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Time-barred Debts

With the number of debt collection agencies rising, complaints about collection tactics have risen as well. The Fair Debt Collection Practices Act (FDCPA) was designed to prohibit unfair and abusive debt collections practices. One such unfair practice is misrepresentation in the collection of time-barred debts.

Debt collectors are attempting to collect on all types of debts, including time-barred debts. Time-barred debts are old debts that consumers have not made any payments on for a certain amount of time, and the number of years the debt collectors have to collect, or the statute of limitations, has expired. A debt collector cannot sue for non-payment of time-barred debts. However most consumers do not know that they are not legally required to pay time-barred debts or do not know their rights with regards to this type of debt.

What Debt Collectors Can Do to Collect Time-Barred Debts

Debt collectors are permitted to contact a consumer about time-barred debts. Some debt collectors may inform a consumer that the debt is time-barred and that they cannot sue if the consumer does not pay. However many debt collectors will not tell a consumer that a debt is time-barred. If a consumer thinks a debt might be time-barred they should ask the debt collector. If the debt collector answers the question they are required by law to answer truthfully. However the debt collector may decline to answer.

How a Consumer Can Find Out if a Debt is Time-Barred

Another way to find out if a debt is time-barred is to ask the debt collector when the date of the last payment was. The date of the last payment is when the statute of limitations starts to run. In the case where the debt collector does not give a consumer this information, the consumer should send the debt collector a letter under FDCPA § 809(b) within 30 days of receiving a written notice disputing the debt and explain that the consumer wishes to verify it.

Consumer Options with Regards to Time-Barred Debts

Consumers should consider carefully whether to pay a time-barred debt. Even though the debt collector cannot sue to collect the consumer still owes the debt. The debt collector can still contact the consumer to try to collect unless the consumer sends a letter demanding that communication stop under FDCPA § 805(c). A consumer could also pay a portion of a time-barred debt or promise to pay the debt. However, in some states paying any portion of the debt or promising to pay the debt ‘revives’ the debt, resetting the statute of limitations. By restarting the statute of limitations the debt collector could then sue to collect the full amount of the debt. The consumer could also choose to pay off the debt. Some debt collectors may even accept less than the amount owed to settle the debt. Should a consumer decide to settle the debt for less than the total amount it is important that they obtain a document stating that the payment or series of payments will satisfy the debt.