How long 'til the bill collectors go away? It's been more than 10 years for a $50 debt...

January 31, 2009 7:23 PM

How long 'til the bill collectors go away? It's been more than 10 years for a $50 debt...

Over 10 years ago I had a credit card that had a $100 balance on it. I sent in a payment for $50 and it got posted late to my account (company's explanation was that they don't consider it 'received' until the check clears or some such nonsense) so I incurred a $38 late fee, plus my APR went up to 22%. Shortly after, I lost my job and even though I never used the card again, I got behind on my payments (now $88 + fees), which caused me to rack up another $38 per month plus penalty fees and such.

When I called to close my account officially, I was told that I owed something like $400 to close it, which I couldn't afford. The account was immediately sent to collections and I was harrassed by bill collectors for a long time. The company was sold several times over in the following years and each time it changed hands, my 'debt' would be re-sold and I'd get calls again.

Even though I now had a blemish on my credit record, I thought I was ok. Flash forward 10 years and now a debt collector is calling me about this same debt only now they are asking $1700 to settle it and get it off my record. I explained how the "debt" was actually only $50 and that the rest was their own "fees" and the person essentially said Too Bad, So Sad because they'd acquired the debt at a certain price and needed to reclaim it at that price.

This seems completely contrary to everything I have ever heard about debts. Usually the company that the debt is owed to writes off the debt on their taxes, but then tries to collect for a certain period of time and if unsuccessful, they sell it to a debt collector for a lower cost (and that's how they can make you deals for "pennies on the dollar"). But these folks insist that they cannot bring the cost down below $1700 and so I have just been ignoring their calls.

Is there any real worry about ignoring this? I already acknowledge the note on my credit file, but other that that, are there any consequences? I thought after a certain number of years (7?) that a debt is considered void? I don't want to pay $1700 on principle. Yes, I made a debt mistake when I was young, but that's a heck of an inflation rate on $50! Now that I am in a better career position and make more money, I'm concerned that somehow they will try and come after my assets or garnish my wages. Am I being too neurotic? Or do I need to get aggressive and try to negotiate some kind of payment plan with them? It pains me to think of paying $1700 for this, especially in this economy, but I also don't want it to be in my personnel file at work that I have a wage garnishment.

posted by giddygirlie to work & money (10 comments total)

Did you admit to them that the debt was valid during the phone conversation? If so, and they were taping it, then you may have reset that 7-year clock. Read up on the Fair Debt Collections Practices Act; at your written request they have to stop calling and instead contact you only by mail as well as prove the debt is valid (they need to be able to provide a chain of possession from the original creditor). If they can't do this you have a chance at getting the debt dismissed as no longer valid, but if you reset the collections clock you'll have to endure 7 more years of collection attempts and possibly a civil suit. http://www.debtorboards.com/ has a lot of good info too.
posted by bizwank at 7:35 PM on January 31 [5 favorites]

Is there any real worry about ignoring this?

Ten years ago, you thought ignoring calls about this would make it go away. The situation you're in now is because of that. That should probably tell you that it's time to stop running.

I know exactly zip about this but it sounds like all of your "information" is hearsay. No debt is considered void, far as I know, unless you've declared personal bankruptcy. You should find a financial advisor to talk to if you want to know all of your options (which I suspect will amount to 'pay up already and here's what happens if you don't' but since I'm not an expert, I refer you to someone who is.)

I don't want to pay $1700 on principle. Yes, I made a debt mistake when I was young, but that's a heck of an inflation rate on $50! Now that I am in a better career position and make more money, I'm concerned that somehow they will try and come after my assets or garnish my wages. Am I being too neurotic? Or do I need to get aggressive and try to negotiate some kind of payment plan with them?

You made a debt mistake ten years ago, and then compounded it by ignoring it and hoping it would go away. It hasn't.

Negotiating a payment plan sounds like a good idea to put this behind you as a step towards fiscal responsibility.
posted by canine epigram at 7:47 PM on January 31 [4 favorites]

Taken from fair-debt-collection.com:

There is a statute of limitation (SoL) also called "time barred" on the enforcement of debts. Although a debt's SoL has expired, that does not prohibit creditors and collectors from attempting to collect the debt. It just means the courts cannot be used to force you to pay the debt through legal actions such as judgments, liens, wage garnishments and so forth.

Assuming a debt is valid, once it expires, it's up to you to decide whether or not to pay it. If you choose not to pay the debt, you might save yourself and the creditor or collector time and money by sending a letter informing them of the expired statute of limitation and your intention to use it as your defense should they decide to pursue legal actions.

--
If you make a payment or possibly confirm that you do owe this money, the SoL resets to zero. Check the above site for a list of SoL by state.
posted by Sufi at 8:11 PM on January 31 [4 favorites]

You could get a lawyer, or someone you know who is a lawyer and is willing to help, to make up a letter stating that if they, the collection agency, cashes an accompaning check written by you in the amout of $50 (or X) dollars, thereby making the rest of the debt invalid. By the very act of cashing the check. Worked for a friend of mine when he had trouble with a credit card company. But I would not clarify the total amount owed. I'd use the term "any".

But really, the refuting of the debt and going through the proper channels bizwank alludes to would be the first steps.
posted by captainsohler at 8:16 PM on January 31

I can relate my story about a debt owed me. I had a promissory note and they made payments on it for 2 years. They moved out of state. I sent certified letters, etc and all were returned. I simply could not find them. So after 10 years I did find them and sent them a letter. The wife thought the note was paid. Her husband was a man in debt over his head and told her he had taken care of it. I sent a copy of the note to the wife. I called a lawyer and he said in effect, "tough" the statute of limitations is 5 years. You can sue them but their defense about the statute will save them. So I wrote a sob story and got her to pay a couple of months. Called the lawyer again thinking the statute did not apply if they resumed payment. I was wrong again. The lawyer said that the note did not "reset" to the date of the last payment. So, just hoping I could recover some of the debt I offered to renegotiate the note and they fell for it. Just luck because they were not aware I had no case. I settled for one-half and got it certified check. whew! So if there is a limitation about how long the debt has been unpaid I make the assumption that they can just kiss-off getting payment from you. A call to a lawyer will confirm that for you. I got my legal opinion from a lawyer over the phone.
posted by JayRwv at 8:48 PM on January 31 [2 favorites]

The debt isn't void, but it won't show up on a credit report after 7 years. Unforunately it can be re-activated if there's any "activity".

You can get a free copy of your credit report once a year (annualcreditreport.com is the government mandated site to get it from, the freecreditreport.com site is a ripoff that will try to upsell you extra services).

If the debt does show up again, you can file a dispute. Just claim you paid the bill and force them to prove you owe the money. They probably won't be able to. Frankly someone probably just bought up a bunch of super-old debt hoping to "win the lottery" on it or something.
posted by Paris Hilton at 11:21 PM on January 31

...ummm, am I missing something here? (IANAL, IANYL)

1. Check your Credit Report and see if the debt is even reported on there. If not, it's out of the SoL, and then the Debt Collector is SOL.

2. Next time the Debt Collector calls, tell him/her to piss off. Send them a Certified letter instructing them NOT to contact you by phone and to stop harassing you. By law, they have to comply.

3. If the Debt is out of the SoL, and the Debt Collector CONTINUES to harass you, then inform them that you are reporting them to your State Attorney General, and FOLLOW THROUGH.

4. Invest in consulting with an attorney. Seriously.

Now, if the debt IS in your Credit Report, then send the Debt Collector a Certified Letter demanding Verification/Validation of the Debt. Now, the Debt Collector is saddled with the burden of proof. They now have to prove that YOU owe THEM the money. This means that they have to get the original documents you signed from the original creditor, and show the trail from that document to them. If they can't, the debt is legally invalid. 90% chance that after ten years, your original creditor no longer has those documents. The debt collector is then SOL. (S**T OUT OF LUCK).

In 99% of situations such as this, most people don't know the law. READ UP ON IT. Especially sites like "The Consumerist". They have a wealth of information. Shady Debt Collectors like to capitalize on people not knowing or being familiar with the law. Don't get intimidated into paying a 400+% premium on a Debt that was LONG forgotten by your original creditor.
posted by Master Gunner at 1:52 AM on February 1 [3 favorites]

Keep in mind that the debt will likely be sold multiple times to different parties. Each of these parties will try to collect to the fullest extent that they feel is worth it to them. It's not going to wish itself away.
posted by Cool Papa Bell at 11:36 AM on February 1

I'm concerned that somehow they will try and come after my assets or garnish my wages.

You should be. They can, and if given an incentive, they will. A lot of these pennies-on-the-dollar collectors won't bother, but if they see any legal action against you by any other creditor they then will all act (this is how I got four judgements against me in nine weeks).

You're not judgement-proof (like me) because you have an income they can tap into.

Bankruptcy is out of the question for you for a debt this small. You'll need to negotiate a settlement or a payment plan.

They will most likely accept something between 30% and 60% of the debt as a settlement, but you should lowball them at first. The key is offering a one time payment now. Make sure you get any settlement agreement in writing before you pay. Then follow up to make sure it is recorded on your credit report as paid off (it won't be "paid in full" but anything is better than nothing).
posted by dhartung at 2:47 PM on February 1

Thank you everyone for your help. This is a lot of great advice and I am definitely going to research the SoL in my state (California) and see what can be done to get them to go away, even if it means paying part or all of the price they're asking.

For clarification: the last time that I spoke to anyone about this was 2000 or 2001, which wasn't any help (the people were unsurprisingly rude) so it's possible that they are trying to reactivate this for another 7 years, which makes sense why they are calling me now.

As far as it showing up on my credit report, the last time I needed a credit check (2007) it did not show up there. I was working with a realtor who did not see any current negative marks, although he saw a note about "slow payment" on this account, but since it was such an old note (and the fact that I was young when it happened), no one was concerned about it and I still qualified for my loan.

Separate rant: Because of this debacle, I have not used credit cards for the past 10 years and instead paid cash for all my purchases which has weakend my credit rating more than if I had defaulted on more credit cards at higher values. *sigh*
posted by giddygirlie at 11:20 AM on February 2