Debt Collection and Overdue Bills

What is a “Debt-Collector”?

Everybody has more bills than they can pay all at once.  And, because Americans have less money socked away now than they did twenty, ten or even five years ago, most of us are just trying to tread water with our monthly bills.  If you keep your monthly payments up to date……you will keep your head above water.  If you fall behind (pay more than 30 days late or have a bill go to collections)…….. your head will drop below the water-line.

Most people have (at least once in their lives) fallen behind on one of their bills.  Once that happens, what comes in the mail is not pleasant.  Usually, there is a letter that warns that if you don’t pay the total balance due, the bill will be ‘sent to collections.’  This means that the company that you owe the money to is going to hire somebody else to hound you for their money.  The company (or person) that they hire is called a ‘Debt Collector’ or a ‘Bill Collector.’   As we all know, Debt collectors are taught that if they are mean, they will do a better job of getting people to pay them.

If you hear from a debt-collector, ask for their address and send them a letter, asking them for some basic information about the debt they say that you owe.  (Click HERE FOR A SAMPLE LETTER)  Fill in the blanks, make a copy for yourself and send it ‘Certified mail, return receipt requested.’  This will only cost a few dollars.  But, it’s the only way to prove that they got the letter.

What many people don’t know is that there are many laws and regulations that describe how the debt collectors must act, when they call you on the phone or send you a letter.  These laws describe how they are supposed to treat you; what kind of bills they are allowed to ask you to pay and how they have to identify themselves. 

The law that has the most to say about debt collections and the behavior of debt collectors is the Fair Debt Collection Practices Act (Often referred to as the ‘FDCPA’ or merely ‘Fair Debt’).   This law does NOT apply to the company that lent you the money.  It DOES apply to the person (or company) that the lender hired to collect the money from you.   If you want to know whether the FDCPA applies to the person calling you on the phone, just ask them: “Are you an employee of the company that lent me the money you are calling about?” If their answer is ‘NO’ then, you know that they are supposed to behave the way the law says a Debt Collector must behave.

If you have any questions about this (or any other) issue; or would like to speak with a counselor, please send an e-mail to [email protected] .  We will put you in touch with a counselor and help you the best way we can!

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What Are Debt-Collectors Not Allowed To Do?

Generally speaking, the law says that people calling you to collect money are not allowed to be mean or abusive to you and have to act (for lack of a better term) like professionals.  If someone who calls you to collect money is abusive; tells you a lie; calls someone other than your spouse (or attorney, if you have one) or calls you at work, repeatedly, take down their name and number and call a conselor for help.  Because the collector just might have violated FDCPA.

Specifically, what does the FDCPA forbid?  Debt Collectors are……  

  • ….NOT allowed to call you before 8:00 in the morning or after 9:00 at night;
  • ….NOT allowed to tell anyone other than your – wife/husband/parent (if you are under 18)/attorney – anything about why they are calling (such as who they work for or that you owe money);
  • ….NOT allowed to lie to you (or mislead you) about anything;
  • ….NOT allowed to speak to you in an abusive manner;
    • For instance, calling you a ‘deadbeat’ is considered to be abusive
  • ….NOT allowed to threaten you;
    • Bill collectors ARE allowed to tell you what they actually plan on doing
    • They CAN say
      • “We are going to sue you” and
      • “We will try to get a judgment against you” and
      • “We can garnish your wages”
    • The CANNOT say
      • “We are going to put you out”
      • “The sheriff will arrest you for not paying us”
      • Your employer will fire you, if you don’t pay.
  • ….NOT allowed to try to collect money that you do not owe:
    • For instance, if they know that somebody else (perhaps a parent or a spouse who has passed away) owes the money – and you don’t – they are forbidden from telling you that you have to pay, or that the debt belongs to you; Or
    • If the bill is ‘too old to collect’, they are not allowed to tell you that you are legally obligated to pay or to threaten to sue you, if you don’t.

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Can A Debt Be Too Old To Collect?

What does ‘too old to collect’ mean?  In Ohio, if a certain amount of time passes after you stop paying on a debt, that debt is legally ‘to old to collect’.  If a debt is too old to collect, you don’t have to pay and a Debt Collector is not allowed to ask you to pay.  But, BEWARE: the debt collector IS allowed to call you and tell you that there is an outstanding balance, hoping that you feel bad enough to pay.  Always ask: “Are you making a demand for payment?”  If the answer is NO, tell them never to call you again and hang up!

The amount of time it takes a bill to become ‘too old to collect’ depends on what kind of bill it was in the first place.  In Ohio, this can be 4, 6 or 8 years.  The table below will tell you how long you have:

Type of Bill   Amount of time before bill becomes “too old to collect”
  • Written contract to purchase goods (such as a refrigerator, a flat-screen TV, or an oven, etc.)
  • [If money is borrowed and the agreement to purchase is the same agreement as the one where money is borrowed.]
  4 Years
  • Separate Agreement to borrow money to pay for an item (such as a car, or a house, etc.);
  • When the money is borrowed from a company that is NOT the seller of the item.
  6 Years
  • Credit Card
  8 Years

The clock starts running to make your debt ‘too old to collect’ when you stop making payments.  For a credit card – the time starts when you last use the card, or whenever you stop paying, whichever happens later.  (Keep in mind: this section only matters if you still owe money.  If you stop making payments, because you paid all that you owe, you don’t have to worry about this)  However, let’s say that you still owe money, and haven’t paid for a long time.  Why is it important for you to see if your debt is ‘too old to collect’?

If your debt is ‘too old to collect’, companies are still allowed to contact you about the debt.  But they are not allowed to ask you to pay.  (this is called a ‘Demand for Payment’) Many debt collectors will call you on a debt that is ‘too old to pay’ and try to trick you into paying something. 

But, don’t be fooled!  If you make a payment on a debt that is ‘too old to collect’, the clock starts ticking again and they can sue you for the entire balance!  That is why it is very important to ask the collector a few questions that will let you know if the debt is, indeed, ‘too old to collect’. Try asking:

  • ASK: “Are you making a Demand for Payment?”
    • If their answer is NO, don’t make any payments and hang up!
  • ASK: “Can you legally sue me for the balance due?”
    • If their answer is NO, don’t make any payments!
  • ASK: “Can you legally garnish me for the balance due?”
    • If their answer is NO, don’t make any payments!
  • THEN – whatever their answers were, write down the name of the person you talked to, the date of the phone call, and the answers that they gave you to the questions that you asked.

If the debt is ‘too old to collect’ companies are not allowed to:

  • Tell you that you are legally obligated to pay; or
  • Threaten to sue you for the balance; or
  • Threaten you with any legal actions could lead to, such as:
    • Garnishment;
    • A judgment being entered against you;
    • A lien being filed against your property;

Knowing if your debt is ‘too old to collect’ is very important, because ‘Debt-buying’ makes it more likely than ever that you will be contacted by somebody who is trying to get you to pay a debt that is ‘too old to collect’.

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What is “Debt Buying”?

Companies that you owe money to are allowed to sell your account to somebody else.  This means that a company that you’ve never heard of (and never did business with) has a legal right to chase you for the same amount of money that you owed the first company – plus interest!  However, they are NOT allowed to:

  • Violate FDCPA;  
  • Add any fees or charges to the total amount due;
  • Increase the interest rate;

Because many debts that are sold are ‘Too old to Collect’, debt buyers may try to get you to make a payment so that they can re-start the clock that allows them to sue you for the balance.   Be Aware!

Many people ask “Is this really MY bill?” when a debt-collector first calls them. Many times it is. But, many other times it is NOT.  The first thing that you should ask someone who calls you to collect a debt (this is especially true if you have never heard of their company) is to send you “everything that they received from the original creditor on the account.”   Here are some other questions to ask a debt-collector, when they call you:

  • Who is the original creditor on the Account?;
  • What is your company’s name and address?;
  • What evidence do you have that the debt you are calling about is really mine?;
  • When was the last payment anybody received from me on this account?

This will help you figure out if the company calling you (and the money that they say you owe) is for real.  Remember: Don’t pay anything until you get the answers to these questions.  And, if you ask the questions and are STILL worried, call a local non-profit counselor and get some help.

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Protect Yourself

  • Demand that the person calling you (or sending you a letter) identify themselves AND the original creditor
  • Demand that they send you a copy of the original contract
  • Demand that they tell you three things about the debt:
    • How much is principal
    • How much is interest; and
    • what is the interest rate that they are charging
  • Send them THIS LETTER asking for basic information about the debt

What’s the law?

The Fair Debt Collection Practices Act (or FDCPA) is the Federal Law that sets the rules for the companies that try to get you to pay money that you owe. 

  • It does not apply to the company that you borrowed from. (if you owe money on a bill to JC Penney, they are not covered by FDCPA. But, any other company that contacts you to collect that money is)