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Question:
DEC 12, 2011

Old Judgment Collection

My wages are being garnished for a debt that is over 16 years old. How did this happen? What about the statute of limitations?

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Bill's Answer: Bills.com Resident Expert

To obtain a legal wage garnishment, this creditor (or its attorney) had to obtain a judgment against you, which means that it had to file a lawsuit and, at least in theory, serve you with a copy of the lawsuit with sufficient notice to allow you to respond, initially with a written response, and subsequently by appearing in person or by attorney in court.

The facts in your question make me think one of two events transpired. My first guess is a judgment was entered against you many years ago. This lawyer is now working to collect on an old unpaid judgment, which was entered against you at some point soon after the defaulted car loan. Perhaps you were too busy with the divorce or other things going on in your life to even realize that you had been sued at the time. Perhaps you were never given adequate notice of the lawsuit and judgment.

My second guess is it is possible, though unlikely, the lawyer did not have a judgment and sent your employer a notice of garnishment, which your employer honored. Such a practice would be illegal on the part of the lawyer and negligent on the part of your employer to follow an illegal garnishment order. Again, this sequence of events is pure speculation on my part, but it also fits the facts you provided.

There are three reasons I believe the first scenario I outlined above -- it is an old judgment you did not notice or recall -- is close to accurate. First, the statute of limitations in Florida for written contracts, such as an auto loan, is five years and the statute of limitations for the collection of a judgment is 20 years. I sometimes see debt purchasers pursue people for old non-judgment debts, but rarely for ones this old, and almost never with the involvement of an attorney because no legal action can be taken to enforce such debts. The only reason that I can think that this attorney would be contacting you about this debt would be if it were an old judgment.

Second, the speed with which the attorney filed a wage garnishment with your employer leads me to believe that the creditor already had a judgment against you. The court process takes a fair amount of time, and it would be nearly impossible for a creditor to file a lawsuit, obtain a judgment, and begin garnishment within a month, the amount of time that has passed since you received the demand letter from the creditor's attorney. However, if the attorney already had a judgment and had the garnishment documents drawn up, the attorney could have sent them to your employer immediately upon receiving your response refusing to pay the amount owed. This second scenario would better explain how this attorney was able to start garnishing your wages in such a short amount of time.

Third, the amount of the debt, and the discrepancy between the $7,000 claimed in the letter and the $23,000 demanded when you called the attorney's office, makes me think that this may be an old judgment. The original judgment amount may have been for $7,000, which is why that amount was quoted in the attorney's recent letter. However, Florida law allows judgment creditors to charge 10% interest on unpaid judgments, which is why, after 16 years, the balance owed has increased so much. The 10% interest alone would account for over $11,000 of the additional money the creditor claims you owe, and with attorney's fees and court costs, I can imagine how this debt could have balloon from a $7,000 judgment 16 years ago to a $23,000 debt today.

Recommendation

The important question is what can you do about the garnishment.

Start by learning if a judgment was filed against you. The only way to know for certain is to contact the clerk of the courts in county where you lived at the time a judgment would have been entered for this debt. Also, if you contact the attorney's office and ask if their client has a judgment against you, they should be able to tell you and may provide you with a copy of the document.

Once a judgment has been entered, it can be difficult to prevent a creditor from proceeding with garnishment, bank account levies, or other means of enforcement. (See the Bills.com document Florida Collection Laws to learn more about your rights and liabilities.) However, one of the few ways judgment enforcement can be stopped effectively is for the judgment-debtor to file for bankruptcy protection.

If you qualify to file a Chapter 7 bankruptcy case, you may be able to discharge the debt entirely. It is never too late to seek bankruptcy protection on an outstanding judgment. The fact that so many years has passed since this judgment was issued should have no effect on its dischargeability in bankruptcy. Consult with an experienced bankruptcy attorney in your area to learn if filing for bankruptcy protection is a viable option in your case.

Visit the Bills.com bankruptcy page for more information about bankruptcy and how it may be able to help you.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Comments (25)


William R.
Marietta, GA  |  April 13, 2011
I have been recently contacted by a collection agency here in Georgia of a past due account from 14 years ago. I know that I paid it at the time of purchase while living in the midwest however I know longer have the documentation to prove that it was paid. What do I do now? They will not give me information as the "burdon of proof is upon the debtor". Thank you
Bills.com
April 13, 2011
Under the Fair Debt Collection Practices Act, the burden is not on the debtor. And, as a practical matter, I doubt there are more than a handful of people in the US who have proof of payment on their 14-year-old debts, but I digress.

Debt collection is governed by a federal law Section 809(b), 15 U.S.C. § 1692, which is also known as the Fair Debt Collection Practices Act (FDCPA). When a collection agent contacts a consumer the first time regarding a debt, the consumer has 30 days after receiving the initial communication to request a debt verification, which is sometimes called debt validation. Five days after the initial communication, the collection agent must give notice to the consumer that he or she has the right to verify the debt. A collection agent need not respond to a request for verification if the consumer sends the request after this 30-day period.

Validate the debt. Chances are, the collection agent has a bare account it cannot validate.
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Jason S.
Morganton, NC  |  April 19, 2011
I received a letter from BB&T stating that they reviewed my request. The letter Lexington law sent. It says everything was correct as reported when investigated. Also said the bank is unable to process my request to alter my credit report at this time. Does that mean they still have the judgment and NCO is just trying to collect for them? Who should i send my request for pay for delete? Please help.....!!!!!
Bills.com
April 19, 2011
Talk to a customer service representative with Lexington Law about the creditor's response to its letter, and what your options are for your next steps. Keep in mind that my window into your situation is small, and Lexington Law knows far, far more about the original debt, the resulting judgment, and your credit report than I do.

If BB&T sold the debt to NCO, then negotiate with NCO about a pay for delete.
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Jason S.
Morganton, NC  |  April 19, 2011
I would do that but i canceled my account with them due to not being able to get ANY responses from email or phone in relation with my questions. They obviously sent the dispute letter to BB&T when NCO is the one contacting me about the judgment. On my credit report it just says BB&T judgment. Do i need to write NCO and see if they have bought it or just trying to collect for them? I just need to know where to go from here. After that i think i can manage?
Bills.com
April 19, 2011
In general, whenever a collection agent contacts you about a debt you supposedly owe, validate the debt to learn if the collection agent has the legal right to collect the debt. Validating the debt shows the consumer the agent can collect the debt and the debt is valid.
Jason S.
Morganton, NC  |  April 06, 2011
Hi i have a few questions. I have a old judgment dating back to 2005. There is a charge off from where i guess BB&T sold the car which i was never informed of but didnt matter due to a aftermarket warrenty did not want to cover internal damage done only after a month in my possesion. They sold the car for 11,800 and decreased the amount i owed. I believe the amount intially was 16,000. My question is i attained lexington law to do my negotiation to pay back remaining balance but then they tell me to seek a local attorney when supposedly they asigned one to my case in charlotte,nc and i live in morganton. I cant get in touch with him or lexington. It seem i am going to have to call the collector and try to negotiation to pay back .50cents on the dollar to what i owe now which is 8,551 after late fees. Do you think i could get them to do the pay for delete on the 4,724 which would be .50cents on the dollar from what is owed now 8,551. If i do get them aggreed to do that does that take the charge off, civil judgment, and the debt to BB&T off my credit report. They are scheudled to come off in 2013 but i am just trying to ensure that all of these accounts are off my credit. I plan to put 2,000 down on the 4,724 i would be paying back for .50cents on the dollar of 8,551. Any help would be very much appreciated so i will understrand how to get all accounts of my report by paying the amount left over after they sold the car.
Bills.com
April 06, 2011
My answer assumes that BB&T repossessed the vehicle six years ago and sold it at an auction, which resulted in a $4,200 deficiency, plus some miscellaneous costs of selling the car, including the auction fee, towing, and so on. The deficiency balance ballooned to $8,551 thanks to the miracle of compound interest. To be fair, you should pay some interest, but 12.5% (according to my calculator) strikes me as too steep. Offer the collection agent 50 cents on the dollar. Explain your alternative is to look into bankruptcy, and if you follow that path to its logical conclusion the collection agent will get zero. If you reach a settlement agreement, ask for a pay for delete.
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Jason S.
Morganton, NC  |  April 06, 2011
Yes they repossessed the car. I told them to pick it up because I was not paying due to what happened. I have not spoken to them in six years. I will call and try to talk to the creditor to get the 50 cents on the dollar. The bankruptcy you were talking about. Is that what you want me to tell them that i will do if they don't come to some agreement on the pay for delete? I am pretty "dumb" when it comes to this. I just want to take care of it because i was young then and realize what good credit means in today's society. Thanks for all your help!!
Bills.com
April 06, 2011
Think of it this way: When negotiating with a collection agent, you want a carrot and a stick. The carrot is your offer of 50 cents on the dollar. The stick is the bankruptcy. You do not want to use the stick, and the collection agent does not want you to use the stick, but you want the stick handy just in case the collection agent becomes unreasonable and will not accept anything less than 100 cents on the dollar.

Talk to a lawyer who has experience in bankruptcy law to learn if you qualify given your financial circumstances. If you do qualify, take notes and write down exactly how much the collection agent will get in a bankruptcy, how much it will cost you to file, and where the courthouse is, and so forth. You want to write down these details so that when you talk to the collection agent about the settlement amount and the pay-for-delete, he or she believes you researched this option fully and are not bluffing.

The pay for delete and the 50-cents on the dollar settlement offer should be discussed at the same time. I would be surprised if you get any resistance on the pay for delete — it costs them nothing. The hard negotiating will be on the price. Start at 35 cents on the dollar to give yourself some negotiating room.
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Jason S.
Morganton, NC  |  April 06, 2011
Well see as it is i really don't have the extra money to pay to see attorney to talk that matter over. Do you think it would be almost as good if we can't reach a reasonable amount for payback to just threatening with filing for bankruptcy. Also what do you think would be a fair price for the pay back and what wouldn't be a fair price.
Bills.com
April 06, 2011
Most lawyers will not charge for an initial consultation. Call around and ask. As for the amount, are you dealing with the original creditor BB&T, or a collection agent? If the company that repossessed your vehicle sold your collection account, it did so for pennies on the dollar. You have a lot more price flexibility if you are dealing with a collection agent that has little expense tied to your account. On the other hand, if you are dealing with the original creditor, it will tend to be harder nosed in its negotiating.
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Jason S.
Morganton, NC  |  April 07, 2011
No I am not dealing with BB&T. NCO Financial has the judgment now. I plan on waiting till I get my wedding paid for and possibly save some money up to put with the 2,000 I have just for this issue. It seems it would be better to negotiate with the money up front might make things go smoother. Also is there any way I could attain you services to maybe do my negotiation for me. I am not a very good speaker. I would be willing to pay you. I don't know if that would be possible. Thanks for all your help so far. One more thing what would be the odds of something being wrong on the judgment and it being deleted from where Lexington has sent dispute letters to the judgment and the charge off. I am guessing not very well. Thanks
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Jason S.
Morganton, NC  |  April 07, 2011
The account is not through BB&T now, it's through NCO Financial. What are the chances of something being wrong on it and being deleted from the dispute letter Lexington law sent them? I am guessing not good. Also would it be better to save up and the full amount of the 50 cents on the dollar when negotiating the price. Thanks again for all you help you have been 10 TIMES more helpful then Lexington law.
Bills.com
April 07, 2011
Regarding negotiating, work with a debt settlement company, consult with an attorney, or read the Bills.com resource Debt Negotiation and Settlement to learn how to negotiate the debt yourself.

You are wise to save a lump sum to work with when you start negotiating with the collection agent.
Bills.com
April 07, 2011
A dispute letter is effective when an original creditor or collection agent (in this case NCO Financial) fails to respond to the dispute in a timely manner. Sometimes the original creditor or collection agent fails to respond out of laziness or disinterest in the account. Other times, the original creditor or collection agent does not realize they hold the rights to the account. Predicting the behavior of original creditors or collection agents is something I do not do because they behave so unpredictably.
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Jason S.
Morganton, NC  |  April 07, 2011
OK sounds great and thanks for all your help. I do have one last finally question and would help me decide what to do next. I have done some reading and i have come to wonder if paying NCO for a pay delete will delete the judgment and charge off? If i get they to agree does both of the accounts go off seeing that it would be paid in full including the 11,800. I am unsure and would like to know for sure what will happen to account or accounts when doing th pay for delete. Thanks as i am so sorry for a the question just very determind to solve all these issues once.
Bills.com
April 07, 2011
The answer to your question will come from your negotiations. If you negotiate a pay for delete, insist NCO remove all derogatories related to the debt.
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Jason S.
Morganton, NC  |  April 07, 2011
Finally can you give me some insight on this letter i have wrote to request the pay for delete....Thank........Dear Collection Manager: It has come to my attention through the credit bureaus that you claim I owe a debt to your agency. I can save us both some effort & time by "Settling the debt out". Below is my offer. It is not a renewed promise to pay nor does it constitute any agreement unless you sign and return it. Note, I have not agreed yet that this debt is mine and have the option to seek further proof from your agency of this debt. It has also come to my attention that your agency regularly purchases debts in the course of doing business. Suffice to say, you hold all the rights to report the debt to the credit bureaus as you see fit and you can change that listing at any time as the source reporting the debt. I am sure you are aware of my right to dispute this debt and request full proof of the obligation. Paying this unverified debt to you means little to me if we cannot mutually agree that you will report the debt as mentioned below. While I realize that your purpose is to collect debts as a collection agent, I am also aware of what a paid collection would look like on my report, which is not favorable. That being said, I have concurred through the bureaus that you have the absolute right to report this debt as you see fit or not report it at all. Please do not quote to me that you are unable to change the listing or I will be forced to cease and desist our communication and request full lengthy verification of the debt. My goal is to arrange a term acceptable to both us since this debt is questionable. I will pay your company the amount of .25 cents on the dollar bringing it to 2137.75 as payment in full for the full satisfaction of this account. Upon receipt of the above payment, your company has agreed to change the entry on my credit reports to Paid and delete them from all three credit bureaus (Experian, Equifax, and Transunion). You further agree to remove all previous notation of delinquency. If you concur with these terms please acknowledge with your signature and return it to me. You agree the terms herein are confidential and you have the authority to make such decisions. No payment will be made without written confirmation. Upon receipt of this signed acknowledgment, I will immediately mail you funds priority mail. This is not a renewed promise to pay but rather a restricted offer only. If no terms can be met, no new arrangements will be made and the offer will be void. Name of Creditor: Signature of company officer: Date: Sincerely,
Bills.com
April 08, 2011
In my opinion, the letter accomplishes what you seek:
  1. It does not acknowledge responsibility for the debt
  2. It is an offer of settlement for a clear term
  3. It does not reset any statute of limitations
  4. It states the collection agent must delete the account in question from the big three consumer credit reporting agencies

Good luck!

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Jason S.
Morganton, NC  |  April 09, 2011
I have one finally question. How would i know if NCO bought the debt or has been assigned the debt? Since there was never any money paid on it but one payment in 6 yrs. i would think they would have sold it to NCO but not sure. I don't want to try to negotiate with NCO when if i should be just dealing with the bank. Any thoughts on this? Thanks so much you have been great. I feel very confident i can take care of this as long as i know who i need to deal with.
Bills.com
April 09, 2011
Validate the debt to learn if the collection agent has the legal right to collect the debt.
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Jason S.
Morganton, NC  |  April 09, 2011
That would be what lexington law did when they sent the dispute letters or would i need to send something to NCO? They supposedly sent the letters out on march 23. When should i recieve something from them or how long do they have to respond. What if lexington law didnt send the letters and ripping me off?
Bills.com
April 09, 2011
I cannot speak for Lexington Law, but it is my understanding Lexington disputes derogatory items on a consumer's credit report, which is a different process and accomplishes a different aim if successful. A credit report is just a report (like a story in a newspaper), and its contents are not sufficient to prove the liability for a debt. A debt validation establishes who owes what and how much.
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Jason S.
Morganton, NC  |  April 16, 2011
The 23 of april will be 30 days since lexington law sent the dispute letter disputing the judgment. I havent recieved anything. Dont they have 30 days to respond and if not its deleted of the record. If i dont hear anything from them what should i do to delete it from my record?
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