Bill Collectors and Old Debt Can Wreck Your Day Don’t Let Them
May 25, 2009 by Christopher Quinto
Filed under Debt
The phone rings and there is a recorded message from a debt collector on the other end. Typically the recording will tell you that they are attempting to collect a debt and ask you to call back and reference a case number. You know you have perfect credit. You have no missed credit card payments and your loans are current. Why is a collection agency calling you?
Its a ploy by some debt collectors to squeeze out some money on debts that are years old. You may have had some trouble sometime in your past and now these collection agencies are unearthing old debts that are five to 10 years old.
A collection call on an old debt can be tricky to handle if you are not aware of your rights. If you handle it incorrectly, that old debt could become brand new again. Its important to understand that old unpaid debt cannot hurt you as badly as new unpaid debt. After seven years, the old debt will roll off your credit report and will no longer affect your FICO score. More importantly, if the debt is older than the statute of limitations in your state, the creditor or collection agency can not sue to recover, nor can they threaten to sue.
The Fair Debt Collection Practices Act prevents a bill collector from threatening lawsuits or garnishments on debts that are older than your states statute of limitations. They can still dun you and ask you to pay the debt but they have no legal recourse to collect.
If the collection agencies can’t legally collect the debt, what’s the problem? The problem is that in some states, if you simply acknowledge that the debt is yours, the old debt can become new debt and the statute of limitations starts over again. Your credit report may also reflect this “new” debt and your FICO will take a nose dive.
The best way to handle a collection call for an old debt is to say as little as possible. Don’t agree to pay. Don’t acknowledge the debt. If it wasnt for the annoying phone calls that are going to keep coming, it would be best not to speak to the collection agency at all.
The time to stop the phone calls is before they begin. Under the law, a debt collector has to send you written notice advising who the debt is with and for how much. You have 30 days to respond. If this is in fact a debt that is older than the statute of limitations, send a letter disputing (not mine) the debt. The collection agency cannot contact you again until they can verify the debt and notify you. If they can’t prove it, you don’t owe it.
Another more direct approach is to use your right to send a cease and desist letter. Make it clear in your letter that you’re aware that the debt is “time-barred,” and you can’t be sued for the debt and you don’t want to hear from them again. Make certain that the debt is actually beyond the statute. The best way to check is with your State Attorney Generals office or consult with a consumer credit attorney
