Thursday, July 25, 2013

Old Debt - New Tricks

Old Debt, New Tricks

by Frances Rahaim, Ph.D.aka "The Money Doctor"

Tax refunds may bring debt collectors, salivating at the possibility of a financial windfall.

The idea of collecting on dead-in-the-water debt is very appealing to a debt collection company. The fair debt collection practices act (FDCPA) defines debt collection companies as any entity which collects debt on a regular basis.  This could be a debt collection agency, attorney’s office, or a company buying unpaid debt.

Before you give up your refund to a collection company, there are a few things you should know. The first to consider is the statute of limitations in your state. In Massachusetts, it is six years, Rhode Island ten, and New Hampshire is three years. If the clock ticks past the statute of limitations, with absolutely no payments being made to the creditor, the debt is considered to be time-barred.  This means that a debt collection agency may no longer sue you for the debt. This is not to say you no longer owe the debt, only that you may not be sued for it.

The company may, however, continue to try and collect from you, and many collection agencies become increasingly aggressive as the statute deadline approaches.

Should you be contacted by a collection agency regarding a debt that you believe is time-barred, you should ask directly if the debt is time-barred, or the date of the last debt payment received. If they decline to answer or you believe the answer is not truthful, you should send a letter within 30 days asking that they verify the debt. They are not allowed to continue to collect until the debt is verified.

            The most important thing to remember is that in most states, absolutely any payment starts the clock ticking again on the statute. In some states even the promise to pay is enough to revive the debt.

            For more information about time-barred debt, you may contact a legal aid lawyer, your state Attorney General’s office, the Federal Trade Commission, or PowerDownDebt, Inc.

Disclaimer: the above blog entry is the opinion of PowerDownDebt, Inc., and Frances Rahaim, Ph.D. , and should not be considered as legal or tax advice. Please seek the advice of a qualified attorney or tax professional. PowerDownDebt, Inc. is a debt management company located in western Massachusetts, and advocates for good credit etc .And asetc.

For more information about debt and improving your relationship with money, visit or call 413-774-5555.

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