It’s easy to fall behind on bills but a lot harder to catch up. As a debt remains unpaid, the efforts to collect on it increases and so does the stress that comes along with it. It’s important to understand when a debt collector can legally attempt to recover the debt and what measures the law allows them to take. If a debt collector is harassing you, you do have options. Here’s what you need to know.
Is there a statute of limitations on collecting old debts?
The first question most people have when it comes to debt collection is “How long can a collection agency attempt to collect a debt?” The answer to this question will depend on the statute of limitations in your state and the type of debt at issue. Many people think that once the statute of limitations has passed, they no longer owe it or it becomes forgiven debt, which is not technically correct. “Can a collection agency sue you for an old debt?” is a common question. The debt is still owed, but the creditor no longer has the right to obtain a judgment against you to enforce it.
TYPES OF DEBT
The statute of limitations varies from state to state, however, usually a creditor will have between three and six years for collecting debt. It is also important to understand what type of debt is at issue because the statute of limitations can be different for each. There are four main types:
- Oral contracts
- Written agreements
- Promissory notes, or an agreement to pay back in installments
- Open ended accounts, for example, a credit card
Finally, you may need to get legal advice on when the statute of limitations begins to run on your debt. Sometimes this is from the date of the first missed payment, and other times it can start on the date of the last payment you made. It’s important to know your rights because even when a debt is passed the statute of limitations, occasionally collections agents will still contact you about it. If you are contacted about an “old debt,” you can choose to pay the amount, settle for less than you owe, or send the creditor a letter informing them of the statute of limitations.
How is statute of limitations different from credit reporting?
Yes. The time that debt collectors have to recover a debt is different from the time periods during which that debt can appear on your credit report. Under the Fair Debt Collection Practice Act (“FDCPA”), derogatory marks can stay on your credit report for seven years, although there are some circumstances where this time is extended. Also, fully paying the debt or bringing the amount owed current will not remove these marks from your credit report.
What is considered harassment by a debt collector?
The FDCPA outlines what collection agents are and aren’t allowed to do when trying to recover a debt. This federal law prohibits debt collectors from calling continuously and repeatedly, but the law doesn’t define those terms to give a specific limit of how often collection agents can call you. It also means that they cannot call you during inconvenient times, before 8am and after 9pm, or at your workplace, unless you’ve agreed to this (usually in the terms of the original agreement). You can revoke this permission and send a letter to creditors expressly telling them not to call you under certain circumstances, and if they continue this could be considered harassment.
Examples of harassment by debt collectors
Under the FDCPA, creditors are required to identify themselves in each communication and provide you certain information about the debt they say you owe. If they refuse to do this, it can be considered harassment.
Some other examples of debt harassment include:
- Misrepresentation of the nature of the debt or the consequences of not paying
- Discussing the debt with third parties
- Failing to stop communication after being told to in writing
- Attempting to collect a debt that obviously cannot be recovered
- Threatening to harm you or your family
- Contacting you in ways that could be embarrassing
- Communicating with a debtor who has filed bankruptcy
- Using profane or offensive language
This list includes some examples but debt harassment is open ended and can be a combination of actions. If you have a debt, it is best to keep a file with all your paperwork, as well as a log of any phone calls so you can prove you are being harassed if necessary.
BE CAREFUL OF DEBT COLLECTION SCAMS
Unfortunately, the rise of debt collection scams has complicated this subject even further. Although seniors are often targets, anyone can be a victim so it is important to verify both the debt and the collection agency you are working with. These scams shouldn’t be confused with third party debt collection agencies, like ERC Collections, which are hired to recover debts. Although these companies can be aggressive and are often the subject of complaints, they are not scams but can easily be confused with one.
Can you sue a debt collector for harassment?
If you believe you’re being harassed by a debt collector, you have several options. An attorney experienced in defending debt collection can help explain your options to you. As a first step, you can ask for information about the debt and instruct the creditor to stop calling you in writing. If that doesn’t work you have the option of filing complaints with the Federal Trade Commission, the Consumer Financial Protection Bureau, or your state attorney general’s office. Many states have their own debt collection laws in addition to the federal FDCPA.
Finally, you do have the option to sue for debt harassment. If you can prove damages like medical bills or missed wages, those can be recovered. However, even if you can’t prove damages you could still receive up to $1,000, as well as expenses and attorneys fees. A lawyer experienced in this area of law can explain the pros and cons of your specific situation.