![Can Debt Collectors Collect Old Debts]()
General Rule: Whether a debt collector can collect on an old debt depends on several factors. These factors include state law, the type of debt and length of inactivity.
Debt collectors will typically take over an account that is past due. Likely, a person has not paid the bill for several months. So yes, a collection agency can collect on an old debt, but how old? Whether a debt collector can collect on an old account depends on different factors.
Sometimes debt collectors try to collect on a past due account that is no longer legally valid. They may resort to tactics that involve various forms of harassment and deception. Fortunately, consumers have protection under the Fair Debt Collection Practices Act (FDCPA). This federal law regulates how third-party debt collectors attempt to collect on a debt.
The following sections detail the factors that determine when an old debt is no longer legally enforceable. You will also learn illegal tactics used by collection agencies and what you can do to stop them.
Factors That Determine Collecting On An Old Debt
A collection agency can collect on certain past due accounts. However, some factors may prohibit a debt collector from collecting on an old debt. Two primary factors determine whether a debt collector can collect on an old account. They are as follows:
➜ Factor #1 – Statute of Limitations: There is a statute of limitations for attempting to collect all debts. If the statute of limitations expires a debt collector cannot collect on any amount that remains unpaid Typically the period for a statute of limitations is the period of inactivity. Most often, this begins once a person misses their first payment.
➜ Factor #2 – Type of Debt: Another factor is the type of debt. In many states, there are different time periods for the statute of limitations depending on the type of debt. For example, there is often a shorter statute of limitations for revolving accounts (e.g., credit cards) than mortgages.
There are several types of debts that may become time-barred. Some examples include:
- Credit cards
- Personal loans
- Student loans
- Mortgages
- Medical bills
- Past due rent
- Car Loan
In some states, if you make a payment after the statute of limitations expires, the clock starts over. Be aware, because there are unique aspects to the statute of limitations for each state.
Note: The statute of limitations applies to both the original creditor and third-party debt collectors.
The FDCPA and Old Debts
The FDCPA protects consumers from harassment and deception during the collection of a debt. It is frustrating for a debt collector to own a debt that is no longer legally enforceable. However, that does not stop some from taking action to collect on an outstanding account. Some illegal tactics a debt collector may try include:
- Deceiving you into making just a small payment. In some states, this will restart the statute of limitations.
- Threatening you in various ways to pressure you into making a payment.
- Harassing you with multiple calls or offensive language.
While an original creditor must abide by the statute of limitations, they do not fall within the scope of the FDCPA. This federal law only applies to third-party debt collectors. However, check your state as they may have laws that do cover the original creditor.
What Are My Rights?
If the statute of limitations expires and a debt collector continues to reach out to you, it is time to take action. Consider any of the below options depending on the severity of your situation:
- Put the Debt Collector on Notice in Writing. Notify the debt collector that they are attempting to collect on an old debt. Once you send a cease-and-desist letter, a debt collector must end all communication with you.
- Notify a Federal Agency. If a debt collector is attempting to collect on an old debt, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB). If there was a specific violation of the FDCPA, you can submit a complaint to the Federal Trade Commission (FTC). The FTC enforces the FDCPA.
- File a Lawsuit. If a debt collector continues to contact you, consider filing a lawsuit. This is especially important if you paid off a loan that was no longer legally enforceable. The court can order the debt collector to stop contacting you and compensate you in the process.
Conclusion
There are rules that a debt collector must abide by. In addition to the FDCPA, a debt collector must abide by a state’s statute of limitations.
If a debt collector is attempting to collect on an old account where the statute of limitations lapsed, do not pay them. However, if you are unsure about the statute of limitations or other issues, you can discuss your debt with a consumer rights attorney. They will help you determine your legal rights.
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