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The 2 Words Debt Collectors Don’t Want to Hear

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While much of the debt collection world is straightforward and, quite honestly, a little boring, some people in the industry treat it like a free-for-all.

“There are widespread attempts to add charges to debts that aren’t legal. Excess interest is something we’ve encountered quite frequently,” said Daniel Edelman, consumer law attorney, founder and partner at Edelman, Combs, Latturner, & Goodwin in Chicago. The biggest problem he sees is people trying to collect debts when they have no authority to do so, Edelman said, but suing people over old debts is another large issue. “We’ve seen people who try to collect debts that are 15 to 20 years old. There’s no state in which something like that is still collectable, but it’s also very cheap for people to get it, so they acquire it and try to get people to pay it.”

Those two words debt collectors don’t want to hear? “Beyond statute.” There’s a statute of limitations on debt, and after it expires, the debt owner can’t sue the debtor in an attempt to get payment. Statutes vary by state and kind of debt (here’s a quick guide), but if someone tries to collect an old debt of yours, let the red flags fly.

Ask for documentation that the person trying to collect the debt is authorized to do that, and that will give you an idea of how old it is,” Edelman said. “If there’s any question about the debt … or the authority of the person trying to collect it or the amount, I would suggest you consult an attorney.”

It’s also illegal for a collector to offer to settle a debt that’s beyond statute without telling the debtor the statute has expired. It’s misleading, Edelman said, and because many states start the statute of limitations from the date of the last payment, so that making a new payment would restart the clock.

“If somebody contacts you and you haven’t heard from them before, don’t assume that just because they have information about you that they’re legitimate,” Edelman said. Ask for written verification of the debt, and if you have questions about it, ask for help. Edelman said most lawyers will review a case for free, and an attorney can quickly tell you if a violation has occurred. “[I]t’s worthwhile to consult an attorney. Consumers may waive their rights if they don’t do things correctly.”

If you’re worried about other debts affecting you, you can check your free annual credit reports for any judgments or collection accounts that could be dragging down your scores. You can also check your credit scores for free on Credit.com to see how collection accounts are impacting you.

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  • guest

    [A debt collector] tried this with me over a time barred debt from another junk debt buyer: Jefferson Capital. Of course when I sent them a registered letter asking for the proof of original creditor and date of default, they folded. I also filed a BBB complaint against them. AND, I billed them for my time and cost for registered mail to resolve their mistake. They have not paid after 90 days, so I turned them over to collections, and reporting to the credit bureaus as delinquent. These people are scumbags. I jab them every chance I get.

  • husker311

    Should I be looking at the statute of limitation for the state I currently reside or where the debt was incurred? Or where they are based?

    • http://www.Credit.com/ Gerri Detweiler

      Good question. We are working on an article on that, It’s not a simple answer. It is possible the collector can bring an action in the state where the contract was signed or in the state where you currently live. So it’s a good idea to be familiar with both.

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