I Settled Credit Card Debt But Collection Agency Says I Owe

Reader Question: I settled a debt with a credit card company two years ago and now they send me a letter from a debt collection agency that I owe twice as much. What do I do?

We don't offer legal advice through this blog, so I can only help you with the credit reporting side of this. If the credit card company is once more reporting an old debt that you've previously settled, then it will likely show up as a negative item on your credit report again. But if you've truly settled that debt in the past, and you have the paperwork to prove it, you should be able to dispute the negative item and have it removed from your credit report.

Unfortunately, the burden of proof rests with consumers, and not with the people who report the debt. It's sort of like being guilty until proven innocent -- the reverse of our justice system. And the only one who can prove you innocent is you, or a lawyer acting on your behalf.

When you dispute an item on your credit report, the reporting agency is required by law to investigate the item. If they're findings are in line with your dispute, or if they are unable to verify the item one way or another, the negative item must be removed from your reports.

The first thing you should do (if you haven't done so already) is to research the collection agency's claim to see if it's legitimate or not. If you previously settled the debt in its entirety, and you feel the new claim is illegitimate, then you might want to get some legal advice on the matter. It all depends on what kind of proof of payment you have in your favor.