Debt collectors are strictly regulated under the Fair Debt Collection Practices Act, which protects consumers against unfair, deceptive, and abusive debt collection.
Consumers frequently complain about debt collectors trying to collect on old debts. In fact, debt buyer Asset Acceptance paid $2.5 million dollars to settle a FTC lawsuit, which alleged that Asset Acceptance failed to tell consumers that certain debts were too old to be legally enforceable.
The FTC released a guide to help consumers understand old debts, here are some key things to know.
Can a debt collector call me about an old debt?
Debt collectors are allowed to call consumers about old debts, with certain limitations. A debt collector cannot threaten to sue you, or actually sue you on a time-barred debt—those are violations of the Fair Debt Collection Practices Act (FDCPA). Depending on what state you live in, it may also be illegal for collector to even call you about a time-barred debt.
If you think a debt is old or beyond the statute of limitations, ask the debt collector. Among other things, the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from making any false or misleading statements. In other words, if you ask if a debt is beyond the statute of limitations, they have to give you an honest answer. If not, they have likely violated the FCDPA.
Can I be sued on an old debt?
A lawsuit on a time-barred debt is a violation of the FDCPA. Depending on your state, debt collectors may still attempt to collect the debt. Some states forbid the collection of time-barred debts, but some states allow debt collectors to try and collect (not sue) on time-barred debts.
If you think a debt is time-barred, you should contact an attorney to make sure it a valid defense. The statute of limitations usually starts when you miss a payment (called default). The definition of default is usually defined the terms and conditions of the contract. In other words, the “age” of the debt really depends on when default started.
The applicable statute of limitations depends on the choice of law in the terms and conditions and the statute of limitations in your state. Some credit card contracts elect the law of another state. In addition, the statute of limitations varies from state to state, from 3-10 years. You will want to check the terms of your contact very carefully. In addition, be aware that student loans may have a completely different applicable statute of limitations, depending on what type of loan you have.
The bottom line is that if you are being sued on an old debt, or are subject to collection efforts on an old debt, you should contact a local attorney to help you sort things out. If you are in Minnesota, please contact me for a free case evaluation.