One of the most overlooked provisions of the Fair Debt Collection Practices Act, and related state laws is that a debt collector cannot misrepresent what you owe.
The reason this is import because the term “what you owe” is what you owe as a matter of law, not what the creditor would like to get. Why is this an issue?
Because you may not legally owe anything!!
Every state has a statute of limitations that at some point ends the ability of a creditor to collect.
Where this becomes relevant is in the context of the fact that there are a lot of business out there that buy accounts. Banks, credit card companies and other legitimate creditors will at some point write accounts off as noncollectible. They conclude that either there is no practical way to collect on a given account, or that if there is, the costs of collecting will be more than they can get.
So far so good, but in an effort to reduce losses, they will sell these accounts, often for pennies on the dollar. The businesses that by these accounts will try to collect the original amount. The problem for them is that often, between the time the original creditor has tried to collect, then eventually given up, the statute of limitations may either already have run, or be close to expiring.
Once the statute has run, this is no longer a legally collectible debt and any representation by a collector to you that it is, is in and of itself a violation of the law.
And this is a simple claim for you to preserve and prove. Just look at the documents underlying the “debt”. If it is a loan, look at when the last loan payment was made and the note for the time after that wen the loan would have been in default. If it’s a credit card debt, look at the account statements for your last use of the card and the date of the last payment. Many, many times you will find that it has been so long ago that the statute will have run.
The rest is easy and can put a few dollars in your pocket. Record the next call from the collector. Ask specifically how much you legally owe. Then file a lawsuit. In addition to the federal statute, many states have unfair collection, or unfair business practices acts that provide for up to three times the amount due.
So it’s easy to see that by taking advantage of these statutes, if you do owe an old debt and are being harassed you are not powerless. You can end up with not only the original debt wiped out but extra money in your pocket as well.