I am set to close on a house in late March and have excellent credit–no late payments, collections, or anything going back 7 years.
However, I received two letters in the mail today from a collections agency that completely shocked me and could potentially derail my home purchase.
My first child was born 8 years ago (2008) in another state and had to be life flighted to another hospital. There was some confusion, initally, because the ambulance and air transport companies sent their bills to my insurance company using the name “Baby X” instead of the child’s legal name, so the bills were rejected by insurance. This was later corrected once I was aware of the issue and I was assured that everything was fine and the bills paid. Nothing about the situation appeared to be fishy and nothing was ever reported on my credit.
Now, eight years later, my mortgage application has triggered a collections agency to send me two letters out of the blue saying that I owe the air transport and ambulance companies a total of $ 1,600 in unpaid fees and that they are willing to “settle” for the low price of around $ 265 for one and $ 465 for another. I know this debt is not only bogus but also well past the statute of limitatons, but what I am unsure about is whether they can still report these collections to the credit agencies in time to derail my mortgage loan? The rules are so vague–usually there’s a limit of 7 1/2 years for credit reporting purposes–but I am not sure what to do. Should I hire an attorney or talk to my broker? I know if I pay anything it will reset the statute of limitations so my goal now is to stall and verify whether or not they have the power to destroy my credit and ruin my mortgage app. I pulled my scores again and there are still no collections or missed payments reported as of today.
Any advice is greatly appreciated.