Creditors can be extremely creative when attempting to collect on a debt. Many of them rely on the fact that most consumers do not truly understand the laws surrounding debt collection. The average consumer may not know creditors only have so long to collect on a debt under the state’s statute of limitations. After that time has passed, the creditor or debt collector is barred from taking legal action to collect on the debt. But that does not mean they can’t stop trying to collect on it.
The problem is many debt collectors will still attempt to get payment on the debt, even after it is past the legal statute of limitations. This practice is often referred to as “zombie debt collection.” Their hope is that the consumer will pay on the bill, even just a partial amount, reviving the debt, and then giving the debt collector the legal right to sue to collect on the remaining debt.
It is important that consumers be aware of what the statute of limitations is for their given state. In Florida, debt collectors may not collect on a debt that is more than five years past due for written contracts, such as personal loans. For other debts, including those with revolving accounts, such as credit cards, the statute of limitations is four years.
It is estimated that consumer debt has reached a record level of more than $4 trillion owed. As a result, the debt collection industry is upping their efforts to make profits from debts that were once considered written off and essentially not collectible, including debts that are past the statute of limitations.
Debt collectors are using different tactics to get consumers to reset the statute of limitations. Some have sent credit cards to the account holders that let them pay off the old debts by using the card, or they allow the consumer to make a smaller payment to stop the collection calls. If the consumer is not otherwise aware of the fact that he or she has rights under the Fair Debt Collection Practices Act (FDCPA) to demand that the calls stop, he or she may believe payment is the only option to end the harassment, which is not the case.
This new push to try to collect on old debts is having an adverse effect on the court system with an increase in the number of debt collection lawsuits being filed. In New York City, it was reported that the number of debt collection lawsuits has drastically increased to more than 100,000, as compared to the 47,000 filed in 2016.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.