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Opinions split on aged debts

Jun 11, 2012 Philip Burgess

Opinions split on aged debts
When debt collection agents fail to recover a missing payment for any reason for a certain amount of time, that amount may become a time-barred debt, severely limiting recovery efforts. However, though Federal Trade Commission laws do not prohibit agents from attempting to rectify the missing money, many companies are not trying to collect on such debts.
 LiquidEdge Poll reveals rift InsideARM's latest monthly Accounts Receivable Management Industry Poll asked debt collection companies if the collect medical debts that have aged or are past the corresponding state's statute of limitations. The results were equally split - 44.4 percent of respondents said they do attempt to recover older missing medical payments, while another 44.4 percent said there is not enough incentive to try to collect. An additional 11.1 percent of agencies polled said they were going to implement policies this year to account for collection of older, expired debts. The amount of companies that do not try to recover out-of-stat debts is somewhat surprising, InsideARM reported. The source claimed there is evidence that supports agencies are often successful when attempting to collect on this type of sum. Medical debt is growing and the population that are unable to pay medical bills is aging, according to the news source. Laws concerning out-of-stat debts According to the founder of Debt Counselors of America, Steve Rhode, each state has different laws on time-barred debts. Rhodes explains in most areas, debts expire between 3 and 10 years after the first missed payment, though in a number of states the valid period is longer. Collection agents should consult the state's Attorney General's office before taking action on a debt that may have expired. Whether or not the statute of limitations has passed, a collector is still allowed to attempt to recover the debt. The FTC Consumer Alert explains that though agents can still call consumers to try to recover the missing payment, collection companies no longer have the right to bring a debtor to court. The text is also clear about informing an individual about the expired debt. While a collector does not have to answer if an individual asks if the statute of limitations has passed, the FTC reported, an agent cannot lie if he or she does choose to respond.