Don't restart the clock on expired debts

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

Dear To Her Credit,
Years ago I had a MasterCard with Chase Bank on which I ran up a bunch of debt. I couldn't keep up with my payments and fell behind. I tried to settle with the bank for cents on the dollar, but Chase Bank refused to do so. I let the debt go -- about $2,000. The "date of last activity" on my MasterCard account was in January 2002. I live in Mississippi and the statute of limitations on unsecured credit card debt at that time was three years.

The old debt was eventually charged off and naturally my credit has suffered. Now, 10 years later, I received a call last week from a number that I tracked back to a collections agency who left me a message wanting me to call them back immediately. Well, I didn't, nor do I intend to do so.

What should I do if I receive a second call or something by mail from them? Ignore any future calls? If I do receive a letter from them, do I send a cease-and-desist letter by certified mail with a return receipt  card attached and inform them that the debt which they are attempting to collect is now time-barred, past the statute of limitations?  -- Stephanie

Answer for the expert

Dear Stephanie,
You've really done your research! You are absolutely correct. You should not have conversations with a collection agency, especially one calling about a debt from so long ago. All he has to do is get you to reaffirm the debt in some way, and he can restart the statute of limitations and try to collect from you. And he is probably very experienced and very good at what he does. Don't give him a chance. There is no law that says you have to answer the phone if you don't want to.

On the other hand, you can't ignore a collector. We don't even know yet if this person is calling about the Chase Bank MasterCard you're talking about. It could be something else, or it could be a scam. Maybe it's that robocaller that keeps bugging me and wanting to talk about my unspecified credit account. If they call again, and you want to put a stop to it, answer and ask to be contacted by mail only. Do not discuss the account, even to say whether or not you owe the debt or when it was.

The statute of limitations for credit card debt in Mississippi is still three years and an account last used in 2002 is well past that date. If this collector is trying to collect a debt that old, say that it is beyond the statute of limitations. It's called "time-barred debt." That means that so much time has passed that they cannot go to the courts to get a judgment against you for that debt. If they persist, send them a cease communication letter with a return receipt, as you suggested.

If they keep trying to collect, seek legal help. A common misconception is that statute of limitations (SOL) laws prevent creditors from taking you to court, trying to garnish your wages or using other legal means to try to get you to pay. That's not the case. SOL laws only give you a defense and prevent them from succeeding in collection actions when you use the laws as a defense. It's not automatic; you must be prepared to respond and present the facts.

Don't forget to check your credit report. A 10-year-old debt should not appear on your credit history, even if it has been sold to a collection agency. If it is on your report, write to all three of the credit reporting agencies and tell them why it should not be there. 

See related: State statutes of limitation for credit card debt

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Updated: 11-21-2017