Collectors May Attempt to Collect on Old Debt: Be Aware when a Debt is too Old for a Collector to Sue for

Debt collectors have a limited number of years to sue a consumer on a debt. This is known as the statute of limitations. Therefore, if a consumer have unpaid "time-barred" debts, collectors will not be able to sue the consumer on the debt even if the consumer does not pay.

The statute of limitations varies from state to states and depends on the type of debt. Additionally, there are circumstances where the “clock can be reset” and the time period starts over. Therefore it is important for a consumer to understand their rights should a debt collector contact him or her about an old debt.

Usually, states will determine how duration of the statute of limitations. In most cases the clock begins to tick after the consumer first fails to make a payment. When the statute of limitations ends depends on the type of debt and the law that applies in the state where the consumer lives or specified in the consumer’s credit contract.

If a debt collector calls about a time-barred debt

Debt collectors are allowed to contact consumers about time-barred debts. The debt collector may tell the consumer that the debt is time-barred and that they cannot sue the consumer if they don’t pay. Should a debt collector not tell the consumer that a debt is time barred, but he or she believes it might be, then the consumer should ask the debt collector if the statute of limitations on the debt has ended. Under the law, if the debt collector answers the question, they are required to be truthful. However, there are some debt collectors who may not answer.

Another way to ask if the debt is time barred is to as what their records indicate the date of the consumer’s last payment was. This can help the consumer determine when the clock started to run for the statute of limitations. If the debt collector does not give the consumer this information, he or she should send a letter to the debt collector within 30 days of receiving a written notice of the debt. This letter should explain that the consumer is ‘disputing’ the debt and that he or she wants to ‘verify’ it. Until the debt collector provides the consumer with verification, they must stop trying to collect.

Is a consumer required to pay a time-barred debt?

The decision to pay on a time-barred debt is entirely the consumers. The consumer does have options on how to proceed, but each has consequences.
 

• Not Pay on the Debt – Consumers still owe time-barred debts even though debt collectors cannot sue for the debt. Unless the consumer sends a letter to the debt collector demanding that they cease communication, they can still continue to contact the consumer
• Make a Partial Payment – In some states, paying any amount on time-barred debts, or even promising to pay, ‘revives’ the debt. By reviving the debt, the consumer restarts the clock and begins a new statute of limitations period. Often this also means that a debt collector can sue the consumer for the full amount of the debt, including any additional fees and interest
• Pay Off the Debt – Consumer’s sometimes decide to pay off the debt even though collectors may not be able to sue. There are some debt collectors who may be willing to accept less than the amount owed in order to settle the debt, either as one large payment or a series of small ones. Prior to making the payment, the consumer should obtain a signed form or letter from the collector stating that the entire debt is being settled and that by paying that amount it releases the consumer from further obligation. If the consumer does not obtain this document, the payment may be treated as a partial payment

Our experienced attorneys here at Krohn and Moss Consumer Law Center have also provided many helpful resources regarding the TCPA and the FDCPA and how telephone debt collectors should act. We have been successfully representing those abused and taken advantage of by debt collectors for years, and have a long list of successful stories to share with you. We offer a FREE CASE REVIEW for you to assess whether we can assist you with your matter. Please do not hesitate to contact us toll free at 1-800-875-3666 or visit our website at http://www.krohnandmoss.com/.