The FTC has set forth rules regarding ‘Time-Barred Debts’ that most collection agencies and lawyers must heed and follow when the statute of limitations has passed on your old debts.

Yes, ultimately, YOU are responsible for your debts. If you fall behind in paying your creditors — or if you dispute the legitimacy of a debt — a debt collector may contact you. But debt collectors are not the law. They must FOLLOW the law!

“Time-barred” debts refer to your debts that are so old they are beyond the point at which a creditor or debt collector may sue you to collect. State law varies as to when a creditor or debt collector may no longer sue to collect. It is vitally important that you know that in most states, the statute of limitations period on debts is between 3 and 10 years; in some states, the period is longer. Therefore, WHERE YOU LIVE is the key to determining if these old debts are collectable by debt collectors.

Your State Attorney General’s Office can help you determine when a debt is considered time-barred in your state. You can find contact information for your State Attorney General at www.naag.org. Or look in the government section of your telephone directory.

Federal law imposes limitations on how debt collectors can collect debts, including time-barred debts. Under the Fair Debt Collection Practices Act (FDCPA), a “debt collector” generally is any person or organization that regularly collects debts owed to others. This general term includes lawyers who collect debts for others on a regular basis, but it DOES NOT include creditors collecting their own debts. Businesses paying their own employees to call or write you to collect a past due account do not fall under this statute. Likely, if the amount is sizeable, they will be motivated to take you to small claims court to collect on these debts; and, once you have a judgment entered onto your credit report, your credit score will suffer mightily, so it’s best to deal honestly, directly and in a timely manner with businesses calling you to get paid for services rendered.

The FDCPA prohibits debt collectors from engaging in any unfair, deceptive, or abusive practices while collecting debts. It does not erase any legitimate debt that you owe. To learn more about your rights under the FDCPA, click on www.ftc.gov/bcp/conline/pubs/credit/fdc.htm.

Collecting Time-Barred Debts
Most courts that have addressed the issue have ruled that the FDCPA does not prohibit debt collectors from trying to collect time-barred debts, as long as they do not sue or threaten to sue you for the debt. If a debt collector sues you to collect a time-barred debt, you can have the suit dismissed by letting the court or judge know the debt is, indeed, time-barred.

Whether a time-barred debt — or any debt for that matter — can appear on your credit report depends on how long the debt has been delinquent: debts that have been delinquent more than seven years cannot appear on your credit report, with certain exceptions.

In addition, a debt collector may not try to collect a debt that has been discharged in bankruptcy, no matter when it was incurred. To learn more about credit reporting, click on www.ftc.gov/bcp/conline/pubs/credit/fcra.htm.

Contact with Collectors
Can a debt collector continue to contact you about a time-barred debt you don’t think you owe? According to the law, if you send the debt collector a letter stating that you do not owe some or all of the money within 30 days after you receive written notice of a debt, the collector must stop trying to collect until you’ve been given written verification of the debt, like a copy of the bill for the amount you supposedly owe. The collector can renew collection activities once you’ve gotten proof of the debt.

You will want to be aware of what you can do if collection agencies attempt to “re-age” your debt, and it winds up reappearing on your credit report for another 7 years!

You can stop debt collectors from contacting you about any debt, regardless of whether you owe it, by writing a letter telling them to stop contacting you. Check out free sample credit repair letters you can use to remove an incorrect charge off from your credit report.

Once the collector gets what some people refer to as a ‘Drop Dead’ letter, that debt collector may not contact you again — except to say (1) there will be no further contact or (2) to let you know that the collector or creditor intends to take some specific action. Remember: You sending them a letter doesn’t absolve you of the debt if you actually do owe it; the debt collector or creditor still could sue you for the debt.

The best way to protect yourself from future collection on any disputed or partially settled debt is to get a form or letter from the creditor or collector that releases you from further obligation. Keep it in a safe place. To make sure the release is valid, you may want to consult your attorney on the matter.

If you believe that a debt collector violated the law, you have the right to sue in a state or federal court within a year from the date the law was violated. If you win, you may recover money for the damages you suffered, plus an additional amount up to $1,000. You also may recover court costs and attorney’s fees. You also may want to report any problems you have with a debt collector to your State Attorney General and to the Federal Trade Commission.