What happens when you stop paying an old debt and a decade goes by? Generally, the debts are sold to debt collection companies for pennies on the dollar, who continue to come after you, sometimes using dubious tactics.
The New York Times had an interesting piece on July 30 titled "FDCPA laws and out-of statute debt". "Out of statute debt" is a debt that is too old to sue for in court due to the passage of the statute of limitations. The subject of the piece, Timothy McCollough, had a credit card he had stopped paying on in 1999, due to a head injury and subsequent job loss. McCollough was sued over the debt in 2007, despite the fact that the debt was beyond the statute of limitations. The Times found that attempts to collect expired debts are common, and in most states it is legal, as long as the collecting party does not sue or threaten to sue. The laws vary by state, but generally the statute of limitations ranges from three to ten years.
Consumers have considerable rights under the Fair Debt Collection Practices Act and are advised to be familiar with the Act's protections. For example, debt collectors cannot harass you, make false statements or commit other unfair practices. In addition, debt collection companies cannot directly contact your family or friends about the debt, or contact you at all if you tell them to stop in writing. They are also prohibited from contacting you directly if you have an attorney.
Despite the protections and penalties for violations of the FDCPA, debt collection companies often violate the law and are sued. Whenever you are contacted by a debt collection company, you are always advised to read everything carefully, take detailed notes on any interactions, be vigilant about any payments demanded and contact an attorney if you are unsure about your rights.
- The Fair Debt Collection Practices Act (FindLaw)
- Businesses: The Fair Debt Collection Practices Act (FindLaw)
- Not so Friendly: Debt Collectors on Facebook (FindLaw's Law and Daily Life)
- Debtor-Creditor Law Overview (provided by Ledford & Wu)
- Debts You Cant Discharge (provided by Law Offices of Richard N. Gottlieb)