How Debt Collectors Use the Legal System to Collect on Old Debt

Getting calls from debt collectors about old debts can be stressful. You may wonder – can they really come after me for this debt that I haven’t paid in years? Unfortunately, in many cases the answer is yes. Debt collectors have a lot of legal tools they can use to try to get consumers to pay up on old debts. This article will explain how the system works, what protections you have, and what debt collectors are allowed to do.

The Statute of Limitations – Your Main Protection

The main protection consumers have against old debt is called the “statute of limitations.” This is a time limit on how long creditors or debt collectors can sue you to collect on a debt. The time periods vary by state and type of debt. For example:

• In California, the statute of limitations on credit card debt is 4 years.
• In Texas, it’s 4 years for credit card debt but only 3 years for medical debt.
• In New York, most debt statutes of limitations are 6 years.

You can research the statute of limitations for your state and type of debt online. Once the time limit expires, the collector loses the ability to sue you for the debt – but that doesn’t make the debt totally go away.

Collectors Can Still Contact You About an Old Debt

Here’s the tricky part – even once the statute of limitations has expired, collectors can still contact you to try to collect on the debt. They can call you, send letters, or try to get you to make a payment. As long as they don’t actually sue you, it’s legal.

For example, let’s say you had a credit card debt from 8 years ago that you never paid. The statute of limitations in your state for credit card debt is 6 years. That means the collector can no longer sue you for the debt. But they can still call you up and ask you to pay, even though it’s an old debt.

What Debt Collectors Can (and Can’t) Do

Debt collectors have to follow rules about how they contact you for debts. These rules come from the Fair Debt Collection Practices Act (FDCPA), enforced by the Federal Trade Comission. Here are some key things debt collectors can and can’t do:

• They can contact you by phone, mail, or email to request payment.
• They can’t harass you with excessive contacts.
• They can’t lie or misrepresent how much you owe.
• They can’t threaten arrest or legal action if that’s not true.
• They can’t add extra fees or interest unless legally allowed.
• They can’t share your debt info with others without permission.

If a collector breaks these rules, you can report them to the FTC or sue them. But often just writing a letter demanding they stop contacting you is enough to get them to back off.

What to Do if You’re Sued for an Old Debt

Even though collectors can’t sue once the statute of limitations expires, some still try. And they may get away with it if you don’t respond properly. If you do get sued over an expired debt:

• Be sure to respond to the lawsuit right away.
• Raise the statute of limitations as a defense.
• Get help from a lawyer if you can.
• Show up in court no matter what.

If you don’t respond, the collector will likely win a default judgement. Then they can try to garnish your wages or put liens on your assets. So don’t ignore a lawsuit over old debt – fight back!

Strategies Collectors Use to Get You to Pay

Collectors may try all kinds of tactics to get consumers to pay on time-barred debt. Some common strategies include:

• Offering to settle for a lower amount as a “good faith” offer.
• Threatening to sue even if they legally can’t.
• Saying the statute of limitations has been “reset.”
• Pressuring you to make a small “token” payment.

Many of these tactics are meant to trick you into resetting the statute of limitations. Avoid making any payment or promise to pay. Get written confirmation if you reach a settlement.

Your Credit Report and Old Debt

Another thing to know is that unpaid debts, even old ones, can stay on your credit report for up to 7 years. This can damage your credit score. However, once the statute of limitations expires, the collector must note on your credit report that they can’t sue you for the debt.

You also have the right to dispute errors or outdated information on your credit reports. Submit disputes to each of the 3 major credit bureaus – Equifax, Experian, and TransUnion. They are required to investigate.

Seeking Legal Help

If you are sued over old debt, it’s a good idea to consult a lawyer if possible. There are also free legal aid clinics in many areas to help consumers with debt issues. You have rights under both state and federal law.

The National Association of Consumer Advocates maintains a directory of consumer lawyers by state: https://www.consumeradvocates.org/find-an-attorney. Legal aid organizations can also be found through this directory: https://www.lsc.gov/what-legal-aid/find-legal-aid.

Key Takeaways

• The statute of limitations protects you from lawsuits over old debt.
• But collectors can still contact you asking for payment on expired debt.
• Collectors must follow consumer protection laws on what they can say or do.
• Don’t ignore legal actions over old debts – fight back!
• Seeking professional legal help is recommended if you are sued.

Dealing with debt collectors on old debts can be stressful. But knowing your rights and protections under state and federal law can help you handle the situation. Don’t let collectors intimidate you into paying expired debts. And if legal action is taken, be sure to stand up for yourself.