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Debt Collectors May Try to Cash In on Old Debts

Debt collectors who pursue old debts are not breaking any laws unless they violate the Fair Debt Collection Practices Act (FDCPA) or your state’s debt collection laws. Beware fast-buck motives, though! Some debt collectors go so far as to

  • Contact consumers about debts that have been charged off as uncollectible. The creditor may charge off on a debt because it thinks the amount of the debt is too small to bother with or because the consumer who owes it is judgment proof.

  • The creditor may decide to try to collect the debt later, or it may sell the debt to a debt collector who specializes in collecting very old debts.

  • Try to collect debts for which the statute of limitations has expired. The statute of limitations begins on the first day you miss a debt payment, and it typically lasts between four and six years. To find out the statute of limitations on your past-due debts, speak to a consumer law attorney in your state or contact your state attorney general’s office. A debt collector is legally entitled to collect a debt after the statute of limitations has run out on it; however, the debt collector is breaking the law if he sues you over the debt or threatens to sue you.

    You can unintentionally reactivate the statute of limitations on an old debt by telling a debt collector that you agree to pay some money on the debt, even a very small amount like $5. When the statute of limitations is reactivated, it starts running all over again as though you just defaulted on the debt. Also, in some legal jurisdictions you can restart the statute of limitations on a very old debt simply by acknowledging that the debt is yours.

  • Tell credit bureaus that an old debt in your credit history is a new debt. Most negative information can remain in your credit history for only seven years and six months. Some debt collectors take this unscrupulous and illegal step in order to put pressure on you to pay the debt, promising that when you do, they will get the new negative information removed.

If a debt collector violates your legal rights when he contacts you about a debt that has been charged off or for which the statute of limitations has expired, get in touch with a consumer law attorney right away. You should do the same if a debt collector tries to get away with reporting to the credit bureaus that one of your old debts is new.

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