Time-barred debt

Monday, November 28th 2005, 12:17 pm
By: News On 6

It’s pretty easy to go into debt in America, but often hard to get out. While we typically have to pay off our debts, there are actually some debts you may not have to pay, thanks to a little know law.

News on 6 reporter Gan Matthews says there is new debt--the kind many of us will run up over the holidays. And then there's old debt. Sometimes it's so old that you're not required to pay it. It's called time-barred debt.

Certified credit counselor Jennifer Delcamp: "time-barred debt is debt that the statute of limitations for collection has run out on that people are still trying to collect on that debt." Under Oklahoma law, if five years have elapsed after you last made a payment on any debt you owe, and no one has taken you to court, then you're not required to pay it. But that doesn't mean collection agencies won't try.

Lindell Stevens with the state’s Consumer Credit Department: "the debt may have expired and then someone buys it for pennies on the dollar in hope of collecting that debt."

The state Department of Consumer Credit says it gets two to three complaints a month about collection agencies that try to bully people into paying old and time-barred debts. Sometimes they get people to pay because they don't know the law--or because people feel qualms of conscience about unpaid debts.

At the Consumer Credit Counseling Service of Central Oklahoma, counselors hear plenty about high-pressure intimidation. Jennifer Delcamp: 'we've heard all kinds of horror stories about threatening to sue them or threatening to take their home or, you know, whatever they can find to scare the person into repaying the debt sometimes they'll do that."

The Federal Trade Commission polices collection agencies, and last year the FTC accused an Illinois-based company, CAMCO, of using abusive and deceptive methods to collect time-barred debt from thousands of consumers. CAMCO paid a $300,000 fine and went out of business, but Lindell Stevens says there are other unscrupulous operators out there who can wear down a consumer's resistance. "Some just feel like it's either pay or continue to be harassed or continue to put up with it. And I’m sure that some would pay a small amount or a smaller debt in order to stop that."

But agreeing to pay any amount, however small, on a time-barred debt can give a collection agency an opening to restart legal proceedings against you. Public and private agencies agree--when someone calls trying to collect on time-barred debt, just say no!

Experts say if collection agencies are bothering you about time-barred debt, you should send them a certified letter asking them to stop calling. They also say, the only time you can have bad debt removed from your credit record is when it's inaccurate or when it's been there longer than seven years, ten years for bankruptcy.