Time-Barred Debt

Every State in the Union has a Statute of Limitation on different types of debts.  Learn yours, they are your friend! Time-Barred Debts are simply debts that are to old for creditors and collections agencies to sue to collect.  Time-Barred debt is commonly referred to as Zombie debt. This doesn’t stop you from paying them, you can pay any debt at any time.  Every state and each type of debt has its own Statute of Limitations but its typically between three and six years (accounts can be reported on your credit report for up to 7 years).    The debt can be sold even though its past the Statute of Limitation (SOL) and the creditor can attempt to collect on the debt by calling you and sending you letters.  This doesn’t mean they can’t sue you, the creditor could still sue. However, compliance  with all of the provisions of the FDCPA, the FCRA, and various other consumer laws written to protect is a must.  My motto is “comply or pay”, when it comes to credit repair.

Time-Barred Debts are one of the easiest debts to deal with when it comes to collection activity and credit reporting.  Since, the creditor or collection agency is unable to win in a court of law, simply telling them to go away usually works.   Never, Ever ignore a summons or subpeona of any sort; not answering can allow them to receive a default judgement and the ability to garnish your wages if the judgement isn’t paid.

How to deal with time-barred debts

There are multiple ways to deal with time-barred debts, there is no right or wrong way.  The goal is to stop the creditor from contacting you and to hopefully, get the account removed from your credit report.  The first step I would take is to send either a Validation or Verification letter depending on if the company contacting you is the original creditor or a collection agency.  As part of the Validation/Verification letter include a simple two line cease and desist request (this will stop the phone calls).  If the phone calls do not stop its a violation of the FDCPA.  Another way, to deal with time-barred debts is simply ignore them.  The company may or may not go away.  Collection Agencies are paid to collect on debt and some of them are counting on consumers not knowing their rights.

Going, Going, Gone

A time-barred debt can be sold, and sold, and sold.  Each time the debt is sold to a new company you need to deal with the new company.  The action should be a one-time event, especially when you mention its a time-barred debt.  If a debt collector does violate your right, you can file a complaint with the Federal Trade Commission, or State’s Attorney General and even sue them in court and win up to $1000.00 for each violation + damages.

Be careful about restarting the SOL

It is possible to restart the Statute of Limitations so be careful what you say and agree to.  The most common ways debtors restart the clock: a promise to pay, making a payment, acknowledging you owe the debt, making a charge to the account, or agreeing to payment arrangements.  This is not an all-inclusive list so be careful what you agree to or admit either in writing or on the phone.

Know your Statute of Limitations

The whole premise behind a time-barred debt is the Statute of Limitations for YOUR state and the type of account.  Some states even have a provision in the laws that says if you open the account in a different state, that state’s SOL takes precedent.  This is where research skills are needed.  The research is done and still not sure about the SOL in your state for your particular account?  Contact the State Attorney General’s office.  While the State AG is unable to represent individual taxpayers, these elected officials are still stewards of the state and a great for information.