The Statute of Limitation on Debt Collection
By: Stephen Bishop Jr.
Published: November 2007
Most of us are familiar with debt collectors’ harassing tactics such as calling at all hours of the day and night, but most of us may not know that there is a new trend called debt buying. If you have never heard of this trend, here is a simple way to understand it. Collection agencies are companies that seek payment from you on your debt. Some of these agencies attempt to purchase your uncollected debt from your creditor for a small price. Now the creditor has no worries and can simply discard your account and take a small loss. However, the debt buying agency may try to sue you for not paying your debt.
This has been an increasing trend in the recent years and is a total nightmare for debtors. Many debtors have become relaxed after not hearing from their creditor for a while, thinking their debt had been disregarded years ago but then these collection agencies begin their harassment. Fortunately, there are often times where you are not required to pay at all. That’s right! When a certain amount of time has passed on a particular debt, the debtor is no longer obligated to pay, and a lawsuit against them cannot be won. This is due to the statutes of limitation on debt collection.
Every state has their separate statute of limitations on debt collection. It is imperative that you are aware of the statute of limitations for debt collection in your own state or the state in which your debt is distinguished. More importantly, you must realize that written and oral contracts, promissory notes, and open-ended accounts all have different limitations. Just because you are protected by the statute of limitations in your state does not necessarily mean the collector will not attempt to sue you. In this situation all you must do is provide evidence. Simply prove that their debt collection time limit has passed according to your state’s statute of limitations. So when does the clock start ticking on the statute of limitations? Most of the time, it is from the most recent activity or from the time your creditor deemed your debt as a bad debt. So whatever you do, do not make any payments that would allow the clock to start ticking all over again. You can easily access the date of your most recent activity or the date when your debt was deemed bad by taking a glance at your credit report.
If you are protected under your state’s statute of limitations and a collection agency calls here are a few do’s and don’ts.
- Inform the collection agency that the allotted time to collect the bill has passed and you are covered under your state’s statute of limitations.
- Tell the collection agency not to contact you again.
- No matter how much they insist, never admit to owing any money.
- Do not make any payments.
- Do not settle to pay a percentage of your debt.
- Do not let them intimidate you. As long are you are protected by your state’s statute of limitations, they are in the wrong, not you.
You are protected under the Fair Debt Collections Practices Act (FDCPA) in many circumstances relating to unfair debt collection. The FDCPA prohibits many of the tactics used by debt buyers and other collection agencies. For example, have you ever received a phone call from a collector really late at night? That is in violation of the FDCPA. Debt collectors are prohibited from calling after 9pm. Has a collector ever threatened you? That is also in violation of the FDCPA. There are many other actions that debt collectors often use that are in violation of the FDCPA, and it is important for you to be aware of them. Educating yourself is the key. The more informed you are with debt collection and your rights, the more you will save in the long run.