News & Resources

Buying Old Debts

Jul 30, 2010 Kyle Duncan

In recent years, some aggressive debt buyers and investors that buy multimillion-dollar debt portfolios that have been charged off by credit-card companies and other lenders for cents on the dollar with a plan to collect enough debts to turn a profit and have been actively pursuing debts that are barred by the statute of limitations. Their intent is to persuade a consumer to make a small payment on an old debt, which revives the debt and allows the debt buyer to take other actions to enforce the debt and turn a significant profit on a debt they purchased for pennies.

There are numerous stories of debt buyers that use questionable, if not illegal, tactics when they try to collect on time-barred debts.  These debt buyers have been reported to harass debtors in an effort to trick them into reaffirming debts so that the statute of limitations will begin anew.

Although original creditors are exempt from the Fair Debt Collection Practices Act (FDCPA), courts have typically enforced the FDCPA against debt buyers. The FDCPA prohibits debt collectors from engaging in any unjust, misleading, or insulting practices while collecting debts with the purpose to eliminate abuse of consumers and promote fair debt collection.  Examples of prohibited collection tactics include: threatening to take any action that cannot be taken legally, communicating false credit information, seeking unjustified amounts and using deceptive methods to collect debts.  So a debt buyer seeking payment on a debt where the statute of limitations has run walks a very difficult line on keeping in compliance with the FDCPA.