Question of the Month – reporting a debt as paid-in-full

In an effort to help and educate as many people as possible, I thought it would be a good idea to occasionally write a blog post addressing common questions I get in consumer law, or debt collection, or similar areas of law. Here’s the question for this month:

Are there any rules for how long a collection agency has to report a debt being paid? I am infuriated after calling this company multiple times. They said it would take 30 days to post. Two months later, someone didn’t do their job and the paid-in-full status was not reported to the credit agencies. Now they give me assurances that they will send out a letter saying that the debt has been paid, in another 30 days. Do I have any legal recourse here?

Short answer: Yes.

Medium length answer: Yes, your legal recourse can be through the Fair Credit Reporting Act.

Long answer: This type of activity is exactly what the Fair Credit Reporting Act is meant to protect people against.

In this situation, the paid debt that’s still showing up as an unpaid debt to credit agencies is called a “derogatory tradeline.” It still shows up as a blip on your record when credit agencies look you up.


You can either hire an attorney at this point, or do this on your own. What you would do, or an attorney would do for you, is write a letter requesting an investigation of the derogatory tradeline. Send the letter to the credit reporting agency showing that the debt is unpaid. The credit reporting agency has 30 days to investigate.


If the investigation results in the credit reporting agency fixing the problem, you are done and the damage is fixed. If the investigation does not repair the problem, then you may be able to file a lawsuit under the Fair Credit Reporting Act.


Bingo bango. Done and done. People usually don’t recognize two simple things about these kinds of violations:


  1. You don’t have to put up with these “simple” or “negligent” mistakes by the credit reporting agencies. These kinds of mistakes aren’t meant to be tolerated, and there is legal recourse under the FCRA.
  2. You don’t have to pay an attorney to do a case like this. If the attorney knows what they’re doing, you shouldn’t have to pay an attorney up front to do this type of work. Why? Because the FCRA provides for attorney’s fees to the prevailing party.