Advice if Creditor is Trying to Collect on a 13 Year Old Debt
- Start by learning the statute of limitations for debt issues in your state.
- Learn your state's collection laws.
- Consult with a lawyer if you have specific questions.
Can creditors try to collect a debt that is 13 years old?
Thirteen years ago, I purchased a dinning room set for $1,300 and paid by check. I was married and working, and never really balanced my checking account. Today I received a letter with a copy of my check and they say they failed to cash my check and now want the money. I am now 72 years old and on Social Security, and do not have the money. Do they have a legal claim after 13 years?
I would be surprised if the lender has a legal claim to enforce the purchase agreement you entered into when you bought your dining room set 13 years ago. Every state has a statute of limitations which limits the amount of time during which a creditor can file a lawsuit against a debtor to enforce an unpaid obligation. For example, California law gives creditors four years to sue for the enforcement of a debt; only a couple of states, Ohio and Kentucky, have a statute of limitations longer than 13 years. Therefore, the company trying to collect on this old debt probably has little ability to legally force you to pay the check it failed to cash 13 years ago. Read this Bills.com resource to learn more about statute of limitations for debt.
Even if this creditor somehow were able to proceed with a lawsuit and obtain a judgment against you for this old debt, it would likely be difficult for the creditor to enforce its judgment. Like most other forms of retirement income, Social Security benefits are generally exempt from garnishment by judgment creditors, so there is little chance that the creditor could force you to pay it from your limited income. Given the age of this debt and your limited income, I think it highly unlikely that this creditor will continue trying to collect this debt. However, if you begin receiving collection calls, you can send a cease and desist letter to the creditor, which should help stop the calls.
You may wish to respond to the letter you received, stating that the statute of limitations for the enforcement of this contract has expired, and that the collector must cease all collection activity. In addition, you may want to detail your financial situation, explaining the fact that in the thirteen years that have passed since this transaction was originally conducted, you have retired and are living on a small social security benefit, and thus are unable to pay even if you were liable for the debt. You may wish to consult with an attorney about this matter and have him/her respond to the collector on your behalf. Given your age and limited income, you may qualify for low-cost or even free legal representation through your local Legal Aid office. Your state or county bar association should be able to advise you of available low-cost legal resources for seniors in your area.
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In all, I think that you have little to worry about in this situation. The debt is almost certainly past the statute of limitations, and even if it were not, your income is likely exempt from garnishment. You should probably reply to the letter and then put this out of your mind, as you will likely never hear from this creditor again. I wish you the best of luck in resolving this claim, and hope that the information I have provided helps you Find. Learn. Save.
Did you know?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Each state has its rate of delinquency and share of debts in collections. For example, in Alaska credit card delinquency rate was 2%, and the median credit card debt was $518.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.
If the answer to both of these questions is "no," then the creditor has no legal claim to your mother's property. The court erred when it allowed the judgment-creditor to place a lien on her property. Consult with a lawyer who has property law experience in your state to discuss filing a motion to have the lien removed from the title.
If your mother was a co-signer, or your name is on the house's title, then you have an entirely different situation. If either of these is the case, you need to attack the plaintiff's failure to give you adequate notice of the lawsuit. Consult with a lawyer to discuss filing a motion to vacate the judgment. If this motion is granted, then you can file a motion to have the lien lifted from the property.
Alternatively, hire a lawyer to contact the judgment-creditor to negotiate a lump-sum settlement that removes the lien.
I owed money on a credit card I couldnt pay and they went to court and got a judgement and not sure its a lien on my property, but Im refinancing and the lender brought it up and is going to check it out. Last time I heard from them was 2013. Thought the credit cards were unsecured so not sure what to do. Just wondering, what I can do? Thank you.
Linda, credit cards are unsecured (aside from secured credit cards). That means when you defaulted on the debt the creditor couldn't come and take any collateral, as there was no collateral securing the loan. Instead the creditor sued you and got a judgment. Judgments can be collected on by wage garnishment and attaching the judgment-debtor's bank account. A lien is another tool. The lien is technically on you, but it encumbers property you own. The lien prevents you from refinancing, selling, or transfering the title to the home.
There are not a lot of options. You can pay the lien off from equity, likely needing to structure it so the funds go straight from the new lender to your judgment-creditor. Otherwise the creditor will not release the lien.
If the creditor is not aware of the application to refinance, perhaps you can negotiate with them, as it has been a long time they have gone without collecting. Maybe they would take 35% of what you owe, if you approach them strategically. You would have to do this before the loan. Once they know you want to pull out equity, they will want their full share, knowing they can impede your goal if you don't pay them.
I don't know the exact words to use. Assuming you can get the money together, you could say that you have always paid your debts, it has been a sore spot that you were unable to pay them, and you have come into enough money to try and clear the debt. They can say no, but if they are willing to settle, get the agreement in writing that the lump sum you give them will clear out the debt entirely, bringing it to $0, and closes the matter.
Good luck. Please report back on how things go for you.