More companies are focusing on collecting old debts, hoping to profit from getting consumers to pay delinquent debts they may have accumulated several years ago. Some of these collection efforts are legitimate, but others may be sidestepping state law and suing consumers to turn a profit. People facing lawsuits should ensure they understand their state's debt-collection laws to protect their rights.
Collection Calls
When called by a debt collector, do not commit to pay or acknowledge an old debt if a debt collector calls and demands payment. Simply note the account information about the debt the collector claims you owe and end the conversation, even if the collector threatens to sue you. Investigate the information you received to make sure the debt is yours. Even if it is, the debt may be too old to collect through a lawsuit because the state statute of limitations may have expired. Each state has laws that limit the amount of time a creditor or lender has to recover delinquent debts.
State Statutes
In some states, making a payment to a collector or acknowledging a delinquent debt is yours can change the statute of limitations concerning that debt, even if it has expired. Making even a partial payment can make an old debt new again by restarting the amount of time a collector has to recoup the debt. In such cases, a collector would have several more years to sue you for payment based on the time allowed for debt collection in your state.
Legal Advice
Consider seeking advice from an attorney experienced in consumer law or the consumer protection department of your state's Attorney General's Office. Ask for information on debt-collection laws in your state to help you determine if the statute of limitations for collecting on your debt has expired. According to Bankrate.com, a creditor loses the right to sue a consumer for payment if the statute of limitations has expired. In any case, don't ignore a debt-collection lawsuit. A court could automatically decide the case in the collector's favor if you don't respond to a suit and require you to pay whatever is owed.
Considerations
You may want to settle an old debt to avoid a lawsuit, but you should be careful about how you settle it if you can't pay the debt in full. One option is to offer a large lump sum payment. Debt-collection companies are often willing to settle accounts for less than what's owed if they can get a lump-sum payment. You should require the company to send you a settlement agreement in writing before you pay, and you should consider seeking an attorney's advice to avoid further problems.
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