Liz Weston MY TWO CENTS
BE A
BETTER Borrower
Monitor your
credit reports to
ensure collectors
don’t post old
debts there.
Dusting
Off Old
Debt
You should always pay
your debts, right? But in
the case of a long-unpaid
debt, doing the right
thing ethically can cause
problems legally. That’s
because every state has
statutes of limitations on
debt, typically from 3 to 10
years. These statutes limit
how long a creditor or collection agency can sue to
reclaim the money.
Collectors can buy “out
of statute” debts for pennies on the dollar from
Dear Liz: A collection
agency just called about
a credit card debt I failed
to pay—more than 20
years ago! The agency
is offering a repayment
plan. Should I take it?
File complaints
about debt col-
lectors by calling
877-382-4357
or visiting the
FTC website
( ftc.gov), and
contact your
state attorney
general’s office.
Search for your
state’s statute
of limitations
on debt at
bankrate.com.
FROM TOP: ART STREIBER; DAN SAELINGER (PROP STYLIST: LAURIE RAAB) ( 2).
credit card issuers, cell
phone firms, and other
companies, so anything
they squeeze out of a bor-
rower is almost pure profit.
And they often won’t tell
you you’re not legally
obligated to pay. In many
states, making a small pay-
ment on an old debt will
restart the statute of limi-
tations and allow a creditor
to sue. That can lead to
trashed credit and wage
garnishment.
Owe? No!
What if it’s not your debt?
Collectors often contact the wrong person, since old debts tend
to be poorly documented. That won’t stop them from suing you,
though. So fight back. Send a letter by certified mail, return
receipt requested, telling the collection agency that you don’t
owe the debt and to stop contacting you. If the collector files a
lawsuit, don’t ignore it. You’ll get the case dismissed if you can
prove it’s not your debt. The National Association of Consumer
Advocates (at naca.net) can help you find an attorney.
up the card, you might not
realize you’re also agreeing to pay the old debt,
which has been added to
the card’s balance. In 2010
Monterey County Bank
paid a $3 million settlement without admitting
or denying wrongdoing
after the FDIC accused it
of ;helping a debt collector
revive expired debts with
deceptive card offers.
With the economy improving and borrowers
looking for fresh starts,
these collection efforts are
on the rise. But don’t take
the bait: Tell the collection
agency—in writing—to
stop contacting you. ;
