subject: Debt Collection Is Subject To Time Limits [print this page] How many times have you heard someone say there ought to be a law, usually when it comes to complaints about things that are really minor irritants?
Well, back in 1977, Congress had heard enough such complaints about a subject that is by no stretch of the imagination a minor irritant - debt collectors.
Lawmakers on Capitol Hill found abundant evidence that the use of abusive, deceptive and unfair debt collection practices was widespread. They also declared that the effective collection of debts could be accomplished without recourse to misrepresentation or other abusive practices.
The end result of the lawmaking process was the Fair Debt Collection Practices Act.
Under this law, a debt is an obligation to pay money based on a transaction in which money, property, insurance or services were involved in the transaction. In addition, the subject of the transaction must involve a personal, family or household purpose.
A debt collector is usually someone affiliated with a business devoted to collecting debts. However, it can also be a creditor who wants to collect his or her own debt and uses any name other than his or her own name.
How Long Can This Go On?
A common concern of consumers involves the duration of attempts to collect a debt or an alleged debt. To someone constantly on the receiving end of telephone calls and letters, it can seem an endless situation.
That is not the case and it is important for consumers to clearly understand the law in this regard. A consumer has clear legal rights.
The ultimate recourse a creditor has is to go to the courthouse and file a lawsuit. The goal is to obtain a legal judgment against the consumer that is enforceable under the law.
A generally insurmountable barrier against such a lawsuit is known as the statute of limitations. In simple terms, this means there is a specific amount of time a creditor has to start legal proceedings.
This barrier is at times ignored by a creditor who attempts to sue for the debt after the statute of limitations has expired. It is important to remember that a creditor must still appear in court to prove the statute of limitations has expired before the lawsuit was filed.
At this point, a creditor must turn to the law of the state (including the District of Columbia and Puerto Rico) where he or she was residing when the debt was incurred.
For example, in the District of Columbia, a contract, open account or credit card account has a three-year statute of limitations from the date of the last payment or the last charge. Be aware that an oral promise by a consumer can restart the statute of limitations.
It is also important to know about a time-barred debt, which is one that cannot be collected via a lawsuit because the statute of limitations has expired.
Nothing prevents a debt collector from attempting to collect a time-barred debt because the consumer still may owe the money. However, the law bars a debt collector from making a false representation about the legal status of any debt.
With this information in hand, a consumer has a much clearer understanding of one aspect of unsavory, and possibly illegal, debt collection practices.
