If a collection agency contacts you, don't pay, or agree to pay, a debt until you are certain it is within your state's statute of limitations. Some collection agencies deliberately try to trick people into paying debts when they can no longer be legally compelled to do so. Some may even file a lawsuit in hopes of a default judgment.
Statute of Limitations
A statute of limitations on debt is the period during which a creditor or debt collector can sue you to collect a debt. Once the statute of limitations is up, the creditor or collector can still try to get you to pay the debt but should not file a lawsuit against you. If a collection agency does file a lawsuit, you can ask the judge to dismiss the case because the statute of limitations has expired, according to the website Nolo.
Junk Debt Buyers
Some collection agencies don't actually work on behalf of original creditors. Instead, they buy very old debts for a fraction of their face value and then try to collect the debt. While this is a legal practice, some junk debt buyers can become very aggressive in hopes of intimidating you into paying a debt that is beyond the statute of limitations.
Lawsuit Defense
Never ignore a summons or collection activity on an out-of-statute debt. Some debt collectors file lawsuits even on out-of-statute debts. If you don't show up for your hearing, the judge can enter a default judgment against you. If this happens, the collection agency can try to collect the debt by garnishing your wages or putting a lien on your home, until you can get the default judgment vacated, Nolo warns.
Federal Law
Under the federal Fair Debt Collections Practices Act , it is illegal for a collection agency to threaten you with something that it cannot or does not intend to do. If a collection agency threatens to sue you for a debt that is outside the statute of limitations, you may have grounds to file a lawsuit of your own against the collection agency. At the very least, you should report the collection agency to your state's attorney general as well as the Federal Trade Commission.
If junk debt buyers/collection agencies are harassing you, you can force them to stop by invoking your rights under the Fair Debt Collections Practices Act. Write the collection agencies a letter telling them to cease all contact with you. State that you are fully aware that the debt is past its statute of limitations. Send the letter certified mail, return receipt requested. According to the act, the collection agency can only contact you one more time after receiving this cease and desist letter to let you know if it plans to take any future action on the account.
Warning
If a collection agency calls you about a debt, do not agree to a payment arrangement or actually make a payment until you can verify whether the debt is past its statute of limitations. If you do make a payment, or agree to pay the debt, you may end up resetting the statute of limitations on the debt. Once you do this, the debt collector can then take more aggressive collection action against you, including filing a lawsuit.
0 comments:
Post a Comment