Part 2: Stale-debt collection efforts that could violate the FDCPA
Federal law protects consumers against abusive debt collectors.
The federal Fair Debt Collection Practices Act, often referred to as the FDCPA, is a consumer protection law that shields people from abusive or deceptive debt collection activity. Here we will discuss the protections of the FDCPA when a debt collector tries to collect on a stale debt such as an old credit card balance that is time barred because the statute of limitations has run.
Statutes of limitation
In part 1 of this article series, we explained that a statute of limitations is a deadline imposed by state law limiting how long a debt collector or creditor can legally file a lawsuit to collect it. If the statute of limitations has run, the debt is considered stale because the debtor could raise the expiration of the statute of limitations as a defense and the case would be dismissed.
Being stale, however, does not actually extinguish or cancel the debt. The money is still owed if it is a valid debt, but the statute of limitations would be an affirmative defense in court.
As we discussed, in Virginia, written contracts like most credit card agreements usually have a five-year statute of limitations. The statute of limitations usually accrues, or begins to run, on the day the debtor breaches the contract by missing a payment that was due. However, the limitations period starts over again every time another payment that was due is missed.
If a debt is time barred, it can potentially be revived if the debtor makes a payment or possibly even by the debtor telling the creditor or debt collector that the debtor intends to repay it. Revival would mean the statute of limitations would have to rerun for the debt to become stale again.
The FDCPA and stale debts
Certain types of consumer debts like personal or household debt, but not business debt, are covered by the FDCPA, meaning that the debtor would have the legal protections of the Act against abusive or unfair debt-collector activity. Particular collection activities regarding stale debts may be violations of the FDCPA.
If a debt is time barred, a debt collector may write letters attempting to collect on it without running afoul of the Act, so long as the communications are not threatening, unfair, harassing or deceptive. However, threatening to file a lawsuit on the stale debt or actually doing so would normally violate the FDCPA.
A debtor may sue a debt collector for FDCPA violations in state or federal court for damages caused by the unlawful actions, legal fees and costs of the suit. The debtor may also request that the court order the debt collector to pay $1,000 for each collection attempt that violated the Act, even if actual monetary loss cannot be proven. Potentially, every single communication could constitute another violation.
Normally, the FDCPA suit must be filed within a year from violation of the Act.
Legal advice important
Anyone facing legal issues concerning an old debt should speak immediately with an experienced consumer protection attorney about the statute of limitations and the FDCPA, including questions about how to respond to debt collectors.
Lawyer Tom Breeden of Thomas R. Breeden, P.C., in Manassas represents consumers across Virginia in debt collection cases.