Collecting on debts that are statutorily barred

Historic City News has previously exposed third party debt collection practices that clearly cross the line of legitimate business transactions with consumers, to the point of misstating the character and legally collectable amount of accounts — especially by bulk purchasers of delinquent debts and collection companies like Asset Acceptance LLC.

Many national credit grantors, whose loan customers have found themselves out of work, or otherwise unable to repay their debts on time, are willing to liquidate their receivables by selling them, sometimes for pennies on the dollar, to debt buyers in exchange for the right to collect the “full balance” owed.

Armed with the power to enforce recovery of these alleged debts, a renewed collection effort is begun — not by the original creditor, but by the current holder of the debt. And, if the “second round” of collection activities fails, nothing is to stop the debt holder from selling those “assets” to other similar companies for tertiary collection activity.

The names of some of the lenders who sell their receivables might surprise you, and include some of the country’s largest bank institutions, like Citibank and others.

Although the Federal Trade Commission, who enforces the provisions of the Fair Debt Collection Practices Act and other federal consumer protection regulations, has brought actions against companies like Asset Acceptance because of their collection practices, the opportunity for profit appears to be so great as to induce these companies to modify their procedures just enough to get by — until the next consumer complaint is filed.

In the meantime, the consumer could be dunned under the Citibank name, or the name of the current debt holder (whatever entity that might be at the moment) and the cycle theoretically could go on forever until the final holder of the “hot potato” gives up, or can’t find another “investor” willing to buy the debt for yet another round of phone calls, collection letters, or further collection activity.

Recently, it came to the attention of our local news desk reporter that a St Johns County woman was receiving collection letters; attempting to collect a debt for purchases made at The Home Depot. The credit for the purchases was extended by Citibank, through a Home Depot Credit Card, according to the informant.

She told Historic City News that her husband made the purchases before his business collapsed — over ten years ago. An accurate accounting of credits for merchandise that was returned to the store was never forthcoming, our source claims. A series of additional charges were added to the disputed balance of the account; including late fees, collection charges, “penalty interest”, and other adjustments that confused the issue only further.

The customer says that after Citibank collectors became frustrated in attempting to reconstruct what had actually occurred and to figure out the proper credits that were due, they made the decision to forward her account to Asset Acceptance LLC — but not before two other collection agents went through similar attempts to collect the debt that may be doubtful and whose accuracy was, at best, in dispute.

Soon after the first of this month, we are told that a letter was delivered to the customer offering a “settlement” of the disputed Citibank, Home Depot account — not an accounting of charges and credits which might have resolved the dispute to everyone’s satisfaction in the first place; but, a settlement of the full amount Asset Acceptance claims was due less an 80% discount.

Sounds inviting, and reads:

May 1, 2013

Dear John Doe:

We would like to help you eliminate this debt with us. Your current balance is $7710.85, but if you pay us $1542.17 by 05/31/2013, we will close your account and consider it paid. That’s an 80% discount or a savings of $6168.68! Why wait? Act now!

But, there is a problem. This debt is statutorily barred — because of the amount of time that has elapsed between the date it was last active and the date of the attempted collection. This does not mean that it is “illegal” to attempt to collect such an old debt; but, if any disputes remain, the creditor cannot file a lawsuit at this late date to enforce collection of the amount they believe is owed.

And, what’s worse, if the customer is enticed to make even a small partial payment on the debt, or to negotiate a settlement, that action, on the customer’s part, could re-start the statute of limitations, opening the door for the creditor to bring such a legal action. “We are bill collectors and we are here to help you,” right. It pays to read the fine print.

In the body of the two page collection notice and settlement offer, in italic type at the bottom of a set of federally mandated disclosures, Asset Acceptance LLC wrote, “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency.”

If you have a complaint about the way a third-party is collecting your debt, please contact the FTC online at www.ftc.gov; by phone at 1-877-FTC-HELP; or by mail at 600 Pennsylvania Ave., N.W, Washington, D.C. 20580