Common ways paid debt is reported wrong
Paying a debt doesn't erase its history. If you paid late, accurate late payments from before the payoff can stay on your report. What the Fair Credit Reporting Act (FCRA) doesn't allow is reporting that is inaccurate or incomplete about where the debt stands today. Common problems:
- A paid-off account still shows a balance or a current past-due amount.
- A settled account still shows the old balance. A settlement can accurately be reported as settled for less than the full amount. What it shouldn't show is a balance you no longer owe.
- A collection you paid still shows as unpaid.
- The same debt reported twice. When a debt is sold, the original creditor and the new owner or its collector may both report it. Generally, only one of them should show a balance you owe.
- A debt discharged in bankruptcy still shows a balance or a past-due status.
- An old account that should have aged off, or a collection whose delinquency date was changed to make it look newer.
Debts discharged in bankruptcy
A bankruptcy discharge ends your personal liability for the debts it covers. After a discharge, an account included in the bankruptcy should generally show a $0 balance and a status such as "discharged in bankruptcy" or "included in bankruptcy." It generally should not show a balance you still owe or a past-due amount.
There are exceptions. A debt you reaffirmed, and certain kinds of debt that bankruptcy usually doesn't discharge (like most student loans and some taxes), can still accurately show a balance. Your discharge order and bankruptcy schedules show which accounts were covered.
Trying to collect a discharged debt is a separate problem. The discharge works as a court order barring collection of discharged debts from you personally (11 U.S.C. § 524(a)(2)), and violations are generally raised with the bankruptcy court. If a creditor is still billing or calling you, tell your bankruptcy lawyer or talk to one.
Old debt that should have fallen off
The FCRA limits how long negative information can be reported (15 U.S.C. § 1681c):
| Item | General reporting limit |
|---|---|
| Most negative items, like late payments, collections, and charge-offs | 7 years |
| Bankruptcies | Up to 10 years |
These limits don't apply to reports for jobs expected to pay $75,000 a year or more, or for large credit or insurance transactions (§ 1681c(b)).
For a collection or charged-off account, the seven-year clock is tied to when you first fell behind on the original account. Selling the debt to a collector, or making a payment, doesn't restart it. "Re-aging" is when a collector reports a later delinquency date than the real one, which keeps the debt on your report longer than the law allows.
Gather your proof
These cases usually turn on documents. Before you dispute, collect what you have:
- A payoff or paid-in-full letter from the creditor or collector.
- The settlement agreement, showing the agreed amount, plus proof you paid it. If the agreement says how the account will be reported, that matters too.
- Bank records, like canceled checks, statements, or payment confirmations.
- Your bankruptcy discharge order and the schedule listing the creditor.
- Old statements showing when you first fell behind, for aging problems.
- Your credit reports, showing the wrong balance, status, or date.
How to get it corrected
- Get all three reports. Go to AnnualCreditReport.com, the official free source. The three bureaus currently offer free online reports there every week.
- Dispute in writing with each bureau that shows the error. Say exactly what is wrong, for example: "This account was paid in full on [date]. The balance should be $0." Attach copies of your proof, never originals.
- Don't rely on the creditor alone. Contacting the lender or collector can help, but a dispute sent only to them doesn't trigger the investigation duty you can enforce in court. That duty starts when a bureau forwards your dispute (§ 1681s-2(b)).
- Watch for results. The bureau generally has 30 days to reinvestigate, and up to 15 more if you send additional relevant information during that time. It must send you written results within 5 business days after it finishes (§ 1681i).
- Keep denial letters and note when you applied for credit, housing, or a job. If the error survives, talk to a lawyer.
My step-by-step dispute guide includes a sample letter.
Damages, fees, and deadlines
When a bureau or furnisher violates the FCRA, the law allows actual damages, like a higher interest rate, a denied application, or the stress of dealing with it. For willful violations, it also allows statutory damages of $100 to $1,000 and punitive damages. The full damages table is on my credit report errors page.
The FCRA lets a consumer who wins recover reasonable attorney's fees and costs (§§ 1681n, 1681o). You don't pay me unless you win. I take these cases on contingency: no attorney's fees and no case costs owed to me unless you recover money. If a case is lost, a court can sometimes order the losing side to pay the other side's court costs, and some Florida laws, including the security deposit and deceptive practices statutes, also let the winner recover attorney's fees from the loser. I explain that risk before anything is filed, and every term is in a written agreement before you sign.
You generally have two years from when you discover the violation to sue, and no more than five years from when it happened (§ 1681p).