We Know: All About Disputing Credit Card Charges

Why Dispute Credit Card Debt?

In most cases, the credit card charges you are being billed are valid. Sometimes, however, things happen. Perhaps you have your identity stolen. Or someone steals your credit card or card numbers. Or a payment you made does not get properly recorded. Or Sears sells their credit card section to another company, losing information in the process.


In these situations, you may need to dispute the debt -- and in many cases, it is better for your credit if you do. For instance, if you are suddenly getting phone calls from a debt collector over a card you were certain was paid off, you absolutely should dispute it in the legal and correct manner. Either agreeing that the debt is yours or making a partial payment will go on your credit report, while a disputed debt by law cannot go on your report until it has been proven to be your valid debt. And bad debt on your credit report, whether valid or not, will harm your credit rating.


What is absolutely terrifying is that any debt collection agency can purchase credit card debt, even charged off debt, and more are buying supposedly uncollectible debt for pennies on the dollar. This is because they've found they can often get money from the consumer even if the debt is invalid, simply to get them to leave the consumer alone. And if you refuse to address the debt, valid or not, the collection agency can put it on your credit report. It can result in a nightmare if you don't handle things properly.

What Are Your Legal Rights?

Fortunately, you do have recourse. The Fair Debt Collecting Act provides for your report to be protected if you dispute your debt within thirty days of the collection proceedings. Even if you can't make that deadline, debt collectors must cease and desist all collections activities once they receive a letter from you requiring certain documentation of the debt.

How Do You Exercise Your Legal Rights?

If you are in doubt of any debt that is being collected or otherwise charged to you, dispute it immediately. Send them a letter -- you can find several examples online if you search "debt dispute letter" -- and in it detail your name, your account number, and the specific debt you are disputing. Send this letter return-receipt or registered mail, and address it to a specific person who is aware of this dispute. Most critically, be certain you ask specifically for a detailed statement of what you owe and why, itemized. Many debt collection agencies will try to get you to pay these debts on the strength of a court statement that you owe a certain sum to the company they bought the debt from. Do not accept this as proof you owe money. You have the legal right to an itemized statement. If the debt collection company cannot provide this, they cannot legally collect your debt.

Unfortunately, they can sell your debt to another debt collection company who can initiate proceedings against you again, and you may have to go through the whole thing over again. For this reason, you need to contact the original company you supposedly owed the debt to and resolve the issue with them. If you don't owe the debt, ask them for a letter clearing your account. You can use this to dispute your debt to the next company that tries to collect, and to send to the credit bureaus to ask them to correct any black marks that this particular debt has caused on your record.

What Else Should You Know?

Be forewarned that this will be a long and tedious process. You may be struggling with your old credit card account and the credit report companies for six months to a year over this issue. This does NOT mean you should just pay the debt and forget about it. In fact, if you pay the debt, the "late" payment will go on your credit report no matter what you do. Paying the debt is considered acknowledgement that you did owe the debt, and you will be on record as paying it after it went into collections. Do not believe the debt collection agency if they try to convince you that you're better off paying the debt; they are under no obligation to give you advice to help you out, and are only interested in getting your money.

Follow this advice carefully, especially if you have been struggling with debt collectors:

  1. Check your credit report regularly. By law, you are entitled to an annual free credit report from each of the main credit reporting agencies; go to the FCC for the link to this service, not to anything advertised online or on television as "free credit report." There are a number of companies out there that try to give you your "free" credit report but only if you purchase other services.
  2. Debt collectors don't do anything to do you a favor no matter what they say. You don't have to listen to them, either, if they try to argue you into paying a debt; in fact, the less you say to them the better off you are because they are recording everything. You don't want to acknowledge a debt until you're certain it's yours! Tell them instead to contact you via the mail, and don't talk to them.
  3. Follow up with all steps in clearing your debt; if you don't finish it out, the debt will likely come back to haunt you again. You don't want yet another company to start calling you to collect money you don't owe!
  4. Disputing a debt will not harm your credit, no matter what debt collectors say. They will mislead you to get your money. That's how they stay in business. It doesn't matter to them whether you owe the money legitimately or not; they will do whatever it takes to get it.

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