How should I deal with a debt in collection that I did not know about?

Question

I was checking my credit report and noticed a debt for $9000.00, the original balance for $5500.00 that was in collection from Sears from 2003. In 2003 I was paying off the debt even though it was 120 days past due. At that time the statements stopped coming and I inquired to Sears about it and the said that they had no knowledge of the account.

I never received anything for a collection agent concerning the debt. My credit report does say that this debt will stop being reported in November of 2009. What does that mean?

Now I have a bad stain on my credit and was wondering how to deal with this.

Answer 1

Most likely, the debt was written off by Sears and sold to Junk Debt Buyer (JDB). JDBs buy written off debts for pennies on the dollar and they have the right to collect the full original amount plus any interest and fees.
The way to deal with JDBs is to make them prove everything. Send the collection agency (JDB) a "Debt Verification Letter" and make them prove any links between you and Sears and also between themselves and Sears to verify that they indeed own the debt and that they have a right to collect on it.
Also keep in mind that the Statutue of Limitation (SOL) on this old debt maybe close to running out. You have no legal obligation to pay after SOL. Credit card debts are always open accounts. For your State's SOL check the link below,
http://www.cardreport.com/laws/statute-of-limitations.html
If you should choose to pay them, keep in mind that they probably purchased the debt for pennies on the dollar and they could be willing to settle for a fraction of the original amount.
Before you pay anything, however, get it in writing from the JDB that they must remove all derogatory information they placed on your credit reports.
http://www.creditinfocenter.com/debt/settle_debts.shtml
As it stands now this debt will clear your credit reports in November of 2009.

Answer 2

From what I heard about Sears card, they do have lots screwed up mistake like yours. I think if you produce the evidence on what you paid at the time, you should be able to get out this, and they can submit the changes to all credit reporting company (make sure all the major THREE are informed) to admit they made a mistake.

Answer 3

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http://all-debt-consolidation-loan.blogspot.com/2007/07/debt-consolidation.html
credit cards:
http://all-debt-consolidation-loan.blogspot.com/2007/07/chase-credit-cards.html
Good Luck!