What can happen if a debt collection agency tries to recover an old debt? Is there a time limit after which creditors can no longer go after Tennessee residents? According to The Consumer Financial Protection Bureau, debt collectors usually have a statute of limitations of two years – sometimes longer – before they are no longer allowed to sue for an older debt.
However, this does not necessarily stop some creditors. According to the New York Times, a large debt collection agency started garnishing the bank accounts of numerous people in Maryland. Many of these people claimed their statute of limitations had passed long before, or that they never owed the debts. The collector was also reportedly not authorized to collect in that state. However, when one retired man living solely on Social Security benefits filed a class action lawsuit against the company, the collector was able to get it dismissed.
Despite this disturbing case, consumers have legal rights that protect them under the Fair Credit Reporting Act. While old debts can show up on credit reports for at least seven years, people have the right to dispute a lawsuit over an older debt if the statute of limitation has passed. Collection agencies should understand that it is a violation of the act to threaten a lawsuit after this time. However, it is important for people to know that making a payment on an older debt may “reset” the time for the statute of limitations. Defending one’s self against an aggressive debt collector may be complex, and could necessitate legal help.