Debt Collection and the Statute of Limitations


The statute of limitations functions as an expiration date upon debts, once a debt has passed a certain point is no longer possible for a creditor upon that debt to file a lawsuit to collect upon it. Determining when exactly the statute of limitations has passed is complicated and can vary based upon the exact sort of debt and the circumstances surrounding the debt. Our office has filed many FDCPA lawsuits in the past against debt collectors who tried to sue our clients for debts past the statute of limitations, or people who threatened to sue our client’s for debts past the statute of limitations. Such cases are generally very strong and we have had very positive results for our cases in most such cases.

But what about bills which a creditor sends which does not threaten to sue, but requests payment upon a debt past the statute of limitations? Is the request for payment itself a violation, absent a threat of a collections lawsuit if payment is not made?

Different courts in parts of the country have had different rulings on this matter, however, a consumer-friendly decision recently came out of the United States Court of Appeals for the Seventh Circuit, which oversees Illinois, Indiana, and Wisconsin. In the case of Manuel Pantoja v. Portfolio Recovery Associates(“PRA”), PRA sent a bill to a debtor which read as follows:

We are offering to settle this account FOR GOOD! Life happens and at times you may fall behind on your commitments. We understand and are offering you the opportunity to lock in this settlement offer with a low down payment of $60.00. If settling this account with the options that we are offering is difficult for you, give us a call.

Other payment options may be available so please call 1‐800‐772‐1413 for more information.

Please understand, we can’t help you resolve this debt if you don’t call, our friendly representatives are waiting. Because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency.

Nothing within the letter itself explicitly threatened a lawsuit. The debtor filed a FDCPA case against PRA in response, alleging that (I)the letter should have warned that any payment would renew the statute of limitations, making them legally responsible for the debt and (II)that the letter was deceptive in that it stated that PRA decided not to sue the debtor when the reality was that they couldn’t sue the debtor and thus the letter was misleading. A lower court sided with the debtor but PRA appealed to the Seventh Circuit. After examining both allegations, the 7th held that PRA was being sufficiently deceptive as to try to trick the debtor into extending the statute of limitations. The 7th also held that PRA tried to intentionally craft its letter to be vague and confusing and that such intentions were evidence that it was trying to act deceptively and thus sided against it.

If you would like to read more about the FDCPA and consumers fighting back against debt collectors, you can find other stories on our blog.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, contact us to see how we may be able to help you.

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.