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Bankruptcy Law Blog

Monday, December 9, 2019

Does Old Debt Go Bad?

Have you ever poured some milk into your coffee only to see it curdle? It’s an early warning sign that your milk is going bad. Too much acid is building up in it and it’s about to spoil. 

Like milk, debt can also get old and go bad. After a certain amount of time as passed, creditors can no longer sue to collect past due debt. The amount of time it takes for the statute of limitations on collection suits to pass differs from state to state. In Alabama, the statute of limitations for debt collection is either three years or six years depending on the type of debt.

What happens after the statute of limitations has passed and a debt goes bad varies. Even though a creditor is no longer able to file a lawsuit seeking to collect, they can still try to get paid. They can continue to send you notices, and call your house, and otherwise pester you so long as they don’t violate any laws on debtor harassment. 

How Is Old Debt Like Old Milk?

However, many creditors will treat old debt like milk that curdles. They will effectively dump it down the drain by writing it off as a loss, and moving on. You won’t get any notice that this has happened because they would love for you to still pay them, but they won’t be expecting you to do so. 

Some creditors find a use for bad debt, just like clever chefs do for milk past its prime. They sell it off to third party collection agencies for pennies on the dollar. The collection agency can and will continue to pester you, but they cannot sue you if the statute of limitations on the debt has run. 

If you are contacted by a third party about an old debt, be careful. Do not confirm to the collector that the debt is yours. Taking responsibility for the debt may make you liable again. Instead, do what the Federal Trade Commission advises, and ask the person contacting you for their name, and their company’s name, address, and telephone number. If the collector will not give you this information, they may be a scammer. 

Even after a debt collector gives you their contact information, refuse to discuss any debt the collector claims is yours until they provide you a written "validation notice." These notices must include the amount of the debt, the name of the creditor you owe, and your rights under the federal Fair Debt Collection Practices Act. From there, you can decide if the debt is valid and what to do about it. 

If you are sued over a debt that is too old to collect through the courts, you may think you have a slam dunk case. But you still need to show up and provide evidence that the debt is outside the statute of limitations for collection. Failing to show up and defend yourself may cause the judge to rule in favor of the creditor. This is called a default judgment, and it is hard to overturn unless you have a very, very good reason for not showing up to court. 

Contact Padgett & Robertson Today

If you have questions about old debt or debt collection in general, don’t hesitate to contact our firm. We have many years of experience in this area, and may be able to help you figure out your next steps with just a simple phone call. 


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”