Some companies specialize in buying old consumer debts to profit off debts they manage to collect. Some of these debt buyers use illegal practices to make their money. Your liability for paying an old debt is partly linked to how you respond to a debt collector. You can help protect yourself from unfair collection practices by contacting your state Attorney General's Office for information on debt-collection practices in your state.
Statute of Limitations
A debt collector no longer has the right to sue you for payment after your state's statute of limitations expires. The statute of limitations is a time limit for filing a lawsuit to collect an old debt. Companies that sue to collect a debt beyond the statute of limitations are violating the U.S. Fair Debt Collection Practices Act. Still, you should always appear in court to explain the situation to a judge, advises the Neighborhood Economic Development Advocacy Project. According to the NEDAP, failure to appear in court can leave a consumer liable for payment regardless of the statute of limitations.
Collection Methods
You may want to seek advice from an attorney if a debt-collection company persists in trying to collect on an old debt. Making a payment on an old debt or acknowledging the debt is yours can restart the statute of limitations in some states, making you liable for full payment of the debt. Some debt collectors will pressure consumers to make further payments on old debts that have been settled or have been discharged in bankruptcy court. Re-aging a debt is another tactic that unscrupulous collectors will use. The practice is illegal, and it involves reporting old debts as new debts to credit bureaus to extend the seven-year limit on reporting negative information in a consumer's credit file.
Legal Notices
It's possible to receive notice of a successful debt-collection judgment against you without receiving advance warning to appear in court. Some lawyers say many debtors don't find out about a collection company's legal action against them over an old debt until it's too late, according to the New York Times. That's because they were never notified about the action so they could respond or appear in court. The article notes that consumers who hire a lawyer to fight such cases usually win.
FTC Actions
The U.S. Federal Trade Commission has sued some debt-collection companies over their procedures for collecting debts. For example, the FTC won a $10.2 million judgment against National Check Control in 2005, according to MSN Money. The company was accused of threatening consumers with lawsuits and jail time over their alleged debts. In some instances, consumers didn't owe the debts the company tried to collect or the amount sought for collection was higher than the actual account balance.
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