When The Debt Collector Is Not Wrong

Here is a reader question about debt collectors we received this week:

Back in 03, I purchased a computer for $1500.  A week later the same computer was advertised at $499.00 (what a difference huh?) so i tried to get in touch with any sales rep to bring the price down.  I got no where, I sent them letters and nothing. In 2004, I contacted corporate office and they plain and simple told me that they could not help me. I never made a payment on it. 

So just yesterday some attorneys called my cell to get payment. I answered no questions. I am going through a background investigation process for a job and they checked my credit and requested information from the collection agency, and that collection agency gave my information to the attorneys.

I do not want to make a false move and get myself caught up.  Now they want me to pay $2300.  I live in San Diego. Can you help?

A: You have discovered an unfortunate and expensive lesson -- when it comes to disputed bills, lenders often have the upper hand. I&39;ve talked to many consumers over the years who refused to pay a bill for one reason or the other, only to discover that it was turned over to collections and their credit scores took a gigantic nosedive.

In your case, I am not aware of any consumer protection rules that would require the computer company to adjust your price after you bought your system. If your contract allowed for returns, your best bet would have been to return the computer, then repurchase it at a lower cost. But unless the company advertised some type of "lowest price" guarantee, my guess is you were out of luck. (There are situations under the Fair Credit Billing Act where you can refuse to pay a charge on a credit card bill, and I am assuming those rules didn&39;t apply here.)

However, the fact that you incurred this debt a little over four years ago may work in your favor. According to the very helpful guide Money Troubles, the statute of limitations for written contracts in California is generally four years. It would be a good idea to talk with a consumer law attorney in your area to learn whether that is the case in this situation. If you continue to refuse to pay, the attorney/collection firm would have to take you to court to collect and you could raise the statute of limitations as your defense and they would lose. If the debt is too old, the consumer law attorney can help you write a letter stopping their collection efforts.

Keep in mind that whether you pay or not, this debt can only be reported for seven and a half years from the date you first fell behind. The only way it should be reported longer is if the attorney/collection firm sues you and successfully obtains a court judgment against you.

However, looking at this objectively, you did buy the computer. The fact that you felt ripped off and ignored shouldn&39;t mean you pay nothing at all. When you talk with the consumer law attorney, ask him or her whether you can settle the debt for less than you owe without jeopardizing your rights. Sometimes paying an old collection account will "toll" or revive the statute of limitations -- starting the process all over again. If you can settle the debt, it may be best to do that and move on.

If you can&39;t settle it in a way that seems fair to both sides, or if the debt is too old, you may want to buy an inexpensive computer from the same company (pay cash this time!) and donate it to a worthy cause. Create some good debt karma to balance out the bad.

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