Protect Yourself Against “Zombie” Debts
I hope you are doing as well as possible during these challenging times. For this week’s newsletter, I want to focus on old “zombie debts” and the steps you can take to protect yourself.
Let’s start off with the basic premise that every debt has a time limit. In the law, this is called the “statute of limitations.” If the debt is past the statute of limitations, the creditor can no longer sue you over the debt. This only makes practical sense because the more time that goes by, the less reliable the creditor’s records will be. Consumers lawyers like myself often refer to time-barred debt as “zombie debt.”
Another thing to keep in mind is that most time-barred debt is bought and sold many times. Over time, many fees may be added to the debt and today, the amount may look unrecognizable to you.
While a debt collector may not sue on a time-barred debt, the collector can still call you and send you letters to collect on the debt.
Here’s a few things you can do to protect yourself against collection on “zombie” debt:
Determine Whether Debt Is Time-Barred
In Florida, most of the consumer debts, such as an old credit card debt, will be subject to a four or five-year statute of limitations, depending on the particular facts of your case. Florida law has a four-year statute of limitations for oral agreements and a five-year statute of limitations for written agreements. See Florida Statute 95.11. Most of the time, the statute of limitations will begin to run from the time you defaulted on the debt. Let’s say you defaulted on January 1, 2015 and you haven’t made any payments since then. That debt is almost certainly time-barred.
Review Your Collections Letter Carefully
If you received a collection letter recently on a debt that may be time-barred, review the letter carefully. Sometimes the collector will even state in the letter that a lawsuit would be time-barred. There may be other important information or even misrepresentations in the letter.
Check Your Personal Records
Never simply assume that the information provided by the creditor or debt collector is accurate. Compare the information with your own records to determine if the information being provided to you is accurate. For example, the collector may send you a letter stating that your default date is more recent then it really was in an effort to work around the statute of limitations.
Think Twice Before Making A Payment
Under Florida law, if you make a payment on a time-barred debt, that will re-start the statute of limitations. See Florida Statute 95.051(f).
Send a Cease and Desist Letter
Under the federal Fair Debt Collection Practices Act, you have the right to mail a certified letter to the debt collector stating that you do not intend to make any payments and to demand that the collector cease communications with you with respect to the alleged debt. Tip: type or write the certified tracking number at the top of the letter before mailing and save a copy of the letter along with the certified mail records (in case the collector later claims to have not received your cease and desist).
Include Statute of Limitations In Your Response
Under Florida law, statute of limitations is what we call an “affirmative defense.” This means it is a defense that you need to put down, in writing, in your response to the lawsuit. For example, if you are sued on an old credit card contract and you believe the case is time-barred, you could say something along the lines of “As a first affirmative defense, Defendant states that this action is barred by the operative statute of limitations, specifically Fla. Stat. 95.11(2)(b), as more than 5 years has passed since the default on the subject written credit card agreement.” If you do not put this down in writing, the defense will be deemed waived.
I hope the information in this newsletter may be helpful to you and your family. Thank you for reading! Have a wonderful Sunday evening.
Ryan C. Torrens
Consumer Litigation Attorney
Disclaimer: The information provided in this email does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this email is for general informational purposes only.