Almost getting it right

I’ve said numerous times that I really don’t like much of what is published about debt collections. Because most articles I’ve seen about the topic get a lot wrong. But the latest article I encountered published by the Los Angeles Times gets it right. Or at least pretty close. But given that it’s from a newspaper, I’d hope they’d get it right.

Sean Pyles wrote the article in question called “How to handle debt that has ‘expired’“. And as said he gets it mostly right, so go and read the article before coming back here as I’m only going to point out the parts where he’s wrong. First, though, I’ll point out what I’ve said numerous times about the statute of limitations, which Sean says right off the bat:

When a debt is older than the statute of limitations, it’s called time-barred debt. That means creditors don’t have a legal right to sue you — though debt collectors may still try. They also can continue to pursue you with phone calls and negative credit reporting.

The statute of limitations only means that a debt collector cannot sue to collect a debt. It doesn’t stop them from contacting you about it or making any other collection attempts. The only thing I would’ve liked to see him include here is the fact that you can, in writing, order the debt collector to not contact you. That will stop one debt collector cold, but won’t stop them from selling it off to someone else, meaning the whole process starts anew.

A debt collector should send you a validation notice within five days of first contacting you. This notice should include the amount owed, date of last payment, who the collector is and how to request information on the original creditor. If you don’t get this notice within 10 days after the debt collector first contacts you, ask for it.

A debt collector MUST send you a validation notice within five days of first contact. And that five day mark is the postmark date, not the date you receive it. If they never send it to you, then don’t ask for it. That’s kind of like discovering you have a warrant out against you and then calling the police so they can come and arrest you.

Now here’s a question for you: what if they don’t send it till after the 5-day limit? Are they barred from collecting the debt? No. It merely opens them up to potential penalties under the Fair Debt Collection Practices Act. The debt is still a contract that can be enforced.

One thing I will point out here: Sean’s statements regarding validation are the most accurate statements I’ve seen in ANY article written about collections. Seriously, it brings a tear to my eye reading it. Until he gets to the part about disputing the debt:

Be as specific as possible in your letter. Say why the debt collection attempt is not valid, including information about payment history or why the debt may not be yours and any other relevant information. Send the letter by certified mail so you get confirmation of receipt.

You don’t need to be specific at all. The law requires that you merely state that you’re disputing the debt. You don’t need to provide anything more, and I’d highly recommend against providing anything more. Go here to find a letter template that you can use to dispute the debt. And if you think that the debt isn’t yours, then you can read my advice on how to interact with the debt collector.

Now while you do have the option to ignore it, Sean’s statements fall woefully short of what could happen and miss a lot of nuance:

When debt is time-barred, you can’t be sued for payment — but the debt doesn’t go away. You may ignore it, but debt collectors and your credit reports won’t.

Furthermore, debt collectors can continue to pursue payment. If you ignore the debt long enough, you risk the current collector selling the debt again.

The statute of limitations is nothing more than an affirmative defense in Court to get the suit dismissed. They can sue you — Sean even says such in the last section of his article — and you will have to show up to Court in order to assert that defense.

The debt will fall of your credit report typically seven (7) years from the date of charge-off, provided you don’t resurrect it. This is what happened to a number of collections accounts I had on my credit report.

This means as well you can have a time-barred debt listed on your credit report unless your State’s limit is higher. And generally you cannot have that entry removed. The statute of limitations that applies to the debt account is tied to your State of residence. Move out of a State where the debt was time-barred to one where it will not be and you can be legitimately sued to have the debt enforced.

And before writing this article, I think Sean should’ve followed the advice he gives about talking with an attorney so he doesn’t provide information that is demonstrably wrong. And he was going so well, for the most part.

If the case goes to court, you’ll probably submit evidence of the date of last payment and information about the bill. Simply stating that the debt is time-barred should be enough to get the case thrown out.

Merely stating the debt is time-barred isn’t enough. You will have to demonstrate the debt is time-barred. So it’s not “probable” that you’ll submit evidence. You will be required to submit that information.

But what if you no longer have the records demonstrating when you last made a payment? There are ways of getting that information, and it typically requires exercising a process called “discovery” and issuing subpoenas to applicable parties to see what records have been preserved. You’ll need to consult an attorney to discuss that option, though, as I highly recommend against going it alone.

Otherwise Sean was mostly correct and it’s one of the most accurate articles I’ve seen written on debt collections.