A couple of weeks ago I received a call from a collection agency that wanted to set up a payment plan on a debt that they purchased. The debt was a major credit card and it's last activity was 2002. They volunteered that information. I'm new to all of this, but what can they legally do? I'm in MN where the statute of limitations is 6 years. Now that they own it, can they sue me? I just want the communication by phone to stop. Am I legally obligated to pay THEM even though I never had a contract with them?
It sounds like the SOL has expired. If they try to sue you, you have that as an absolute defense so I wouldn't pay them a thing at this point. Tell them the SOL has expired and you'll probably never hear from them again.
Thanks for the advice! Do you suggest I do this in writing or on the phone? Is there any loophole at all that they can use to come after me for this that I should know about in advance? The person I spoke to was very upfront about how they bought the debt, gave the month and year of that purchase, gave the date of last activity (my last payment, how much it was....I took their word for it since I didn't have any info handy) and it was indeed 10 years ago. I'm anticipating that their response will be, "we own it now and now you owe us".
ALWAYS communicate in writing, unless you know what you are doing! There are some times that I just love to talk on the phone with CAs but it's not for someone who is just starting out... But I've been told that I have a bizarre sense of what is fun.
Theoretically, if they do own the debt, you do owe them; but the law gives an absolute defense to claims called the statute of limitations, for a reason. After a reasonable period of time, it would become increasingly difficult for someone to provide certain proof that the debt is valid. This board is for the discussion of the technical points of credit law, that said, I know that some people who are firm advocates for credit law being used to help the creditors, who still believe that there is a fine line between technical points, and the morals of utilizing credit law to "get out of debt free." Now, if the company that was the original creditor drifted off into Rip Van Winkle-land for 10 years, then said "hey, lets get a few pennies for this account", frankly the JDB was an idiot for even returning their phone call. The JDB hopes that the consumer will say "Oh, yes, you think I owe you money, let me write you out a check." and unfortunately there are some who do that, even when there are 20 John Does in the phone book, and the JDB sends a letter or calls all 20 of them to see if they can get one (or more) of them to pay it.
Some states do allow the SOL to be re-started by 'affirming' the debt, i.e. "Oh, yes, I know exactly what you are talking about." Some CA/JDBs have started to send Credit Card Solicitations on stale-dated debt to get the consumer to create a new credit card or other type of account to pay off a debt that they can't sue on because of the SOL, that creates a new account where if you would default on, they could take action against you on the basis of the new debt. Now, some JDBs have actually been recently forced to disclose STALE DATED status, which depending on the JDB involved may be why they were so forthcoming in saying, oh, yeah, the account is 10 years old, we just purchased it. Basically the FTC has told a number of flagrant JDBs who were using extreme practices on debts that were outside of the SOL, that they need to tell the consumers specifically that we can't force you to pay! (I will actually search out a few of the settlements to get the exact verbiages.)
What I typically do to notify them that the account is stale dated, is to include it inside a validation request, that way I make sure that it can in no way be seen as affirming. Please tone this sample down to fit what sounds good for you. If you don't think your idea of fun is filing a suit in Federal Court, the last couple sentences could be toned down so they're not as bright as Rudolph's nose on Christmas Eve.
Thanks for the advice. I do have one question....if I made reference in the call to knowing what account she was speaking of, even just acknowledging that I had that account and may have owed on it, does that reaffirm the debt? The person I spoke to asked me to verify with yes or no my address and my SS# (I said I would not volunteer that information). Did my saying anything to the her about it shoot me in the foot? BTW, I checked my credit report via MyFico and there are no collections listed there. This stuff seems to have fallen off the report, as it should after that much time, and not come back as a collection item. That assumes that MyFico is accurate? (Any advice on that?)
One more thing: Let's say I just want these people to go away forever and never have to deal with this again. I assume that if I pay something that we mutually agree on and I get some sort of letter stating that it's "PAID" then there is no chance at all that this can come back again, correct? I don't want to go from having no collections on my report to a "PAID" collection for obvious reasons, but I also don't want to deal with this for the rest of my life either if they should re-sell this to someone else. Is that a possibility? That they could resell it later to someone else and I start all over dealing with this again and again? If the debt is about $2000, is it conceivable that they could accept 10 cents on the dollar or even less just to get something out of me?
Under NO circumstances should you acknowledge the validity of this debt, and by offering to pay anything, you are doing just that. Once you make a payment, the debt can then appear on your credit report, and in most states, that will reset the SOL, so you can be sued for the remaining balance. Even worse, in some states, merely ADMITTING that the debt is/was yours can reset the SOL. My advice is that when people call for old debts like this, simply say that you do not recognize the debt, and that you have had no credit cards for more than 10 years (or whatever). If they keep calling, send a cease and desist letter. Make sure in that letter to always refer to the debt as "alleged debt" and DO NOT ADMIT that you owe/owed this alleged debt.
Is there a resource here or elsewhere that can tell me what the laws are in my state (Minnesota) so I can be sure I understand exactly what can happen? So when a collection agency sends something that says "if you pay XX amount your account will be considered "Paid in Full/"Settled in Full".....that isn't legally accurate? They could still, even after submitting a letter beforehand stating what the terms will be if I pay XX amount, sue me or go after me in some other way? Because while these bills were accumulating, I was ill and didn't have the money. Now, I still don't have the amount that these bills are, but I do have the ability to settle them and get these people out of my life forever if that's possible. I certainly don't want to be chased by these people the rest of my life if 10+ years later they are still doing so. I guess I don't understand how coming to an agreement in writing that states, "if you pay $XX amount we will consider the account paid in full and you will owe nothing else" could be challenged later and overturned. Unless there's a state law loophole in MN that would make that the case. Is there a way to find that out for my specific state? Thanks!
If you get it in writing that the debt will be "settled in full", then you are correct that you don't owe the remaining balance. Of course, it is still possible that the collection agency will sell/transfer the remaining balance, so you will need to forever keep that letter (and a copy of your money order or canceled check) in case that happens. In any case, I would not pay one red cent at this point to get these people off my back--a cease and desist letter will do the same thing, for about $6, the cost of sending a letter by Certified Mail return receipt requested. You do realize, I hope, that after this much time has passed, the original creditor (the company who lent you the money, and you defaulted on) is out of the picture. They would have written off and sold the debt LONG ago, and the company who is contacting you now has most likely bought the debt from another junk debt buyer for 1 cent on the dollar or less. Paying them won't help reimburse the original creditor for their loss, nor will it improve your chances of getting credit in the future!
Yes, I do realize that. I'm sure they probably bought it for pennies but my only concern at this point is putting an endpoint to this. I have since done business again with the original creditor (Citi) and have an active account with them with no late payments whatsoever.
Trade lines can only be listed for 7 years from the date of the delinquency that resulted in charge off. So the account, and any collections which result from it should never appear on your credit report legally...
