Debt Collectors find yet another way to collect on debt you don’t owe

Recently we wrote about how debt collectors convince people to pay the debts of dead relatives — debts for which they have no responsibility: Debt collector scams: new lows to take your money.  Now, according to the Wall Street Journal, they have found a way to get you to pay debts that are beyond the statute of limitations.

Every state has some limit on the length of time, ranging from three to ten years from the last loan payment, during which debts can still be collected under the law.  Once your debt has passed this time limit, creditors have no legal recourse, and they write off the debt.  But some debt collectors buy this debt and work with a bank to tie a credit card to your making payments.

It’s hard to get by in life without a credit card, and if you have had debt problems you might not be able to get one.  So it may be tempting to be told that if you make a payment on an old debt, you would be eligible for a credit card.

The problem is that once you make a payment on the old debt, the statute of limitations starts running all over again and they can reinstate collection efforts on the entire amount!  They may even set you up for an automatic payment plan with money being charged to your account every month.

So, you get a low limit, high interest, high fee credit card and open up a while new collection campaign on debts that would be past the statute of limitations.  You could have forgotten about them!

If you’re in this situation, look first at a debit card or a prepaid credit card. See our main article on Credit Card Types.

Comments are closed.