Legal Question in Credit and Debt Law in California

I sold something on eBay about 5 or 6 years ago and received the payment through Paypal. After I cashed out all the balances in my account, Paypal reversed out that payment (resulted in negative balance in my account) because the buyer was using a fraudulent account. It was so difficult dealing with Paypal that I decided to just ignore them, including the collection agency letters! I did not care about my credit report back then. Just a week ago, I received a letter from a collection agency trying to collect on this "Paypal negative balance". They offer to settle this for half of what I owe (less than $600). Is there any statute of limitation for something like this? I am concern about my credit report now (want to buy a house). I am afraid to contact the agency, hearing that a lot of them are preying on people who do not know anything about the law (me) and that they are very mean & rude! Help!!!!


Asked on 11/17/09, 2:20 pm

1 Answer from Attorneys
Robert F. Cohen Law Office of Robert F. Cohen

Depending on whether you had a written agreement (by checking a box that said "I agree" by signing up for PayPal), the statute of limitation would be 4 years, or 2 years if only an oral agreement. Even so, if the payment had been reversed more than 4 years ago and they started billing you for the negative balance, it is uncollectable. However, it could stay on your credit report (if it is on there) for up to 7 years. If you compromise and decide to pay some amount, make sure to agree in writing that they will report to the credit reporting agency that the debt has been paid in full.

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Answered on 11/27/09, 8:36 pm


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