a min. I called Discover in an attempt to make good on this old account. The card had a $1000 Credit limit and I figured I probably owed then $2000. Discover didn’t hold the account any more. Collections told me who did and I followed them to a dead end where they had no idea who held the account. My Credit report has not had such an account listed in the last 3 years i have been checking.

That brings me to last month, talking RSI about an account that had fallen off the planet. I panicked and asked them what I could do to postpone any litigation. They made me an offer of $4000 and I refused. I just don’t have that kind of money. I countered with $1500 paying them $100 in good faith that I would come up with the rest some how in the next 6 weeks. I have yet to pay them the remaining $1400. I planned to at the end of the month.

Keep in mind that I recognize that I owe SOMEONE this money and I DO want to make good on it assuming its a legitimate transaction. The reason I Responded to the posting was the tactics were heavy handed. I would have paid the bill without the scare tactics. I would love a payment plan but that was not an option. I know no one owes me any favors but I have worked hard to earn my credit back and I don’t want this mistake to ruin it again.

Did I make a mistake by offering to pay this account to a creditor that has offered me little to prove they actually hold the account? Was I wrong to strike a deal when the account was not on my credit report in the first place? I don’t feel as though the final sum is unfair. I guess I just wanted some insight on anything else I could have done. Was RSI was in the right to treat me this way?

Hi R.,

Ok here’s the details:

The statute of limitations for the debt has passed. In California, where you live, that’s 4 years. That means they can no longer sue you to collect on the debt. If they threatened you with jail time, that’s a violation of the Fair Debt Collection Practices Act. Right now you might be able to already sue them for statutory violations, something that can easily be done in small claims court.

Now, if they don’t have any proof of owning the debt, or proof that you have the debt….then that’s also illegal. You might owe the debt to “someone”, but there’s no proof that they are the people. They could have just bought your records from someone, but might not be able to provide the purchase agreement and the paper trail of debt ownership from the first piece of paper you signed to the one that allegedly put the debt in their hands. It’s very common. So you could pay off these people, who might not even own the debt, and then the real company who owns the debt could come along and ask you to pay them.

How did you pay these people? If it was a credit card, call your credit card company and reverse the charge. If it was a check, call your bank and see if you can put a stop payment on the check. You might owe these people, but right now the only obligation that you have to pay them is moral, not legal, and they haven’t done the necessary work to prove that you have any obligation to pay them in the first place.

First, bone up on your rights under the FDCPA.

Next time they call, tell them you will only communicate with them via mail from now on, and then mail them this letter to make it official. Then send them this letter to make them “put up or shutup.” Either they have to provide proof they own the debt, or they have to cease all collection efforts.

Make sure to send both these letters by certified mail so they can’t lie and say they never got them. I respect that you want to have a clean report and make good on everything, but you gotta make sure they play fair too.

(Photo: TrailofTerror)

UPDATE: R. may have put himself in a bad position and “reset” the debt clock by paying RIS the $100. Check the comments for more on this debate.

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