On a fixed income with debt collectors calling

Ignoring creditors won't make them go away

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

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Question for the CreditCards.com expert

Dear Credit Guy,
My parents received a state of Texas citation for a credit card that was charged off in November 2007. My parents are separated and both on fixed incomes. My mom is already in a situation where she can't afford food and started receiving food stamps and gets food from a pantry. She can't afford to pay anything right now. She has had her Internet, cable and other things cut off because she can't afford to pay. Is it legal for them to sue her for something that was charged off in 2007? -- Patty

Answer for the CreditCards.com expert

Dear Patty,
When a creditor charges off a debt, it does not mean that the debt is no longer owed. It simply means that the creditor is taking the debt off its balance sheet as income. The statute of limitation in the State of Texas for collecting a debt in the courts is four years. So, the collector can legally pursue collection by suing your parents until November of 2011.

If your parents have not communicated with the collector, I would recommend beginning there. It is costly for the collector to file a suit with the courts and appear before a judge. It sounds as if your parents do not have any assets for the collector to come after. If your parents will communicate with the collectors and let them know the state of their finances, they may withdraw the suit to save that expense.

Unfortunately, should your parents owe the debt and they do have assets, such as a home, the collector could receive a judgment from the court that could be used to place a lien against the home. A lien against the home would not mean whoever is living there would have to leave. A lien on a home cannot be used to force a sale in Texas, it only means that if and when the property is sold, the lien must be satisfied with money from the sale.

In addition, a judgment can be used to garnish a bank account. Social Security wages are exempt in most cases from garnishment (federal tax liability and child support are cases where exemption does not apply), but if any non-Social Security income is deposited in the bank account, those funds would be eligible. Unfortunately, this is one reason people become part of the "unbanked" population that is becoming more and more prevalent everyday. But, that is a topic for another day. To be safe, I would recommend that Social Security income be deposited in an account where only those funds are deposited.

Credit card debt is unsecured debt, so if your parents have no assets and no way to make payments, they can communicate this fact to the collector and request that the collector not contact them again about the debt. It is best to make the request in writing. The Fair Debt Collection Practices Act prevents a collector from contacting your parents once this request is made. But, that may not be the last your parents hear about the debt. These types of collection accounts can get sold over and over again and each collector may contact your parents to collect.

Take care of your credit!

See related: State statutes of limitation for credit card debt, How wage garnishment works -- and how to avoid it, Know your rights: Fair Debt Collection Practices Act

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Updated: 11-25-2017