Making a partial payment on a debt, even making a written promise to pay may extend the clock to legally enforce the debt.
Did you read that?
We sure hope so because a large majority of people in the United States have no idea that debts expire. DEBTS DO EXPIRE.
A bill collector may contact you out of the blue claiming you owe money. Some people, too many – unfortunately, dont question the debt and either pay it or put up with being harassed over it, when in truth, it was totally noncollectable.
Have you ever heard of Asset Acceptance? If you have its probably because they’ve contacted you about an unpaid debt. Asset Acceptance is a third party debt collector (debt buyer) who purchases debts from creditors like credit cards, medical bills and utility debts. The FTC took action against AA for misleading consumers and has agreed to accept 2.5 million from the collection agency for misleading consumers.
Specifically the FTC states 9 counts against Asset Acceptance including not notifying consumers of expired debts. The FTC states that the complaint consisted of violations of the FTC Act, FDCPA, and the FCRA.
The FTC’s nine-count complaint charged Asset Acceptance with:
- misrepresenting that consumers owed a debt when it could not substantiate its representations;
- failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
- providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
- failing to notify consumers in writing that it provided negative information to a credit reporting agency;
- failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
- repeatedly calling third parties who do not owe a debt;
- informing third parties about a debt;
- using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
- failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.
Time barred debts often referred to as expired debts or SOL debts (statute of limitations to collect) are a big problem in the credit industry when it comes to consumer’s rights. With the number of collection agencies buying old debts and junk debt buyers recirculating old debts, people are often completely unaware that under state law, they cant be sued for the debt. Without knowing this information, people make a payment on the old debt and unwittingly renew its statute of limitations. Basically resetting the clock and making the debt legally collectible.
This latest action from the FTC is making clear one thing. Debt collectors need to start following the rules or pay the consequences. In this case, the consequences add up to 2.5 million dollars.
While the Fair Debt Collections Practices Act (FDCPA) makes a lot of activities by debt collectors illegal, one thing that needs to become standard operation is a notification to a debtor that a debt is legally expired. Just as a collection agency must advice a consumer of their right to dispute the validity of the debt, collection notices should also contain a disclaimer when a debt is legally expired. Hopefully this latest action will begin to broaden the scope of what’s “collectible” giving consumers a clearer picture.
Read more on time barred debts: FTC on time barred debts & what you need to know.