Old Debts That Won’t Die
Timothy McCollough freely admits that he stopped making payments on his Chase Manhattan credit card in 1999. He says he did not have the means to pay after he was disabled by a head injury that cost him his job as a school security guard.
But more than a decade later, Mr. McCollough, who is 52 and lives in Laurel, Mont., is still haunted by the unpaid balance, which was originally about $3,000.
In 2007, he was sued a second time over the debt, and this time the suit contended that he owed significantly more: $3,816 in credit card debt, plus $5,536 in interest and $481 in legal fees. As he did the first time, Mr. McCollough sent a handwritten note to the court explaining that the statute of limitations on the debt had passed.
“I have had no dealing with any credit card in 8 1/2 years,” he wrote to the court. “The pain they caused is worth more than the money they want.”
Mr. McCollough is not the only borrower being pursued for a balance that has expired. Such claims are routinely sold on debt collection Web sites, where out-of-statute debt is for sale for a penny or less on the dollar.
In most states, it is legal for collectors to pursue out-of-statute debt, as long as they do not file a lawsuit or threaten to do so.
But some lawsuits are filed anyway, and consumer groups and even some industry consultants argue that collectors routinely harass debtors for unpaid balances that have exceeded the statute of limitations. In some cases, collectors have unlawfully added fees and interest.
“It’s so cheap, if you can work it smart, you don’t need to collect that much,” said John Pratt, a consultant to the debt-buying industry and an author of “Debt Purchasing: An Investor’s Guide to Buying Debt” (Morris Publishing, 2005). He said investors in old debt generally hoped to recoup two and half times what they paid for a group of claims.
Because collectors cannot sue on old debt, he said, they are more likely to resort to abusive tactics. “Time-barred debt is where the worst abuse has occurred towards the debtor,” he said.
In a report issued July 12, the Federal Trade Commission called for “significant reforms” in the debt collection industry and recommended that states change the murky laws that govern out-of-statute debt.
The statute of limitations for debt varies by state, generally from three to 10 years. In many states, collectors can restart the clock if they can persuade the consumer to make even a tiny payment toward the old debt. Debt collectors generally do not tell consumers that making a payment will revive the debt so it can be legally pursued.
I LIVE IN ROSS CO CHILLICOTHE OHIO, TODAY I WENT TO COURT AGAINS A DEB COLLECTION AGENCY KNOWN AS NATIONAL CHECK BURAEU IN CINNCINNATI OHIO. THE DEBT SUPPOSDLY FOR CREDIT CARD IN 2000 IN 2003 THEY WON JUDGEMENT FOR THIS ACCOUNT TO 2008, IN CIVIL COURT TODAY THE JUDGE REVER THE OLD JUDGEMENT AND EXTENDED THE COLLECTION AGENCY TO COLLECT. IN COURT I ASKED FOR PROOF THAT THEY WERE LEGAL TO COLLECT AND PROOF THAT THEY WERE ASSIGNED THE DEBT SINCE IT WAS WRITTEN OFF IN 2003. ANY WAY TO MAKE A STORY SHORT, THE JUDGE DIDNT LISTEN TO ANYTHING THEY GOT THE REVER OF JUDGEMENT BEING A DEBT OF 10 YEARS THIS PAST MARCH AND IN STATE OF OHIO IT SAYS THEY ONLY HAVE TWO YEARS PAST THAT TO ASK FOR REVER I POINTED THIS OUT AND ARGUES BUT THE JUDGE DIDNT ACCEPT IT AND THEY GOT IT NO MATTTTER WHAT I SAID. CAN YOU PLEASE HELP ME. I AM ON SOCAIL SECURITY AND I JUST RECENTLY GOT MY AUCTIONEER LICSENSE AND HOW CAN I GET STARTED IF THEY COLLECT THIS MONEY THE DEBT IS 2800 AND 6 PERCENT INTEREST WHICH BRINGS IT TO ALMOST 4000
I COULD HAVE FOUGHT A PACK OF RATS BETTER THAN THIS HEARING PLEASE HELP OR SEND ME WHERE I CAN RECIEVE HELP. THE DEPT OF AG CAN TAKE MY LICSENSE AND I WILL BE STUCK ON SOCAIL SECURITY PAYMENTS , HOW CAN I CHANGE MY LIFE WITH THIS HARRASSMENT FROM THE COURT AND THIER COLLECTOR
Comment by annette boydston on September 20th, 2010 at 8:34 pm