Statute of Limitations – Avoid the Trap with Time-Barred Debts

Time-barred debts also known as Zombie Debt are debts for which the statute of limitations has passed.  What this means is that a lawsuit cannot legally be filed against you if the debt is too old and the collector has failed to file a lawsuit in time. This does not mean, by any stretch of the imagination, that debt buyers and collectors will not still pursue you.  If they do so, depending on the manner in which they go about their collection efforts, they may be in flagrant violation of the law.

In Georgia, the Statute of Limitations for debts, generally, is four years for actions on an account and six years for actions on a contract and these types of claims are common on credit card debt lawsuit

It is up to you as the consumer to ask the right questions, to request the right documentation, and to take the appropriate action when you are contacted by a debt collector.  Do not trust the collector to have accurate information and never, NEVER, take their word for it without seeing records of the account or debt.  These debt collectors know that it is much easier to get consumers to pay when they put you in fear of being sued, jailed, or some other frightening situation.  Unfortunately, when debt collectors act within the boundaries of the law, they know that their job of collecting is much more difficult. People don’t tend to pay just because the debt collectors shame them or simply ask.

If the consumer does try to pay something or perhaps generates some new activity on the account or debt, the statute of limitations may start all over.  This is a big risk and has given rise to clever new ways for collectors to engage consumers in their collection efforts. Not to mention, the debt collector now knows you’ll pay and may ramp up efforts to increase those payments.

As a general rule, never speak with a debt collector if they are unwilling to provide documentation of the validity or verification of the debt.  When you ask questions and they respond with statements like, “We’ve given you plenty of time” or “We’ve already sent you those documents,” tell them to resend them and hang up the phone.  Always document who is calling, what company they work for, and what account number goes with the debt they are seeking payment for.

You will find that they are often completely unwilling to provide some or all of this information. They may become more aggressive in their tone or language as you demand this information.  However, this does not mean that their case is strong, but is instead a clear indication that there is something wrong with the debt.  Either they cannot prove the debt or it may be time-barred.  In fact, they may resort to wishing you luck in court, telling you they are going to forward it to the “legal department,” or suggesting some other action which would be in clear violation of federal law including the Fair Debt Collection Practices Act (FDCPA).

Sometimes they might send you documents titled “Bill of Sale” or “Assignment”.   Be wary of documents that do not reference your name or debt specifically.  It is also not uncommon for these debt collectors to put affidavits with these documents of one of their employees who swears they are personally familiar with the account records.  Sometimes the debt collector’s own documents produced to you clearly show they are suing you on a time barred debt.

Occasionally when these collection efforts cross the line, the companies responsible are held accountable for their actions.  A recent situation cost Asset Acceptance, a large debt buyer company, $2.5 million dollars.  See the Federal Trade Commission’s Recent Press Release on Asset Acceptance  (January 31, 2012).

You may wonder why they continue to conduct themselves this way and the answer is simple.  It works.  They make lots of money by engaging in illegal collection activities and preying on consumers.  They make so much money that it is well worth the risk of getting caught.  Think of criminals who rob banks, stores, and people.  Sometimes they get caught and it gets on the news.  Sometimes they go to prison.  Still, just as sure as the sun will come up tomorrow and the day after, someone will try to rob a bank or a store.

Finally, as always, knowledge is power.  Don’t be intimidated by a debt collector.  Debt collectors hate it when consumers are knowledgeable and diligent in asking for proper documentation of the debt. Gather all the information you can.  Do your own research as best you can, and then do not be afraid to speak to a consumer attorney if you think you are being victimized by illegal collection activities.