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While you're waiting for a debt collector
to verify the debt, it's a good idea to do some
research on your own. If one debt collector calls
you about an old debt, you can bet another debt
collector will try again in the future.
You'll want to track down the statute
of limitations for delinquent debt in your state.
This
chart from Bankrate.com is a good place to start.
For specific details, you'll need
to contact a consumer attorney in your state or
the consumer protection division in the office of
your state's attorney general.
They'll be able to tell you the statute
of limitations that applies to your overdue debt
and whether a debt collector has the right to sue
you for payment.
"If it's more than four years
old, it's worth getting some legal advice on it,"
says Bob Hobbs, deputy director and attorney at
the National Consumer Law Center.
To find an attorney near you, visit
the Web site of the National Association of Consumer
Advocates and search
for an attorney with expertise in debt collection
in your area. To find your state's attorney
general, click
here.
If your debt is beyond the statute
of limitations in your state, simply write a letter
to a debt collector and ask them not to contact
you.
Exercise your
rights
The Fair Debt Collection Practices Act gives you
the right to cease contact with a debt collector
and you may as well use it.
Make it clear in your letter that
you're aware that the debt is "time-barred,"
and you can't be sued for the debt and you don't
want to hear from them again.
What if a collection agency is calling
you about an old debt you racked up while living
in a different state? Which state's statute of limitations
on delinquent debt should you refer to, the state
in which you used to live or the state you live
in now?
Looking to the statute of limitations
in the state where you live now is a safe bet.
Creditors have two options when suing
you over a delinquent debt. They can either sue
you in the state where you live or sue in the state
where the transaction took place. Most choose the
state where you live now.
According to "Money Troubles:
Legal Strategies to Cope With Your Debts":
The creditor usually selects the state where
you live if it's different from where the transaction
took place, because the court requires a substantial
connection between you and the state in which
you are sued.
That's why it's a good idea to use
the statute of limitations in your home state as
a guide when dealing with an old, old debt. If you
have questions, be sure to consult a consumer attorney.
What if you want to pay back an old
debt? Proceed with caution. Negotiating a payoff
amount with a debt collector is no easy feat. This
article
from Bankrate.com will guide you through the steps.
And before you offer a debt collector
a cent, take a close look at your budget.
Negotiations
No matter what a debt collector says, an unpaid
credit card bill is not the most important bill
you have to pay this month. Providing necessities
for your family comes first. These 16
rules will help you prioritize your debts.
If after scrutinizing your finances
you are able to pay a debt collector for an old
debt, feel free to do so. Just be careful how you
do it.
Offering a lump-sum payment may be
the best way to go. Debt collectors want your money
ASAP and they may be willing to settle your debt
for a whole lot less if you agree to one big payment.
By offering a lump-sum payment, you
could easily cut your debt in half.
Just be sure to get proof in writing
that the new, lower payoff amount will satisfy your
debt in full.
"You have to be very careful,"
says Peter Barry, a consumer rights trial lawyer
in St. Paul, Minn. "You absolutely want to
get something in writing that says 'If I pay this,
this satisfies my debt.' Otherwise, you leave yourself
open to be collected again on the debt."
If you can't make a debt collector
a decent offer on an old debt, you may want to think
twice about paying.
In some states, even a small payment
of, say, $20, could re-start the statute of limitations
on your debt. This will make your old debt new again.
The debt could be slapped back on
your credit report as delinquent and a debt collector
can sue or threaten to sue you all over again.
The advantage swings back to the debt
collector.
Dana Dratch and Bankrate editorial
assistant Sheyna Steiner contributed to this story.
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