In the debt collection industry, the "statute of limitations" refers to a period of time during which the debt's original creditor or any company that purchased the debt from the original creditor can bring suit against the debtor for nonpayment. The statute of limitations impacts all aspects of the debt collection process -- even collection letters.
Misconceptions
Consumers often mistakenly believe that when the statute of limitations passes in their state, collectors lose the ability to collect the debt at all. These individuals are unpleasantly surprised when collection letters demanding immediate payment continue long after the statute of limitations expires.
What these unfortunate debtors don't realize is that, while a creditor loses the right to sue after the statute of limitations expires, it does not lose its right to collect the debt. A creditor can continue sending demanding collection letters to uncooperative debtors indefinitely.
Lawsuit Threats
Although collection letters can continue beyond the statute of limitations, the Fair Debt Collection Practices Act stipulates that these letters must not contain jargon that would lead the consumer to believe that he is at risk of a lawsuit for nonpayment. Because the company can no longer sue the debtor, it cannot try to frighten the individual into paying off her account by including a threat to sue in its letters.
Collection letters you receive after your state's statute of limitations expires also cannot include threats to seize property or garnish your wages since debt collectors can only take these actions after winning a lawsuit.
Stop Collection Letters
A collection agency has the right to send payment demands through the mail unless you revoke this right. Under the FDCPA, you can stop collection letters by sending a letter of your own to the company notifying it that it no longer has the right to contact you. You can terminate all communication with a collection agency at any time -- whether the statute of limitations remains in effect or not.
Considerations
If you receive collection letters threatening a lawsuit after the statute of limitations passes, you may have inadvertently reset the clock on your debt. Depending on your state laws, you can revive the statute of limitations by making a payment to the collection agency, acknowledging your responsibility for the debt or verbally agreeing to send a payment.
In addition, different statutes apply for different types of debt. A credit card debt, for example, often carries a different statute of limitations than an unsecured loan. Your state attorney general's office or consumer protection agency can inform you of how long the statute of limitations is in your state and what actions could restart the clock on your debt.
0 comments:
Post a Comment