Misrepresentation or Omission re Time-Barred Debt
The Fair Debt Collection Practices Act (FDCPA) forbids third-party debt collectors from making false representations to consumer debtors. But the complaint for this class action claims that Systematic National Collections, Inc. made a number of false statements in trying to collect a “stale” debt from the plaintiff in this case.
Not all consumers understand that they cannot be sued for a consumer debt once the statute of limitations on it expires. But perhaps even fewer know that if they make a single payment after that, the statute of limitations may be restarted, and that they can again be sued for the debt. The complaint for this class action claims that Contract Callers, Inc. violated the Fair Debt Collection Practices Act (FDCPA) by not making this clear to consumers.
Most consumer debts are subject to a statute of limitations. This means that after a certain length of time has elapsed, the creditor can no longer sue the consumer for the debt and the debt can no longer be reported to credit reporting agencies. The exact length of time that must elapse before the debt becomes “stale” differs from state to state. The complaint for this New York class action claims that debt collector Ditech Financial, LLC violated state and federal laws by threatening to report stale debts to credit reporting agencies.
Consumers cannot be sued for most of their debts forever. At some point, debts for personal, family, or household uses become time-barred and creditors can no longer take them to court to recover the money owed. The exact length of time it takes for a debt to become time-barred varies from state to state. The complaint for this class action alleges that debt collector Transworld Systems, Inc. tried to collect a debt without mentioning to the consumer that the debt was time-barred, in violation of the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA).
After a period of time, debts can become time-barred. That is, the creditor can no longer sue to collect on them once the statute of limitations expires. However, the complaint for this class action says that Dynamic Recovery Solutions violated the Fair Debt Collection Practices Act (FDCPA) by not informing debtors that any payment on such a “stale” debt can restart the statute of limitations, putting the debtor in a worse position.