Did you know that debt collectors have a limited amount of time to collect on old debt?  There is a Statute of Limitations (SOL) that varies by state that dictates the length of time a collection agency can legally take action to collect a debt.  So if you have an older debt that has not been cleared from your credit report or are being hounded by debt collectors for a debt that you thought was written of several years ago, what should you do? 

First you need to understand that each state has its own SOL that may vary based on the following categories:  open accounts, written contracts, oral agreements, and promissory notes.  Credit card debt is usually considered an open account. 

If you have not heard from a debt collector in several years on an old account and suddenly start to receive calls or letters to pay off an old debt, proceed with caution before contacting them or acknowledging the debt.  In many cases as the SOL is about to expire your old debt may be sold to a scavenger debt collector which basically is an investment group that purchased old or written off debt for pennies on the dollar.  They may contact you and misrepresent themselves as a “litigation firm” that is preparing to sue you for the old debt.  Since it is their goal to get you to pay as much of the original debt as possible therefore increasing their profit, they are known to use some rather tricky and underhanded methods to scare you into paying.  This is where it is important to know the SOL for you state.  If the SOL has expired (keep in mind the length of time is based on the last activity on your account, not when it was opened); you have a legal defense in court if you are sued for this debt.  However, if the new “litigation firm” that now owns your debt convinces you to agree to pay 70% or even 50% you now have activity on your account and the SOL is not longer in play. 

 The best way to protect yourself from these aggressive collectors and reinstating the SOL is:

• Do not admit that you owe the debt
• Do not agree to pay on the debt
• Do not agree to send any money

 What you should do:

• Tell them the statute of limitations has run on this debt
• Tell them to not contact you again, if this doesn’t work
• Send them a certified letter, requesting a return receipt telling them not to contact you further
• If they continue contacting you, send them notice to cease and desist any contact

These are just a few things you should know if you are dealing with collection of an older debt.   If you are in this situation it is best to contact an attorney who can decipher the laws and how they pertain to your situation in your state to ensure you do not open yourself to further legal action.

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