Time-barred debts are debts that are too old for creditors and debt collectors to sue you for. Each state has a law that dictates how long a debt collector can sue you for a debt. This period is known as the statute of limitations and is between three and six years for most states, but can be longer. Before you respond to an old debt, check the statute of limitations in your state. You can confirm the statute with your State Attorney General.
Lawsuits for Time-Barred Debts
The Fair Debt Collection Practices Act prohibits debt collectors from suing or even threatening to sue you for a time-barred debt, but that doesn't mean it won't happen. In February 2012, the Federal Trade Commission sued one large debt collector, Asset Acceptance, for violating this part of the FDCPA. As part of the settlement, Asset Acceptance now has include a "will not sue" notice in collection notices for debts that are past the statute of limitations.
If you happen to be sued for a time-barred debt, you can simply provide the court with proof that the statute of limitation has expired. Don't ignore a lawsuit summons under the assumption that it will take care of itself. The creditor or collector could obtain a default judgment against you and an order to garnish your wages if you don't pay the judgment.
Activity Allowed on Time-Barred Debt
Creditors and debt collectors can still collect time-barred debts. The law doesn't prevent them from doing that. The debt might even appear on your credit report if the credit reporting time limit hasn't expired. Most debts can appear on your credit report for seven years from the date it became delinquent. If the statute of limitations expires on a debt before that seven years is up, the account will remain on your credit report.
What You Can Do About Expired DebtsYou can deal with time-barred debts in a few ways:
- Request the debt collector provide you with written verification of the debt. This process is known as debt validation. After you send a written request for verification, collectors can't attempt to collect from you until they've provided proof that you owe the debt.
- Request the debt collector stop contacting you. If you don't a debt collector to call or send letters anymore, send a written letter stating the statute of limitations has expired and you no longer wish to be contacted about the debt.
- Ignore the collector's calls and letters. Again, make sure you don't ignore a lawsuit summons.
Keep in mind that as long as a debt exists it can be sold and assigned to various collections. You will have to repeat these steps each time a new debt collector starts collecting on your debt. If a debt collector violates your rights, you can file a complaint with the Federal Trade Commission and your State Attorney General. You may also be able to sue the debt collector for up to $1,000 plus damages.