Facing any kind of lawsuit can be a traumatic experience, but hiding from it or pretending it isn't there won't make it go away. Scavenger debt collectors often count on a person's fear of the legal process to collect on otherwise noncollectable debts. You should talk to a lawyer anytime you're faced with a lawsuit or a creditor threatens to sue you to collect on an unpaid debt.
Scavenger Debt Collectors
Scavenger debt collectors are companies that buy old debts from creditors in an attempt to gain repayment from the debtor. These companies can buy debt for pennies on the dollar because the debts are no longer enforceable. According to financial adviser Clark Howard, it isn't uncommon for scavenger debt collectors to buy debts that are up to 30 years old.
Statutes of Limitations
A statute of limitations is a legal ticking clock that sets a limit on how long a person has to take a particular action. For consumer debts, statutes of limitations determine how long a creditor has to sue a debtor who has failed to pay back a debt. These statutes differ significantly between states, but creditors generally have between three and 10 years after a debtor stops making payments in which to file a lawsuit.
Affirmative Defenses
A statute of limitations provides a defendant an affirmative defense against a lawsuit. This means that if a creditor sues you, claiming you owe a debt, you can have the case dismissed if you can show the statute of limitations on the debt has already expired. However, an affirmative defense does not bar a plaintiff from filing a case. This means that a creditor can still file a lawsuit against you even if the statute of limitations has expired.
Default Judgment
When a scavenger debt collector files a lawsuit on a debt that is outside the statute of limitations, the collector is often doing so in hopes that you will hide your head in the sand and not respond. If you get sued and don't show up in court or answer the lawsuit, the court will grant the plaintiff a default judgment. This means the debt collector will win the case even if the statute of limitations has expired. Wining the case often involves simply showing up to court and making the debt collector prove its case, which they often cannot do.
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