A great round table was held recently on December 4 at the FTC over the unfair practices by debt collectors. One part of the conference talked strictly about debt collecting on old debt or debt which is past the statute of limitations, also called time-barred debt. If a debt is out of statute of limitations (SOL), a consumer is not legally required to pay on the debt.
The panel brought out several questionable practices by debt collectors:
- Some companies purposely only purchase and sell debt that is out of statute (OOS) debt.
- One of the debt collection lawyers maintained that no OOS actually gets prosecuted, but was immediately shot down by the other lawyers and judges on the panel, based on their own personal experience. Most lawyers and judges said they saw lawsuits on OOS debt every day.
- Some companies try and trick consumers to waive the SOL by getting them to make a small payment of even $5. “Can’t you give me something?” In some states, making a partial payment on a debt restarts the statute of limitations.
- In states where a partial payment does NOT restart the debt, the states usually require a new written promise to pay. In such cases, the collection agencies have sent out letters with a tear out on the bottom that says “I don’t have the money to pay now, but I do plan to pay on this debt in the future.” Once the consumer sends in this signed piece of paper, the SOL is revived.
Some remedies suggested by the panel:
- The panel discussed whether or not a requirement should be made on collectors to state that the debt is out of the SOL that they cannot be legally sued by the statute of limitations.
- A recommendation was made that a disclosure be made to a consumer that a partial payment could restart the SOL.
- One suggestion brought up was there should be some kind of legal requirement for debt lawyers bringing suit to swear that the debt is not past the statute of limitations.
If you would like to view this portion FTC Dec 4, 2009 meeting in its entirety, here it is: Statute of Limitations Webcast.
Have you been the target of a collection agency for old debt? Did they try suing you? What was the outcome? We want to hear about it!
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I have several medical bills and a few credit card bills that have been delinquent since 2004 (after a major illness). I live in Mississippi and the SOL on ALL debts is 3 yrs. I still receive letters from collection agencies for the debts. The debts have been sold several times. It seems like every other month it’s a different collection agency writing about the same debt. Several collection agencies AND the original creditors are reporting these debts on my credit report. It is legal for them to do this? When does the SOL start? Doesn’t it start 90 days after I first become delinquent with the original creditor? How can it keep starting over?
I would be interested in knowing the answer to Sue’s comment listed above as well. We continue to have the same problem. Is there no recourse against these collection companies ruining your credit in this manner?
Sue and Peggy, In answer to the questions, It is legal for them to list it provided it is a legally enforcible debt. If the SOL is up, it isn’t. The SOL starts on the first day after your last payment OR the day after service by the OC. To keep it from starting over, don’t pay. If the SOL is up, they can’t sue. I have pulled my credit score from a 498 to a 672 in about 6 months by using debt validation and SOL. It’s amazing what a few letters can do. E-mail me and I will be glad to help you out. nrhauntedplaces (at) gmail (dot) com
what is the start date for the 10 yr period for a
bk 7 ? is it the original file date or the date when it is discharged?
Discharge or cancellation date for CH 7. Date paperwork is filed for Chapter 13.
Statute of Limitations Webcast This link does not work in the article
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I have a Sprint bill from 2001 but a recent credit report reflects it as a debt from November 2011. Friends that worked at ER Solutions have told me that they will run a $1-5 dollar payment on an account even if the consumer hasnt called or mailed in the payment in order to keep it active. Is there a way for me to prove that this is why my debt appears to be new?