Are Debt Collection Attempts On Expired Debts Unlawful?

Most forms of debt have what is called a “statute of limitations”, a date after which a lawsuit to collect the debt will fail because the debt is too old, if the allegation that the debt is too old is proven in court. Many local courts have held that it is unlawful to threaten a lawsuit or file a lawsuit on a debt past the statute of limitations. Does that mean that debt collectors cannot simply request payment on “expired” debts, even if they do not threaten or imply a threat of a lawsuit of a payment is not made? Locally that question is still up in the air but most local courts seem to interpret that such requests are not unlawful, though that view is not unanimous.

A consumer-friendly case on this issue was just decided in the Tenth Circuit, the case of Gunther v. Midland Credit Mgmt., Inc. and Midland Funding, LLC, No. 17-704, 2018 WL 4621764 (D. Utah, Sept. 26, 2018).

In Gunther, a debt collector sent a letter asking for payment of an “expired” debt and stating that they “will not sue” because of the age of the debt, rather than that they could not sue. The letter was styled to imply that by taking a settlement offer contained in the letter the consumer would save money over their other options, when, if they simply ignored it they would be unlikely to have to pay anything at all. The Tenth Circuit then ruled that the letter was deceptive and misleading under the Fair Debt Collection Practices Act, a law which forbids debt collectors from engaging in a variety of misconduct.

Click here for more information about the FDCPA.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems. We have saved over 1,800 homes from foreclosure, eliminated $100,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, and debt collector violations, negligence and fraud.

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This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorney in connection with any legal issues related to the matters discussed in this article as the applicability of state, local and federal laws may vary.