A very good 'WikiHow' of the Day
Collecting old debts - even debts that you aren't legally responsible for - is becoming a very profitable venture. Companies can buy those debts (sometimes referred to as "junk debt") for pennies to the dollar, then go after the people who they think are most likely to pay up. A phone call can turn into badgering, harassment, threats to sue, and other inappropriate (and sometimes illegal) actions. If you ever get a collector asking you to pay up on a debt that's "come back to life", here's how to make sure your rights aren't violated.
Steps
1. Do not acknowledge the debt. If you're not sure whether you actually owe the debt, don't say anything that could indicate that the debt is yours, and certainly do not agree to make any kind of payment. Doing this can give the company the legal right to collect the debt, which they might not have had if you didn't acknowledge the debt.
2. Don't fall for any traps.
3. Get it in writing. Ask for proof that you owe the debt, like the credit card agreement you originally signed, along with an account history. If they don't have that proof then they don't have the right to take action against you. Again, make sure you don't acknowledge the debt. Keep repeating: "I want to see evidence of this debt in writing. I do not acknowledge this debt."
4. Check the statute of limitations to make sure you're not responsible for the debt anymore. The statute of limitations essentially defines how much time you can go without paying a debt before a collector's right to collect through the court system expires. Every state in the US has different rules and exceptions regarding when the time period officially begins, how long it lasts, and what can "revive" the statutory period, so you really do need to check the laws or consult an attorney in your own state. Until you can do that, however, keep the following in mind:[1]
5. Write a letter explaining that you are not responsible for the debt, you do NOT acknowledge it, and you demand they stop harassing you or you will take legal action. If you've done your homework and you know that you are not responsible for the debt (such as if your statute of limitations expired and you don't meet the criteria in your state for extending it, or you declared bankruptcy), send them a letter through certified mail and get a return receipt. If you've filed for bankruptcy, send them your discharge order with your letter. If they insist on taking you to court, be prepared to tell the judge that you notified the collector in writing that the statute had expired.
6. Watch your credit report carefully. They might try to report the debt or taint your credit history. As mentioned earlier, collectors could post an old debt as if it's new, or lie about the date of delinquency (in an attempt to start a new statutory period). Dispute any questionable entries with the credit bureau and the agency. Again, asking for proof of the debt as advised earlier can make their claims invalid.
Tips
• If you are responsible for the debt, negotiate carefully.
• Do not negotiate with collection agencies. You owe nothing to them unless you signed a contract with them. If you intend to pay off the debt, contact the original creditor and make arrangements exclusively with them. In all likelihood, the debt was charged off by the creditor, and they will not take an interest in recovering it. If it is charged off, you are free from that burden. Pen a cease and desist to the collector, citing the Fair Debt Collection Practices Act and advise them that further action will result in your pursuit of legal recourse against them.
• NEVER give a collection agency your banking information. If they have that information, they can empty your bank account, and you will have no recourse against them.
• If you receive an actual court summons, DO NOT ignore it even if you think the statute of limitations has expired. Get an attorney. If you don't show up in court the judge is likely to accept all their allegations as facts and give them whatever they ask for. It's called default judgment. And a judgment is enforceable whether the debt was legitimate or not.
Warnings
• Making a payment, even a small "good faith" payment can restart the statute of limitations on your debt, or restart the collections process if the statute has already expired.
• Always consult an attorney if you have any questions or are uncertain about the laws regarding your debt.
Sources and Citations
'Zombie' debt is hard to kill - MSN Money
1. ↑ http://www.debtzine.com/blog/51.htm
Collecting old debts - even debts that you aren't legally responsible for - is becoming a very profitable venture. Companies can buy those debts (sometimes referred to as "junk debt") for pennies to the dollar, then go after the people who they think are most likely to pay up. A phone call can turn into badgering, harassment, threats to sue, and other inappropriate (and sometimes illegal) actions. If you ever get a collector asking you to pay up on a debt that's "come back to life", here's how to make sure your rights aren't violated.
Steps
1. Do not acknowledge the debt. If you're not sure whether you actually owe the debt, don't say anything that could indicate that the debt is yours, and certainly do not agree to make any kind of payment. Doing this can give the company the legal right to collect the debt, which they might not have had if you didn't acknowledge the debt.
2. Don't fall for any traps.
- illegally "re-aging" debts (reporting the old debt to the credit bureaus as if it's new)
- promising to wipe off a red checkmark on a credit report
- bait-and-switch credit card offers (they tack on the balance of the zombie debt)
3. Get it in writing. Ask for proof that you owe the debt, like the credit card agreement you originally signed, along with an account history. If they don't have that proof then they don't have the right to take action against you. Again, make sure you don't acknowledge the debt. Keep repeating: "I want to see evidence of this debt in writing. I do not acknowledge this debt."
4. Check the statute of limitations to make sure you're not responsible for the debt anymore. The statute of limitations essentially defines how much time you can go without paying a debt before a collector's right to collect through the court system expires. Every state in the US has different rules and exceptions regarding when the time period officially begins, how long it lasts, and what can "revive" the statutory period, so you really do need to check the laws or consult an attorney in your own state. Until you can do that, however, keep the following in mind:[1]
- Even if the statute of limitation expired, agencies can still try to collect the debt; they just can't do it through the court system. (If your debt was discharged through bankruptcy, they can't attempt to collect it at all.)
- Moving to a different state, even temporarily, can affect the length of your statutory period.
- Do not allow the collector to convince you to make a payment to "show your good intentions" (such as if you're on your way to court). This can "reset" the statutory period and essentially bring the debt back from the dead.
- If the statute of limitations has expired, and you don't meet the criteria in your state for extending it, send a letter to the collectors stating those facts.
5. Write a letter explaining that you are not responsible for the debt, you do NOT acknowledge it, and you demand they stop harassing you or you will take legal action. If you've done your homework and you know that you are not responsible for the debt (such as if your statute of limitations expired and you don't meet the criteria in your state for extending it, or you declared bankruptcy), send them a letter through certified mail and get a return receipt. If you've filed for bankruptcy, send them your discharge order with your letter. If they insist on taking you to court, be prepared to tell the judge that you notified the collector in writing that the statute had expired.
6. Watch your credit report carefully. They might try to report the debt or taint your credit history. As mentioned earlier, collectors could post an old debt as if it's new, or lie about the date of delinquency (in an attempt to start a new statutory period). Dispute any questionable entries with the credit bureau and the agency. Again, asking for proof of the debt as advised earlier can make their claims invalid.
Tips
• If you are responsible for the debt, negotiate carefully.
• Do not negotiate with collection agencies. You owe nothing to them unless you signed a contract with them. If you intend to pay off the debt, contact the original creditor and make arrangements exclusively with them. In all likelihood, the debt was charged off by the creditor, and they will not take an interest in recovering it. If it is charged off, you are free from that burden. Pen a cease and desist to the collector, citing the Fair Debt Collection Practices Act and advise them that further action will result in your pursuit of legal recourse against them.
• NEVER give a collection agency your banking information. If they have that information, they can empty your bank account, and you will have no recourse against them.
• If you receive an actual court summons, DO NOT ignore it even if you think the statute of limitations has expired. Get an attorney. If you don't show up in court the judge is likely to accept all their allegations as facts and give them whatever they ask for. It's called default judgment. And a judgment is enforceable whether the debt was legitimate or not.
Warnings
• Making a payment, even a small "good faith" payment can restart the statute of limitations on your debt, or restart the collections process if the statute has already expired.
• Always consult an attorney if you have any questions or are uncertain about the laws regarding your debt.
Sources and Citations
'Zombie' debt is hard to kill - MSN Money
1. ↑ http://www.debtzine.com/blog/51.htm