Consumers are being bombarded with attempts to collect old debts where the legal responsibility to pay the debt has been extinguished. Collectors attempt to coerce people to make payment on a debt that is too old to file a lawsuit against and too old to mention on a credit report. With no real weapons at the collectors' disposal, repayment of the debt is not necessary and merely an option. The Federal Trade Commission (FTC) is finding the practice of trying to collect on optional debt widespread, so beware and ask questions before agreeing to payment.
Coercing consumers into making payment on a debt outside the statute of limitations is becoming common practice by bulk purchasers of debt, who buy delinquent debt from original creditors for substantial discounts. Numerous national well-known credit grantors whose customers have found themselves out of work and on unemployment, and thus unable to pay their bills, are unloading their debt to collection agencies for next to nothing. The collection agencies are buying the right to collect the full balance from consumers like yourself.
The FTC has found that these collection agencies are purchasing debts which are well outside the statute of limitations – meaning a lawsuit can no longer be filed to collect those debts. In an effort to force debtors to pay, the collectors often make misleading statements, such as threatening to file lawsuits to collect or reporting the debt to the credit reporting agencies, neither of which the collection agencies can legally do.
While the FTC is keeping a watchful eye on these debt buyers and has launched investigations against some of the larger collection agencies, the financial reward these agencies stand to gain by collecting on statute-barred debt seems to well outweigh the punishment handed down by the FTC.
When a debt buyer fails to get paid, it generally sells the debt to another debt buyer. Then the process starts anew, causing a great deal of frustration to the consumer who has been seeking some validation instead of disputing the debt with collection agencies . Informed consumers, like those who use this sample letter for disputing a debt , challenge the agencies trying to collect these debts. But the majority of the population is uninformed and more easily coerced into making a payment.
Knowing their audience, collectors send letters offering a settlement, usually around 75% off the total balance owed. This makes the offer even more appealing to an uninformed consumer, who may end up making payment on a debt that is in fact statutorily time-barred -- or “optional” as I like to call it.
If you are being contacted by a debt collection agency on a debt you believe may be statutorily time-barred, contact SmithMarco P.C. to discuss your rights and receive a completely free case review.
Larry P. Smith is a consumer attorney, concentrating his practice in the areas of Fair Credit Reporting Act and Fair Debt Collections Practices violations as well as consumer fraud claims and lemon law. He is the Managing Partner at SmithMarco, P.C.
Mr. Smith has briefed and argued countless cases regarding consumer fraud and Fair Credit Reporting Act claims and Fair Debt Collection Practices Act claims. He has argued successfully in the appellate courts for the State of Illinois on consumer rights issues, and has argued before the 7th Circuit Court of Appeals on several occasions. Mr. Smith has tried dozens of consumer rights cases to verdict in the state and federal courts of Illinois, Georgia and Wisconsin and has arbitrated over 700 cases. Additionally, he has amicably resolved over 3000 consumer fraud, Fair Credit Reporting Act and Fair Debt Collection Practices Act cases via settlement.
Mr. Smith was admitted to the Illinois Bar in 1993 and has been admitted to practice in the U.S. Court of Appeals for the Seventh Circuit and the Eighth Circuit and the U.S. District Courts in Illinois, Indiana, Michigan, Wisconsin, Arkansas, Nebraska, Colorado, Oklahoma and the Eastern District of Missouri. Mr. Smith has been admitted pro hac vice in Arizona's Federal District Court, Georgia state and federal courts, Michigan, Missouri, Wisconsin, Ohio and Indiana state courts in order to represent consumers.Mr. Smith earned his Juris Doctor from The John Marshall Law School in 1993. He earned his B.A. degree in Political Science from the University of Illinois in Champaign-Urbana in 1990.
Mr. Smith has provided interviews and advice for consumer reporters on FOX TV and NBC News Target 5 reports and has been a guest on WGN Radio to discuss consumer rights topics.