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Debt Statute of Limitations

The debt statute of limitations is the legal time limit a party has to collect a debt through the court system. After that time a creditor or third party, such as a debt collection law firm, may not sue to enforce the credit agreement. Collecting using traditional methods such as calling or lettering is still allowed. The statute of limitations varies from state to state and by type of debt, and is typically between three and 10 years (see map below)

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Collection Agency Seeking Circuit Court Rehearing in Pivotal FDCPA Time-Barred Debt Settlement Case

A collection agency that saw a Sixth Circuit Court of Appeals decision go against it last month has filed a petition for rehearing and rehearing en banc with the Court. The case involved a settlement offer on a time-barred account. The collector initially won the case and the Sixth Circuit reversed that ruling in a split decision that carried a strong dissent.

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Fallout Growing from FDCPA Decision on Proof of Claim on Time-Barred Debt

A U.S. Circuit Court decision this summer took an extraordinary step when it held that filing a proof of claim on time barred debt is conduct that violates the FDCPA. At the time, attorneys close to both bankruptcy and FDCPA proceedings warned that it would touch off a very real firestorm in that sector of the ARM industry. That has proven to be quite true.

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Regulators Urge Caution and Full Disclosure on Time-Barred Debt Collection

At a collection conference in Las Vegas, regulators shared some insight into how they view out-of-statute debt. They called for fuller disclosures to consumers, both on legal action (agencies can’t take any) and responsibility to pay (the consumer, in an out-of-stat-debt situation, has none). Will the insight make it into the Policies and Procedures of collection agencies, though?

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Debt Industry Responds to New York’s New Rules for Collectors, Buyers

Now that the industry has had the chance to take a deeper dive into the details of the New York Department of Financial Services’ proposed regulations for debt collection by third-party debt collectors and debt buyers, experts and organizations are submitting their feedback on how to further improve the regulations. Specific questions remain about the correct language to use in consumer notices, and how the rules may impact creditors.