One of the most frequent and critical questions I encounter in my practice concerns how to respond to demands from collection agencies. This is particularly important if you believe the debt is beyond the statute of limitations. Once a debt has surpassed this period, it becomes legally uncollectible. This means that neither the original creditor, the debt collection agency, their attorney, nor anyone else associated with the debt can sue you in court to collect it.
However, this doesn’t mean they can’t contact you about the debt. There is no law preventing debt collectors from calling or writing to you, even indefinitely. They can contact you about the debt for the rest of your life; they simply cannot legally use the courts to force you to pay. Nonetheless, as you will discover in this article, there are numerous underhanded tactics that lenders may employ to attempt to continue to collect on these debts.
What Are The Relevant Statutes of Limitations in Illinois?
In Illinois, the statutes of limitations for various types of debts are crucial for understanding your rights when dealing with debt collectors. While I have written extensively on this topic, here is a brief overview of two significant categories of debts that debt collectors frequently target:
Debts Where the Contract is Not Wholly in Writing – 5 Years
These are debts where the entire agreement was not formalized in writing. Typically, this means that both parties did not sign the contract or the terms were open ended. Credit card agreements often fall into this category, as the lender usually does not sign, and your use of the card constitutes your agreement to the terms.
Debts Where the Entire Agreement is in Writing – 10 Years
These are agreements where all terms are explicitly stated in writing, and all parties have signed and agreed to the terms. A common example are high interest payday loans where both the borrower and the lender have signed a detailed written agreement.
Debts for the Sale of Goods – 4 Years
This category includes debts arising from the sale of goods, such as a car or utilities like gas or water. These debts are subject to a four-year statute of limitations under the Uniform Commercial Code (UCC), which Illinois has adopted for sales of goods.
Legal Judgments – 7 Years, Extendable to 27 Years
Once a judgment is entered by the Court, it is not subject to the same limitations as other types of debts. Typically, a judgment remains valid for 7 years but can be extended up to a total of 27 years. For more information, see our detailed guide on revival of judgments in Illinois.
When Does the Statute of Limitations Clock Start?
The statute of limitations clock starts ticking on the day you miss your last payment. However, it is important to note that the clock will restart if you make any subsequent payments. For example, if you stopped making payments in June 2020 and then made a payment in June 2021, the statute of limitations clock would reset to start again from June 2021.
It’s crucial to understand that the date of your last payment is what matters, not the date you first became overdue. Once the relevant statute of limitations period has passed, no one can sue you for the debt, effectively protecting you from any legal obligation to repay it. However, this protection does not prevent debt collectors from contacting you about the debt.
They can contact you by phone and in writing forever.
How to Obtain and Verify Debt Information
Once you know the status of the debt the collector is trying to collect, you are armed with very powerful information. This knowledge allows you to make informed decisions about how to proceed. If you’re uncertain about the date of your last missed payment, you may be able to obtain this information from the collection agency. Here’s what to do:
- Request Documentation: Ask the collection agency to provide detailed documentation of the debt, including the date of the last payment. This will help you verify the debt’s status and the applicable statute of limitations. This is commonly called a validation of debt request.
- Verify with Original Creditor: Contact the original creditor to cross-check the information provided by the collection agency. This can help confirm the accuracy of the details and ensure you have the correct date.
- Review Your Records: Check your own financial records, including bank statements and payment receipts, to find the date of your last payment. This can provide additional verification.
- Credit Report: Examine your credit report, which may include the date of last payment and the account status. This can be useful for cross-referencing the information you receive from the collection agency.
By obtaining and verifying this information, you can better understand the status of the debt and determine the appropriate steps to take in dealing with the collection agency.
Debt Collector Dirty Tricks
Acknowledging an expired debt, even with a simple “yes, I owe this money” or “I agree to repay” or making a single payment towards repayment can legally reset the statute of limitations clock. These acts can revive an old debt that was previously uncollectible. Once acknowledged, the creditor regains the legal ability to sue for the debt, obtain a judgment, and garnish wages.
Debt collection agencies persistently contact individuals in the hope of catching them on vulnerable or financially advantageous days, when they may be more inclined to agree to repay a debt or to make a payment. These companies understand that even a single payment restarts the statute of limitations clock, giving them the legal leverage to pursue repayment through lawsuits and wage garnishment. It’s plausible that debt collectors receive incentives or bonuses for successfully reviving old debts, potentially turning the process into a game for them. This troubling reality underscores why I wrote this blog—to protect you from falling victim to such predatory practices.
Steps to Take if the Debt Is Past the Statute of Limitations
If you are absolutely certain that the debt is past the statute of limitations, follow these steps:
- Cease All Communication: Stop talking to the debt collection agency immediately. Do not engage in any further conversations with them.
- Block Their Numbers: Block all phone numbers associated with the collection agency to prevent them from contacting you.
- Verify and Repeat for New Collectors: If a new debt collector starts to pursue the same debt, verify that it is still barred by the statute of limitations and then cease communications with them as well.
- Send a Cease and Desist Letter: Consider sending a cease and desist letter to the collection agency. Clearly explain that the debt is barred by the statute of limitations and include supporting documentation. This may effectively stop them from contacting you.
By following these steps, you can protect yourself from unnecessary harassment and ensure your rights are upheld.
Debt Collector Do’s and Don’t’s
When dealing with debt collectors, it’s essential to know your rights and understand the best practices for handling their communications. Here are some key do’s and don’t’s to guide you:
Do’s
- Do Verify the Debt:
- Request written validation of the debt within 30 days of the initial contact. This should include the amount owed, the original creditor’s name, and other relevant details.
- Do Keep Records:
- Maintain detailed records of all communications with debt collectors, including dates, times, and the content of conversations. Save any written correspondence you receive.
- Do Know Your Rights:
- Familiarize yourself with the Fair Debt Collection Practices Act (FDCPA), which outlines your rights and the limits on debt collectors’ actions.
- Do Communicate in Writing:
- If you prefer, request that all communications be conducted in writing. This can help you keep a clear record and reduce the stress of phone calls.
- Do Report Violations:
- Report any violations of your rights to the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and your state’s Attorney General.
- Do Seek Legal Advice:
- If you are unsure how to handle a situation or believe your rights are being violated, consult a consumer protection attorney for advice.
Don’t’s
- Don’t Ignore the Debt Collector:
- Ignoring the issue won’t make it go away and can result in legal action. Respond promptly, even if it’s just to verify the debt.
- Don’t Provide Personal Information:
- Avoid giving out sensitive information like your Social Security number, bank account details, or other personal information until you have verified the collector’s legitimacy.
- Don’t Make Immediate Payments:
- Don’t rush into making a payment until you have verified the debt and confirmed that the collector is legitimate. Paying a disputed debt or one past the statute of limitations can have legal implications.
- Don’t Let Collectors Harass You:
- Debt collectors are prohibited from harassing, threatening, or using abusive language. Stand firm and report any harassment.
- Don’t Acknowledge the Debt Without Verification:
- Acknowledging the debt or making a partial payment can reset the statute of limitations. Only do so after you are certain about the details and legitimacy of the debt.
- Don’t Be Pressured into Settling:
- Debt collectors might pressure you to settle quickly. Take your time to understand the debt and explore your options before agreeing to any settlement.
By following these do’s and don’t’s, you can manage interactions with debt collectors more effectively and protect your rights throughout the process.
Beware of Fake Collection Agencies
Recently, I have noticed a disturbing trend in my practice: the rise of fake collection agencies. These scammers pose as legitimate debt collectors, contacting people and demanding payment for debts they have no right to collect. Although it is unclear when this trend began, it is certainly on the rise. While you shouldn’t treat every debt collector as though they are fake, it’s important to be aware that these scams do occur.
A few suggestions if you are suspect a fake collection agency may be trying to scam you:
- Contact the Original Creditor: If in doubt, contact the original creditor to confirm whether the debt has been sold and to whom.
- Report Suspicious Activity: Report any suspected scam activity to the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and your state’s Attorney General.
Steven J. Grace – Expert Chicago Attorney
For individuals navigating the complexities of debt collection, Steven Grace, a dedicated attorney based in Chicago, offers expert guidance and support to help consumers avoid the pitfalls of aggressive collection agencies. Through bankruptcy and debt defense strategies, Steven empowers individuals to protect their rights and financial well-being. Click here to schedule a consultation.
