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Bogus Debt

Old or Bogus Debt & Debt Collection

Don't let an old debt come back to haunt you: statute of limitations by state.

There are a lot of debt scams out there designed to separate you from your money. One of the techniques scam artists use is confusion. They blur the line between what is legitimate debt and illegitimate debt and whether you owe it or not. Two of the specific issues that cause confusion are demanding payment for debts you never incurred in the first place and the other is to dun you for old debts that you are responsible for, but that have exceeded the time period under which the creditor could file suit.

One of the scams involves demanding payment for a debt you did not incur at all. You might get a call or receive a demand for payment from a collection agency for a debt you do not remember making or that does not seem to exist at all. The first thing to consider is identity theft, then consider the legitimacy of the debt. Demand that the collector produce a paper trail. When in doubt, ask for proof that you are actually responsible for the debt.

Many of these scam artists set up shop with little more that a post office box and the hope that an intimidating letter will frighten or confuse you into paying a totally illegitimate debt. To verify the debt yourself, check your credit file. This is easy enough now with the new federal law that allows you to request a copy of your credit report for free once a year from each of the three major reporting agencies; Equifax, Experian, and Trans Union. If the debt appears on your credit file demand to see documented proof from the creditor or collection agency that the debt is yours. Legitimate companies will be able to easily produce documents verifying the transaction took place. 

If the debt is not yours, or there is, in fact, no debt at all, then the con artist will not be able to produce the required documents. In this case, you may wish to contact the Secretary of State in your state to report the agency and see if they are even registered.

The other issue consumers seem to get confused about is the so-called ‘statute of limitations’ on debt. There is none. If you never paid off a debt then you still owe it no matter how old it is or how long it has been since you were last contacted by a collection agency or the entity you owe the money to. Just because the debt is old does not mean it is not valid; you are still obligated to pay.

In some states, there is a limitation on the time during which the creditor can file suit against you to collect the debt. For example, in Texas, under Chapter16.004 of the Texas Civil Practice & Remedies Code, Four-Year Limitations Period, the creditor must file suit no later than four years after the debt went into default.

What this means is that any debt you are liable for, such as consumer loans or credit card debt, tax liability, damages related to land sale fraud, overpayment or underpayment of royalties or wages, money allegedly owed under an insurance policy, and money arising from a breach of contract, can only be collected by a personal law suit against you prior to the anniversary of the fourth year on which you defaulted on the debt. Just because a creditor is not allowed to file a lawsuit against you to collect the debt after this period of time, does not mean that you do not owe the money. The debt is still valid and the creditor can use other means to try to collect the debt, and the debt will remain on your credit report. 

The rules for collecting debts secured by property, such as a mortgage or vehicle, are different, and you would be wise to consult a private attorney if you are unsure of what type of debt you owe and what your options are.

On the other hand, if you are being harassed or abused by a collection agency you can contact the Federal Trade Commission to file a complaint or just to gather more information on your rights. 

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POINTS TO REMEMBER 
Old or Bogus Debt 

Remember: Ask for documented proof of debt, valid debts do not go away after several years, check your credit file often.

To obtain a copy of your credit report:

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