5 On Your Side

Old debts must be dealt with sooner or later

Posted May 22, 2012
Updated June 12, 2012

Times are tough right now. People lose jobs, money gets tight, and bills go unpaid. It's a situation a lot of people are in right now. You might not know this, but it could cost you your car or savings, as much as 20 years later.

Plenty of people think when the collection agency phone calls and letters stop, it means the collections agency gave up and wrote off the debt. That's what Erin Miles thought. She had a tough time years ago. "The company I was working for closed, and I lost my job," Miles said.

She had credit card insurance, which she thought covered payments if she lost her job. "It picked up a couple of payments, and then it stopped," said Miles. With no paycheck coming in, the $3,400 balance was more than she could afford. So, she let it go.

A collection agency sent letters and court orders, which Miles admits she didn't fully understand and ignored. Years later, her credit report showed the bill as "paid." She thought the debt was cleared.

past due bill Debt collectors can come calling years later

Then 10 years after the bill went unpaid, the 2006 Honda Accord she recently paid off, was gone. "I was told the car was taken for a debt," said Miles.

She's not alone in this situation. Eva Williams contacted WRAL about credit card debt from 15 years ago. Back then, she owed $3,000. The 68-year old thought disability insurance paid it. But recently, a collection agency contacted her wanting more than $10,000. For Williams, because of her current circumstances, the company decided to no longer pursue the debt.

That won't be the case for the majority of people. "They could take your car, could take your house. They could take your household goods," warned attorney Travis Sasser.

He says his law firm has seen a significant increase in cases of collections firms going after old debt. They have up to 20 years to pursue payment. Often, collectors watch and wait, until you have assets worth seizing.

"They like to take people's cars," said Sasser. "And they like to freeze their bank accounts." He adds, it doesn't matter if the collection calls and letters stop, or if the debt no longer appears on your credit report, as in Erin Miles' case.

"At some point, something's gonna have to be done with it," said Sasser. "It's either gonna have to be paid off, settled, bankrupted," added Sasser. "You can't just leave it sitting out there, unresolved for the long-term."

And as the debt sits unpaid, it grows.

"The interest and the late fees do add up, and I'm afraid it doesn't really matter what the original amount was," said Sasser. "All they really care about is the present balance that's owed on the debt."

For Miles, that initial $3,400 debt ballooned to more than $6,700. In the eleventh hour, she managed to pay off the debt and get her car back. But now, she has advice for anyone who has debt they can't pay: Don't ignore paperwork, don't assume a bill has gone away, and contact the creditor immediately. "Because once they have your property, there's almost nothing that you can do."

One more thing, Sasser says it is a common misconception that the court system will get involved in helping to set up some sort of payment plan, but it will not. The bottom line: When you can't afford to pay a bill, it's a difficult situation, but it is not a defense.


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  • boolittlek May 24, 2012

    Ike, you are correct about unsecured debt (e.g., credit cards) having a statute of limitations of 3 years. However, for secured debt (e.g., car loans, mortgages, etc.), I have seen cases in which attorneys have successfully argued for a statue of limitations of 10 years if the promissory note was signed under seal. I have not seen the NC statute myself, and I am not an attorney, so I cannot say for sure.

  • NoWayyyyy May 24, 2012

    Good gracious :) I need ALL of your phone numbers in case I ever get into trouble lol :) Gee whiz....how in the world do you know all of this??? I am afraid to even ask :) Ike - all I can say is wow :) You know your stuff!

  • elcid liked Ike May 24, 2012

    The 7 year figure is how long a negative trade line remains on your credit report. Few states extend the statute of limitations on open-ended accounts (credit cards - which is what usually gets people into trouble) beyond 6 years. The overwhelming norm is 3 or 4 years. NC is 3.

    What this means: Once that 3 year clock has run out, the creditor no longer has a cause of action against you. It CAN still bring suit, but you are able to show up in court and assert the expired statute as an affirmative defense. When you do so, the court will rule in your favor (again, assuming you haven't screwed up and reset the clock.)

    The negative trade line will remain on your credit report for 7 years from the date of default, at which point it drops off and it's as though it never existed.

  • elcid liked Ike May 24, 2012

    "Clark Howard always says the statue of limitations (Cramer-speak) is 7 years, then they can't come after you. IF you do like Ike says and don't start the clock over from scratch. Is this different for NC?"

    NC's statute of limitations with regard to debts is as follows:

    Oral contracts - 3 years

    Written Contracts - 3 years

    Promissory notes (i.e. a written contract that includes a specific promise to pay, specified interest rates, a repayment schedule and consequences of default. Most installment contracts, like cars, mortgages etc. fall under this heading) - 5 years

    Open-ended accounts (credit cards ...) - 3 years

    The statute begins to run at the point when the creditor / injured party has cause of action against you, which means that that point can vary depending on the terms of the contractual agreement you entered into, but generally speaking it is the point at which you defaulted.

  • common tater May 24, 2012

    Clark Howard always says the statue of limitations (Cramer-speak) is 7 years, then they can't come after you. IF you do like Ike says and don't start the clock over from scratch. Is this different for NC?

  • elcid liked Ike May 24, 2012

    How, it IS worth noting that Republicans in the General Assembly are trying to overturn this policy and thereby allow wage garnishments of at least 15% in repayment of consumer debt, most recently with House Bill 30, sponsored by Rep. Moore (R-District 111), and co-sponsored by Reps. Cleveland (R-District 14), Dixon (R-District 4), Hilton (R-District 96), Jones (R-District 65), Randleman (R-District 94), Sager (R-District 11)and Warren (R-District 77). If they succeed, debtors in NC could find themselves being subjected to wage garnishments for their consumer debts.


    If you find this problematic, contact them and express your disapproval.

  • elcid liked Ike May 24, 2012

    "how would anyone even know a suit had been filed? or wouldn't it be filed by a creditor in their state? so someone owing money wouldn't be able to travel there to attend a court proceeding correct in order to contest something like this."

    Third party debt collectors are required to bring suit against you in the state in which you live.

    I will say this: if you have decided not to repay a debt, do NOT, under any circumstances, discuss it with the collector or make any sort of promise to pay / make a payment. Doing so restarts the time period for the SOL and can subject you to litigation that you would otherwise be protected from. If the period is still running, you do run the risk of subjecting yourself to litigation, but it is important to keep in mind that NC specifically bars the garnishment of wages in repayment of judgments for consumer debt, so absent seizing excess personal property in excess of the allowable exclusions, there isn't much that a collector can do in NC.

  • NoWayyyyy May 24, 2012

    thanks Thomas :) whew you guys got it going on! I think I will just continue on paying my bills on time, then I won't have to worry over all of this (and keep the rest of my money under my mattress :) Ya'll enjoy your long weekend!!

  • goobnav May 24, 2012

    No surprise this article got buried in a hurry. It is nothing but the Corporate Banksters using their controlled media sources to fear us into paying something that in no longer legally binding.

    If you are not served the court papers and given a chance to legally fight seizure of personal property, that was not used for collateral and, the Debt Agency takes it, guess what, that's theft. Nor is it addressed that any agressive tactics used to collect a debt are illegal and, if used, release the debtor from collection of the debt and any charges that go with it.

    This article is a perfect example of who really is running the world as we know it. The Banksters and their Corporate minions in the Media. Keep posting lies WRAL and, tell that attorney he needs to turn his license to practice due to giving illegal advice.

  • dollibug May 24, 2012

    This is a matter of interpretation....and just how people look at a law....no one knows what the law truly states....attorneys do not know either....which is why everything is such a mess....attorneys are supposed to know...and they want you to think that know....when all they do is guess....like the rest of us....