FDCPA and Time-Barred Debts

With the number of debt collection agencies rising, complaints about collection tactics have risen as well. The Fair Debt Collection Practices Act (FDCPA) was designed to prohibit unfair and abusive debt collections practices. One such unfair practice is misrepresentation in the collection of time-barred debts. 

Debt collectors are attempting to collect on all types of debts, including time-barred debts. Time-barred debts are old debts that consumers have not made any payments on for a certain amount of time, and the number of years the debt collectors have to collect, or the statute of limitations, has expired. A debt collector cannot sue for non-payment of time-barred debts. However most consumers do not know that they are not legally required to pay time-barred debts or do not know their rights with regards to this type of debt.

What Debt Collectors Can Do to Collect Time-Barred Debts

Debt collectors are permitted to contact a consumer about time-barred debts. Some debt collectors may inform a consumer that the debt is time-barred and that they cannot sue if the consumer does not pay. However many debt collectors will not tell a consumer that a debt is time-barred. If a consumer thinks a debt might be time-barred they should ask the debt collector. If the debt collector answers the question they are required by law to answer truthfully. However the debt collector may decline to answer. 

How a Consumer Can Find Out if a Debt is Time-Barred

Another way to find out if a debt is time-barred is to ask the debt collector when the date of the last payment was. The date of the last payment is when the statute of limitations starts to run. In the case where the debt collector does not give a consumer this information, the consumer should send the debt collector a letter underFDCPA § 809(b) within 30 days of receiving a written notice disputing the debt and explain that the consumer wishes to verify it.

Consumer Options with Regards to Time-Barred Debts

Consumers should consider carefully whether to pay a time-barred debt. Even though the debt collector cannot sue to collect the consumer still owes the debt. The debt collector can still contact the consumer to try to collect unless the consumer sends a letter demanding that communication stop under FDCPA § 805(c). A consumer could also pay a portion of a time-barred debt or promise to pay the debt. However, in some states paying any portion of the debt or promising to pay the debt ‘revives’ the debt, resetting the statute of limitations. By restarting the statute of limitations the debt collector could then sue to collect the full amount of the debt. The consumer could also choose to pay off the debt. Some debt collectors may even accept less than the amount owed to settle the debt. Should a consumer decide to settle the debt for less than the total amount it is important that they obtain a document stating that the payment or series of payments will satisfy the debt. 

Debt Collector Misrepresentations

Some debt collectors have attempted to coerce consumers into paying time-barred debts by making a variety of misrepresentations. Some companies would try to encourage consumers to pay even a small portion of the debt. If the consumer pays any amount of the debt, this would lead to a restarting of the statute of limitations on a debt that the consumer did not have a legal obligation to pay. 

One company that encouraged consumers to pay on time-barred debts was Asset Acceptance, LLC. As a result of its practices of making misrepresentations to consumers Asset Acceptance paid a civil penalty of $2.5 million to the Federal Trade Commission (FTC) and has agreed to tell consumers when a debt is too old to be enforceable and that Asset Acceptance will not sue to collect the debt. Asset Acceptance went after time-barred debts with the intention of encouraging consumers to make at least a partial payment so that the legal obligation to pay would be revived. 

This company would also report the expired debts to credit bureaus to pressure debtors to pay. The settlement also barred Asset Acceptance from placing time-barred debts on consumers’ credit report without first notifying the consumer. This settlement shows that the prohibitions against unfair and deceptive collection practices apply to time-barred debts.

Claims under the FDCPA can become quite complicated very quickly and have many factors to consider. Many debt collection agencies and firms have a nearly limitless amount of resources including an endless flow of money, hives of staff, and an extensive bank of previous work assignments. This is why you need an equally resourceful and more experienced staff to defend your rights. 

Here at Krohn and Moss, we have been representing clients throughout the United States since 1995 and possess the resources and experience necessary to best represent you or a loved one. We have an intimate understanding of the law and compassionately represent our clients each and every time—you are not just another case to us but a person with a problem we can solve. 

If you or a loved one believes to be a victim of malicious and wrongful conduct under the FDCPA, please contact us immediately. Call us toll free at 1-800-875-3666 or visit our website for a FREE case review and evaluation at http://www.krohnandmoss.com.