• Consumer Protection Law and Advocacy — Chicago, IL

Handling Old Unpaid Accounts

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Handling old unpaid accounts continues to cause a lot of confusion for consumers.  Often times, after a debt is “charged off” by an original creditor, another entity will buy the debt.  Companies that buy old debts — called debt buyers — will send collection letters encouraging you to pay.  These letters will offer special deals and settlements if you “pay now.”  But watch out for these tactics.

There is a limited period of time by which an unpaid debt can be sued on.  This time period, known as the “statute of limitations,” can vary from state to state and depends on the type of account. For example, in Illinois, there is generally a five-year statute of limitations to sue on a consumer credit card debt.  And if your vehicle was financed and repossessed, there is generally a four-year statute of limitations in Illinois to sue on any deficiency balance from the vehicle loan.

Why is this important?  Because if you make a payment in response to a collection letter, even if it’s only a $5 or $10 payment, you re-start the statute of limitations.  If you can’t or don’t intend to pay the whole debt, you may make it easier for the debt buyer to sue you on that whole debt.  And this can lead to court fees, possible judgments, and garnishment or citation proceedings.

Worse, if it’s a debt you don’t recognize, making a small payment thinking the problem will go away can obligate you on a debt that wasn’t even yours to begin with.  This so-called “zombie debt” was the subject of a fabulous John Oliver segment (watch it at http://www.rollingstone.com/tv/news/watch-john-oliver-forgive-15-million-in-debt-20160606) and multiple news articles, including this one from the Guardian: https://www.theguardian.com/money/us-money-blog/2015/nov/08/zombie-debt-is-menacing-america-and-mine-even-has-a-name-kathryn.

If you have any questions about collection letters on old or unrecognizable debts, talk to an attorney BEFORE you pay.



Stacy M. Bardo is a seasoned litigator, with 20+ years of experience prosecuting consumer cases in state and federal court. Stacy founded Bardo Law, P.C. to provide effective, zealous legal representation to consumers, while maintaining empathy and compassion for her clients.

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