KNOW YOUR RIGHTS ON COLLECTION OF AN OLD DEBT
KNOW YOUR RIGHTS ON COLLECTION OF AN OLD DEBT
When you have debts that you have stopped paying on, you have rights under the Fair Debt Collection Practices Act. Often times the debts are sold to a consumer debt buyer that will pay pennies on the dollar then call the debtor several times a day to collect the full amount. There are things you can do to protect yourself depending on where your debts are in the process.
30 to 180 days late:
Your credit card debt is still with your original lender in their internal collection department. The collector calling you can do things that a debt collection agency cannot. They do not fall under the protection clauses of the Fair Debt Collection Practices Act because they represent the original lender. The important thing to remember is that once you stop paying on the debt, a clock starts. This clock represents the time it will take for your debt to go beyond the statute of limitations. That statute of limitations for credit card debt can be as short as three years or as long as ten years. State law determines how long the statute lasts, but varies state to state. The state law applies either to the state you live in or the state specified in your credit contract. The type of debt is also a factor. You can check with a legal aid lawyer, an attorney or your State Attorney General’s Office to see how your state law applies to your type of debt.
Six months to ten years
Once a credit card debt goes to an outside collection agency, an attorney who regularly collect debts, or a company that buys old debt to collect on later, your debt is considered a write off for the original lender. These other debt collectors now fall under the Fair Debt Collection Practice’s Act. You can click on this link to read about the protections this act allows you. Once your debt falls beyond the statute of limitations it is considered a time-barred debt. In other words, you cannot be sued in order to collect the debt. That does not mean you do not owe the debt and collection agencies can continue to try to collect. It simply means they can no longer sue you ( file a judgment) in order to collect.
Warning!!!
If you decide to start making payments on an old debt, understand that resets the clock. Even a partial payment or a commitment to make a payment will reset the clock. Make sure you are able to repay the debt before committing to a payment plan. It may be best to try to settle the debt for less then full balance and pay it off instead of agreeing to payments. You can negotiate the settlement yourself; don’t hire a company to provide that service.
Should you have questions on issues arising from old debt, Family Life Resources can assist you. We can teach you how to settle your debt or whether a payment plan is a good option for you. We can also help you understand how all of this affects your credit report. You can contact us at 800-553-8621 Monday- Friday 9:00AM to 5:30 PM. Our initial counseling is free. See our other blogs on this subject, like us on facebook and follow us on twitter for our updates.