Rachel Hunter, J.D.
Article

Suits on Time Barred Debt

Some consumer-friendly states provide that it is an unfair and deceptive trade practice for a debt collector or original credit to get a debtor to acknowledge a debt that is barred by the statute of limitations or to bring lawsuit thereon. The federal Fair Debt Collections Practices Act (“FDCPA”) also contains a provision indicating that it is a violation of law to misrepresent the character or status of a debt. 15 U.S.C. §1692e(2)(A). However, the FDCPA only applies to debt collectors, not original creditors, and while it does prohibit a debtor collector from falsely implying that suit can be brought on a time-barred debt, it does not stop a debt collector from actually filing a lawsuit and not all states are consumer friendly.

In those states where there is no law expressly prohibiting a lawsuit on a time-barred debt, debtors must be extra vigilant. The statute of limitations is a waivable defense – that means that if you do not file an answer asserting the statute and you could have done so, then the defense is waived. In such cases, if the creditor gets a judgment against you, you will have to pay the judgment as most states have strict guidelines about vacating a judgment that has been properly entered. If you believe that a debt is barred by the statute of limitations and you sued, do not ignore the lawsuit. Immediately seek out legal counsel to see whether the debt is in fact time-barred and if it is to draft an answer for you. Here is a link to a helpful alert from the Federal Trade Commission (“FTC”) on time-barred debt: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt144.pdf.

Copyright (c) 2012 by Rachel Lea Hunter



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