Does the New Rule on Time-Barred Debt Go Far Enough?

man from Florida talking on the phone with a debt collector

On December 18, the Consumer Financial Protection Bureau (CFPB) issued a new rule regarding time-barred debts. While the new rule is meant to protect consumers, many critics are wondering if it goes far enough. The criticism may be warranted, as the rule essentially reinforces the protection consumers already had. Due to this, it is important that all consumers are aware of the new rule and what it entails. It is just as critical that you understand how to deal with time-barred debts that debt collectors can still try to recover.

The New Rule

The new rule places limitations on debt collectors trying to recover debt from consumers. It states that creditors and debt collectors can no longer sue a consumer over a time-barred debt, or threaten to take legal action. A time-barred debt is one in which the statute of limitations has expired. In Florida, the statute of limitations on most consumer debt is five years from the time the debt was taken out.

The new rule also restricts debt collectors from placing debt on a consumer’s credit report and leaving it there, also known as parking the debt, without first telling the consumer. In addition to notifying consumers about the debt going on their credit report, debt collectors must also notify consumers of their rights before starting collection action.

Debt collectors are also now limited in how many times they can attempt to contact a borrower over a past-due debt. According to the rule, debt collectors and creditors can only contact a borrower once a day in a seven-day period. Debt collectors can use nearly any method to attempt to collect on a debt, as long as they provide borrowers with a method of opting out of that form of contact.

Criticism Over the Debt Collecting New Rule

Critics say the new rule does not go far enough to protect consumers, and they are not wrong. Before the new rule was issued, debt collectors could not threaten legal action if they had no plans of pursuing it. Debt collectors are well aware of the statute of limitations on debt in Florida and know that pursuing a lawsuit once the time limit has expired is a largely fruitless endeavor. Consumers would only have to raise the issue of the expired statute of limitations and the case would be thrown out of court.

The new rule also does not prevent debt collectors from contacting borrowers. It only prohibits them from taking legal action or threatening to take action. That means a debt collector can still call incessantly and perhaps even harass borrowers, which is also against the law. When a borrower has multiple debts, they could face a number of phone calls, emails, and texts per day, as debt collectors are allowed to call once per day for every debt owed.

The critics state that although the new rule was intended to provide protection, it works in favor of businesses rather than consumers. The new rule also does not go into effect until November, which means borrowers will not enjoy the limited protection it provides for nearly one year.

How to Deal with Time-Barred Debts

Even prior to the new rule, the Fair Debt Collection Practices Act (FDCPA) prohibited debt collectors from pursuing lawsuits, or threatening such action, over a debt that was time-barred. The new rule only reinforces that restriction. Unfortunately, these laws are not enough to stop it from happening.

Debt collectors that do abide by the law and do not threaten legal action are also not barred from attempting to collect on the debt. Again, just because a debt collector cannot sue you does not mean that they cannot continue to try and collect the debt. The debt does not go away and while they must abide by certain rules while doing so, collectors can still continue to contact you. When they do, it is important to know your rights.

Always ask if the statute of limitations has expired on any debt a collector tries to recover. They are obligated to tell you when the time limit has run out. You should also ask to see records of the debt, including the date on those records, and the date of your last payment. The clock on the statute of limitations typically starts on the day you made that payment.

Although debt collectors are required to provide this information if you ask for it, that does not always mean they will. When that is the case, send a letter within 30 days of the request to ask them to send verification and that if they cannot, you will dispute the claim. The debt collector not only has to send verification, but they are also prohibited from contacting you until they do.

You should also send a letter to the debt collector asking them, in writing, to stop contacting you in any manner. Once you do this, the debt collector can contact you one more time to notify you of what action, if any, they are going to take. After that, you should not hear from the debt collector again. However, even when you do this and do not intend to repay the debt, there are still consequences. The debt will still remain on your credit report for a period of seven years, which could make it more difficult to obtain credit and other opportunities.

Contact a Fort Lauderdale Debt Defense Lawyer

Although there are steps you can take to deal with debt collectors trying to collect on time-barred debts, the process is not easy. At Loan Lawyers, our Florida debt defense attorneys can advise on what actions to take, speak to debt collectors on your behalf, and will always ensure that your rights are upheld. Call us today at (954) 807-1361 or contact us online to schedule a free consultation with one of our skilled attorneys and to learn more about how we can help.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.