Debt Collectors Who Sue You After The Statute Of Limitations Expires Violate The FDCPA


HAVE YOU BEEN SUED BY A DEBT COLLECTOR (DEBT BUYER) AND WONDER WHAT THE STATUTE OF LIMITATIONS CAN DO FOR YOU?

Being sued by a debt buyer is not a pleasant experience, particularly if the debt is so old that you cannot remember the details of it. The law recognizes this and requires that suits be brought within a certain time period – the statute of limitations – and if the suit against you is filed after the statute of limitations has expired several things should happen.

First, you should be successful in the collection suit as the case should end in victory for you.

Second, if the debt collector knew or should have known that the suit was “time-barred” – that is outside the statute of limitations – then the act of filing the suit is a violation of the Fair Debt Collection Practices Act (FDCPA), the federal law that governs collectors.  This can entitle you to money damages.

So you may not only be able to beat the collection lawsuit filed by the debt buyer (LVNV, Midland, Portfolio Recovery, etc) — but you may also be able to sue for money damages if the FDCPA was violated as it often is by these debt buyers.

 

WHAT IS THE STATUTE OF LIMITATIONS IN ALABAMA?

This is a matter of much controversy but there are three basic ideas.

1. The Alabama statute of limitations for credit cards and similar debts is three years which is an “open account” as there was no payment schedule with your credit card — you just charge on it and then make at least the minimum payment.

2. The statute is six years under a stated account (or account stated) theory. This is what the debt collectors argue applies when they buy an old credit card debt. We disagree.

3. Finally, the laws of the state that control the credit card agreement may give us the statute of limitations. For example, if you have a Capital One card, the laws of Virginia normally will give us the statute of limitations.  Often the card is so old that no one knows what the terms were and if they were ever modified so normally we use the laws of Alabama to give us the statute of limitations.

 

IF I THINK THE STATUTE OF LIMITATIONS HAS EXPIRED WHAT DO I NEED TO DO IN THE COLLECTION LAWSUIT?

Make sure you respond to the complaint! Sometimes this is done as an “Answer” and sometimes as a “Motion To Dismiss”. But whichever approach is most appropriate, just make sure you do respond so there is no default judgment. You should tell the court in your response that the statute of limitations has expired on this case.

 

CAN I SUE THE COLLECTOR FOR SUING ME WHEN THE STATUTE OF LIMITATIONS HAS EXPIRED?

Usually.

The FDCPA says that if a collector sues you after the statute of limitations has expired and the collector knew it or should have known it, this violates the law. Depending on the circumstances, suing you after the statute of limitations has expired may also violate various Alabama laws which give you the possibility of punitive damages which is something the FDCPA does not give.

 

SHOULD I FILE A COUNTERCLAIM OR FILE A SEPERATE LAWSUIT IN FEDERAL COURT AGAINST THE COLLECTOR?

We do not recommend filing a counterclaim as it often confuses the issues. If you have a good enough case to file, then our experience is that the case should be filed in federal court on its own and not as a counterclaim to a collection case.

 

WHAT BENEFIT DOES THE FDCPA GIVE ME IN MY SUIT – WHAT DO I GET OUT OF IT?

The FDCPA provides four basic benefits:

1. You receive up to $1000 in statutory damages even if you have no actual damages;

2. You receive all of your actual (compensatory) damages if you can show the violation of the FDCPA harmed you;

3. You receive your legal fees paid for by the abusive debt collector; and

4. Your litigation expenses can also be paid for by the collector that you are suing.

 

WHAT ACTION SHOULD I TAKE RIGHT NOW IF I HAVE BEEN SUED AFTER THE STATUTE OF LIMITATIONS HAS EXPIRED?

Contact us or another experienced consumer attorney. Or you can call us at 205-879-2447 and we will be glad to help you understand whether we think you have a valid statute of limitations defense and if you have a valid lawsuit to file against the collector who sued you.

(Be sure and read the comments as there is additional information about the statute of limitations in the questions and answers below).

 


61 Comments

  1. Shari McGuffries says:

    I received a letter from Nathan & Nathan in Birmingham. About a debt I owe to Household Finance. The loan was taken out on April 2004.At this time I can’t afford to pay them off or reach an agreement, or have them garnish my paycheck.Can I file for Bankruptcy (Chapter 13)? Does the Statue of Limitation apply to this case? The people at Nathan & Nathan before this case, I had one with Capital One- I told them what I could pay them they told me that was not acceptable payment.I just paid that account off. But what is acceptable payment when I have living expenses as well?

    • JohnGWatts says:

      Shari,

      Are you being sued by Household Finance? Or by a debt buyer who claims to have bought the debt?

      There are some other questions we would need to know the answer to but this is not the place to do this — call my office at 205-879-2447 and ask to speak to Carolyn or Randi and they can get your information and then I’ll be glad to talk with you or meet with you.

      Bankruptcy can be an option but normally is not the best option. We can explore all of your options so you can make the best decision for you.

      Best wishes and we look forward to hearing from you.

      John Watts
      Birmingham, Alabama

  2. Michaelann Harbin says:

    I have a question about the statute of limitations in AL concerning credit card debt. When does the time start? And also does the time start over when that company sells the account to a debt collector? I know it’s 3 years, but is it 3 years from the date I made the last payment on the account? Thanks so much

    • John Watts says:

      Great question and we will do a more indepth article about this because it is such a common question.

      Several things we need to look at….

      First, which state’s law applies to a lawsuit in Alabama?

      Second, assuming Alabama law applies, what is the statute of limitations for each type of “cause of action” that the collector/debt buyer sues us on?

      Which State’s Law Applies?
      Normally we think of Alabama law as applying because the general rule is that the law of the state where the lawsuit is brought (Alabama) is the law that controls what is called “procedural” law. Procedural law is the statute of limitations (normally), how you file a lawsuit, the time to answer a lawsuit, how you do depositions, etc.

      The law of the state where the “wrong” happened controls the “substantive” law — this is the amount of damages you can receive, what you have to prove in your case, etc.

      So here’s an example.

      We represented a family who had a loved one killed in another state (TN) but we filed suit against the trucking company in Alabama. TN law told us what damages could be recovered (much different than Alabama by the way) but Alabama law told us the statute of limitation, how long the defendant had to answer the lawsuit, etc.

      So in a collection case, it would normally be Alabama. But, sometimes the credit card agreement states the laws of ________ state will control. Does this mean just the substantive law or does it mean the procedural law also? The courts around the country are divided on this.

      A problem with debt buyer lawsuits is normally the debt buyer can’t prove what the agreement says because these agreements change all of the time and we are usually talking about agreements in place 4 or 5 years ago.

      But if it is a different state, then we need to look to the laws of that other state to find out the answer to the statute of limitations for each type of claim. See the next section for an example — using Alabama.

      What Are The Time Periods For Different Causes Of Action In Alabama?
      An open account — which is what credit cards are — is three years. The statute would start running when you default on the debt obligation. There is controversy and disagreement over whether this would start from the date of your last payment or your last missed payment. Collectors argue that if you make a payment 5 years later, you have restarted the statute of limitations.

      I don’t agree with this but why give them an argument. There are ways to pay without restarting the statute of limitations — get the collector to agree you are not reviving the statute of limitations. If they won’t agree in writing, that should be your answer….

      A stated account — or account stated — is six years. So is breach of contract. Collectors love to use stated account even though I don’t think it applies in a credit card context. We’ll go into this in more detail in a future article.

      Here’s The Bottom Line
      The whole SOL can be somewhat confusing, in part because the collectors normally don’t have the terms and conditions that will tell us which state’s laws apply.

      As a practical matter, most collectors/debt buyers who sue in Alabama do so around the 4-5 year mark. After the “open account” 3 year period has expired.

      In our experience, the bigger problem is the debt buyers file suit and seem to not have any intent to prove their case. They sue folks who do not owe the debt buyer any money and the attitude among debt buyers appears to us to be “Well, we have no proof, and no intent to prove you owe us, but we sure are hoping that you will not show up or you will be intimidated into paying us money.”

      That is known as a “shakedown” lawsuit — it is extortion. File tons of bogus cases and hope people will pay you money or not show up to defend themselves. There is little outrage about these types of bogus cases filed but that will change as Alabama consumers start fighting back.

      Thanks again for your comment and I hope this reply (incredibly long as it is!) has been helpful to you.

      John Watts

  3. Linda says:

    What about a payday loan that is now 5 years old. Is the statue different for those?

    Thanks.

    • John Watts says:

      If in Alabama it may be that this would be breach of contract which tends to be 6 years. I’ve never actually looked at one of these for SOL as most of these are so bogus that at least against my clients no one seriously tries to collect them. If you are in Alabama, feel free to get in touch with my office and let us look at the contract. You should have been given a contract when you signed up for the pay day loan. Sometimes online pay day loans are much different so let us know if yours was with a real business in Alabama or some online place that maybe is not so legitimate.

      Thanks

      John

  4. Greg says:

    I have been told that if you send a letter disputing the validity of the credit card debt that the SOL changes from 3 yr to 2 yrs.
    Is this true and what is the Alabama code that references this?
    Also, does the SOL start running at the date the last payment was made or the date the first payment was missed?
    Thank you for your help.

    • John Watts says:

      Greg,

      In Alabama, I’m not aware of anything that changes the statute of limitations from 3 years (an “open account”) to 2 years. Sorry I can’t help you on this.

      As far as when the statute of limitations (SOL) starts to run, I think the most accurate view is your last missed payment. Now, if the SOL has expired and then you later make a payment, the creditor or debt collector will argue this “re-starts” the SOL. It is not quite that simple in my opinion.

      I hope this answered your questions — let me know if this did not and I’ll be glad to chat with you.

      Best wishes

      John Watts

  5. Greg says:

    John thanks for your earlier reply but Im still not clear were i stand the last payment posted 1-15-10 the next payment due date was 3-12-10 the collection agency filed their lawsuit on 2-18-13 splitting those dates so my question is: had the statute of limitation expired?

    And part b of my question attorney John Caraway with Campbell & Campbell at talledaga had told me to send a letter disputing the validity of the debt and that change the SOL to 2 yrs vs 3 yr.
    I sent that letter 2&half years ago but i don’t know what law that was based on and can’t locate him to ask. can you please help me find out he said it was based on civil law i believe was what he said.
    Thanks again for you help.

    • John Watts says:

      Greg,

      If the next payment due date was 3-12-10 then I think that is when the statute of limitations will start running — when that payment is missed. I’m assuming you were relatively current up until the 3-12-10 date.

      I have never heard of any type of dispute letter changing the statute of limitations. As noted in the main article and some of the comments, the collection attorneys argue the statute of limitations is not 3 years but 6 years.

      Feel free to contact my office at 205-879-2447 and let us know which collector has sued you.

      In 95% of the collection lawsuits there is no need to even get to the statute of limitations defense. The collection agency (debt buyer) has too much trouble on its hands in proving it owns the debt it has sued on. If it can’t prove it owns the debt, then the statute of limitations is not important. Does this make sense?

      Also, check your credit reports to see if after you disputed the debt (if to the same company now reporting), is it being reported? Reported as “consumer disputed” or is that part missing? This can be a violation of the law. http://www.alabamaconsumer.com/2012/04/if-you-dispute-a-debt-the-collector-must-mark-it-as-disputed-on-your-credit-report/ They hate to do this — http://www.alabamaconsumer.com/2012/04/why-collectors-hate-to-mark-your-account-as-disputed-on-credit-reports/#.

      Thanks again for your comments and I hope this has helped some. Let me know if you have any other questions.

      Have a great week.

      John Watts

  6. jevon says:

    I have an old credit card (furniture) that I have not paid on since 2007 byt the collectors own admissionin a letter they sent me. But they have proceeded with trying to sue me and I have to answer the summons. It says breach of contract and open account. This was a credit card and it was mine but is it not past the SOL to sue me? Do I include paper work with my answer to summons to prove the debt is past 3 years?

    • John Watts says:

      Jevon,

      It depends on where you were sued — if sued in Alabama then this may be beyond the statute of limitations. Breach of contract is normally 6 years so it depends on when the statute started running in 2007 and when you were sued (not served) in 2013. If, for example, you were sued in January 2013 and you stopped paying in November of 2007, then if 6 years is the SOL then the suit is timely.

      I just mentioned in a comment that normally the biggest problem for the collectors (debt buyers such as LVNV, Portfolio, Midland, etc) is proving they own the debt. If they can’t do that, then nothing else particularly matters. http://www.alabamaconsumer.com/2012/08/sued-by-lvnv-midland-funding-or-portfolio-recovery-associates/

      Do make sure you do NOT default — you can have the greatest defense in the world but if you default then it is meaningless. So make sure you respond in time to the lawsuit.

      Which debt buyer sued you?

      Also if you are in Alabama feel free to contact us at 205-879-2447 and we’ll be glad to chat with you about your 4 options when you have been sued by a debt collector.

      Best wishes

      John Watts

  7. jon doe says:

    do you have any affiliates in other states? im being sued in nevada for a debt at least 3 years old,claimant barclays bank delaware,but could that be a debt buyer ? delaware SOL IS 3 years so im kind of shocked tey would dare sue and definatly want to bring a fdcrpa suit bac to them for this. I dont have much cash to file an answer nor do i want to try to claim inigent satus,is filkng a motion for dismissal free?

    • John Watts says:

      YOu can check out NACA (National Association of Consumer Advocates) to find a lawyer in your state. I don’t know what the cost is for filing a motion to dismiss but if you have a valid FDCPA (Fair Debt Collection Practices Act) claim, you may find a lawyer in Nevada that will handle the defense of the case for free and then make his or her money off suing the collector for violating the FDCPA.

      I would not try to do this on my own — there are all sorts of implications when you start dealing with collection lawsuits and whether to file a counterclaim or a separate federal court lawsuit. Get some good advice from someone in your state who knows what they are doing and you will be in good hands

      Thanks for the comment and keep us posted on what happens….

      John Watts
      Birmingham, Alabama

  8. Tim says:

    I recieved a judgement in 2011 for a debt from 2002, I didnt know anything about the statue of limitations in Alabama being 6 years for a written contract. I have since then payed the entire 6700 debt and 4500 lawyer fees through garnishment.Is there any way I could sue or request my money back.

    • John Watts says:

      Tim,

      I’m sorry — I don’t know of any way for you to get your money back. A consequence of a judgment is that a judge has said you owe the money. Very hard to undo judgments, particularly once you get past a few weeks.

      Normally when our clients win their collection lawsuit against the debt collector, and then we sue the collector, the collector will argue “Yes they won but Judge they really do owe the debt.” The federal judge says “That matter has already been decided. You should have won the collection case.”

      Same thing here — even though you didn’t know what the statute of limitations was, your lawyer should have raised it or if you were your own lawyer then the law says you should have known what the time period was….. It can be a harsh law because you have very little time to answer lawsuits and sometimes you can’t find a lawyer who will fight this.

      Here is an article I did on folks who do not owe the debt but who have a judgment against them ruling that they do actually owe the debt.

      Sorry I don’t have better thoughts for you.

      I do suggest you make sure your credit report shows the account is off of your credit report (if you defaulted in 2002 it should have gone off in 2009 or 2010) and that the judgment is marked as paid. Do you have a “satisfaction” of judgment from the collection lawyer? If not, I would get that to show that you have actually paid the judgment completely (if you have). That needs to be filed in court by the collection lawyer.

      Best wishes

      John Watts

  9. Lisa says:

    Hi,
    I’m getting collection calls on things that fall under the SOL. Should I dispute these items on my credit report for that reason? Or should I contact them directly?

    Thanks,

  10. Rachel says:

    Hi

    We had a car repossessed in 2007. The company sold the account to a debt collection agency. Today they call threatening to come get our house by putting a lien on it. The company is CitiFinacial. They said they would do this if we didn’t come up with half the money by the 28th of the month. I read that the statute of limitations is only 6 years. I’m confused about it being through the collection company now. Can they do this?

    Thanks!

    • John Watts says:

      Rachel,

      Thanks for your comment. The statute of limitations is normally 6 years at the most in Alabama.

      When in 2007 was your car repossessed?

      Who is the collection agency?

      Make detailed notes of who called you — when they called (take a screen shot of the call or caller id) — and what they told you.

      If the statute of limitations has expired then it is illegal to threaten to sue you.

      It is also illegal for a collection agency to threaten to take your house unless they explain they have to sue you, and then win, and then get an order to do a “sheriff’s sale” in order to take your house. We have sued a number of collection agencies for this exact type of illegal conduct.

      If you are in Alabama give us a call at 205-879-2447 and we’ll be glad to talk to you.

      Thanks

      John Watts

  11. Amy says:

    Hello,

    I was just contacted by an attorneys office stating I owe $2000 on a credit card debt from 10 years ago. He went on and said that a civil case was being files against me. Plus a criminal case and that warrants would be issued for my arrest in the next 24 hours, if I did not show up in his office with them amount owed. I have no clue as what this guy was talking about! I asked him to send me papers or something in writing so I could research this. He said the only paperwork I would be getting would be when I was arrested!

    I asked this gentlemen to not call me back and hung up the phone. He proceeded to call me back. At which time I asked for his name and number. I then told him he was harassing me and if he called me back I would turn him over to the State Attorney Generals office. I then hung up the phone again. At which time he called back a third time just to say to me that he would keep calling me!

    I have no clue or knowledge as to what this man is talking about. What should I do?

    • John Watts says:

      Amy,

      This sounds like a scam collector. You did the right thing by asking for paperwork and his contact information. These scam guys are banking on the fact that the threat of a lawsuit or criminal proceedings (“arrested”) will scare you into paying without any proof.

      I’m glad you stood firm — the more people that do this the more these scam guys will go out of business.

      Always ask them for their full mailing address and that you want them to mail a letter to you — not fax, not email, but real mail with a stamp. I have not yet seen one of them do it.

      You may want to check your credit report by going to http://www.AnnualCreditReport.com to make sure this debt is not on there.

      Best wishes and let us know how this turns out for you….

      John Watts

  12. Tara Mae says:

    My husband and I received a letter stating that we owe for a medical bill that we know nothing about. When asked for proof, they sent us some bogus letter with bogus original creditors. What can we do? And is there a Statute of Limitations on medical bills as well?

    • John Watts says:

      Tara,

      Do you live in Alabama?

      If so, give us a call at 205-879-2447 so we can understand better what is going on.

      In general, if you receive a collection letter — sending a letter asking for proof is a good idea. We have a simple dispute letter we recommend here.

      If the response you get back does not show you that you do owe the debt, then you can ask for more proof and tell the collector why you think what they sent was not any good. Or you can simply say you don’t owe it if it is clear. Each situation is different but here’s the bottom line:

      We want to pay our debts that we owe to the right people — we do NOT want to pay debts we do not owe and we don’t want to pay the wrong person.

      Best wishes with this situation and if we can help let us know.

      John Watts
      Birmingham, Alabama

  13. Samekia Armstrong says:

    I was garnished 2 years in a row after SOL the car company never sent it to the court to be renewed they just faxed my job and keep during me I actually paid the 7000$ for this car the first time they garnished me in 2005 can I not get my money back

    • John Watts says:

      At least in Alabama you cannot be garnished without a lawsuit that ends in a judgment against you. One exception is federal student loans. Where are you living where the car company garnished your wages without a lawsuit? Or maybe I misunderstood you. Was it an earlier judgment and then they simply waited since 2005 to garnish you?

      Sorry I’m not fully understanding your question.

      John Watts

    • John Watts says:

      Samekia,

      Were you sued after the statute of limitations expired? Or were you garnished after you lost a lawsuit?

      Once a lawsuit is filed within the SOL, then even if the judgment happens afterwards, it is ok. Then a garnishment can happen years later.

      Do keep in mind you have to be properly served for a judgment to be entered against you.

      There are some limits on how long a company has to garnish you — if you live in Alabama contact my office at 205-879-2447 and we can chat about your particular circumstances.

  14. John,

    I have just pulled my credit report, what is the statue of limiations on a medical bill? I have several dating by to 1997 that still show on my credit report in collections. Can those be legally removed?

    • John Watts says:

      Kimberly,

      In Alabama the statute of limitations will normally be 3 or 6 years. That’s the time period to sue you.

      The time period to credit report is different — it is 7 years from when you defaulted. If your bills are from 1997, no way they should still be on your credit report unless you paid them on time — in which case you wouldn’t have a collection account. So that is very odd and almost certainly illegal.

      Here are your options — and do get with a consumer lawyer in your state — but in general:

      **Sue under the Fair Debt Collection Practices Act (FDCPA) for false credit reporting — this is section e(8) of the FDCPA.
      **Send a dispute letter to the collection agencies and the credit reporting agencies asking that these be removed and, if not, to explain to you in writing why these accounts will not be removed.
      **Call the collection agencies and ask them what is going on.

      You should not be dealing with this on your credit reports — I’m interested in the explanation (excuse) the collection agencies give you. If you are in Alabama feel free to give us a call at 205-879-2447 and let the receptionist know you put a comment on our website and have a 16 year old collection account on your credit report.

      Best wishes and stay in touch!

      John Watts

  15. Charlotte Clayton says:

    What are the procedures necessary from a creditor before a judgement is issued? Shouldn’t the judgement letter be sent to the debtor via certified mail? How can they prove it was ever received? Thanks for your response.

    • John Watts says:

      Charlotte,

      Here’s what has to happen for a judgment to be entered:

      1. You must be sued.
      2. You must be served with the lawsuit.
      3. You must then lose the lawsuit.
      4. Then a judgment is entered.

      The judgment, at least in Alabama, does not have to be mailed by certified mail.

      If I’m missing what you are asking please let me know.

      Thank you for the comment!

      John Watts

  16. Laura says:

    What would the SOL be on one of those loan companies where you list various household goods as collateral (similar to a title pawn but with household goods instead)? Would this type of loan fall under the UCC Article 9? Would the SOL fall under Code of Alabama Section 6-2-34 of 6 years? Thanks!

    • John Watts says:

      Laura,

      I’ve never looked at that kind of contract but generally contracts are for 6 years in Alabama.

      I’m not a UCC expert but normally these types of loans are not made for you to buy the household goods (i.e. you aren’t buying a TV with the money) but instead it is a loan and you are “securing” the loan with your household goods.

      My leaning is towards the 6 years.

      If you have more specific questions — if someone is suing or threatening to sue — let me know by leaving a comment or contacting my office at 205-879-2447.

      Thanks for the comment and I hope my answer helps — I know it is not definitive but these are my thoughts….

      John Watts

  17. Ebony says:

    I have been garnished and wasn’t aware did not recieve any info from the creditor nor my job had been out on a loa for illness for more than 3 months my job stated the sent me an email regarding the info however I was out due to illness so never recieved email and the creditor never served me the debt is from 2006 thats when I got behind on acct it is currently 2013 are they still able to garnish my wages I think this is illegal and its for a car that was reposessed

    • John Watts says:

      If you were never served, then under Alabama law the judgment can be void — worthless. You do have to take steps quickly to get the judgment set aside and then the lawsuit will proceed.

      If you live outside of Alabama I suspect the procedure is the same but you’ll need to get with a consumer lawyer in your area.

      Here, when we face this situation, we file a motion to let the court know the judgment is void as our client was never served. We give proof of that to the judge.

      We also show we have a valid defense to the lawsuit so the judge realizes it makes a difference to undo the judgment. If the judgment is voided (undone/set aside) then the garnishment is no good.

      Get some help ASAP as it sounds like it is possible the statute of limitations has expired (depending on when suit was filed against you) and that the judgment can be set aside.

      Best wishes and let us know how it turns out for you.

      John Watts
      Birmingham, Alabama

  18. Chris says:

    Sol on equity line of credit? Was a revolving type equity loan where we were to borrow what amount we needed and payments were based on that amount. House was foreclosed on and sold for just under enough to cover the original loan.
    Getting sued for this and feel like it falls out of sol.
    Thanks.

    • John Watts says:

      Chris,

      If you are in Alabama then most likely this would be considered an “open account” which is 3 years in Alabama. When did you last take a draw on the line? When did you last pay on it?

      Critical that you do NOT get a default judgment — you need to respond to the lawsuit in time.

      If you are in Alabama please call my office at 205-879-2447 and ask to speak to Randi Curb and tell her we connected on our website and she’ll get your information so we can see exactly where you are right now and what your options are going forward.

      I also suggest you pull your credit reports — http://www.alabamaconsumer.com/2012/08/how-do-i-pull-my-credit-reports-for-free/ — sometimes what a mortgage company reports on your credit reports is completely different than what they put in the lawsuit to collect a “deficiency” after a foreclosure.

      Best wishes

      John Watts
      Birmingham, Alabama

  19. Laurie says:

    Great Information.

    Here’s a question: Providian Credit Card merged with WAMU, and bills started coming from WAMU. Then Chase in 2008 had to buy WAMU and all their debt including what WAMU had from the Providian merge. Chase turned my account over to a collection agency that keeps giving me a 30 day or else letter every couple months and the other months I get a let’s settle for 30%. I have not paid since 5/2008 and the last payment went to WAMU. Chase has been notified my account was wrong, payments were not applied that had been sent to WAMU, copies of all validating payments were sent to Chase with a dispute letter, and they just kept adding interest, late charges and over limit charges. It started at $8,000 and now the collection agency shows it on my credit report over $20,000. Any suggestions?

    • John Watts says:

      Laurie,

      Sounds like you are dealing with a mess which is fairly common with the whole Providian->WAMU->Chase type of situation.

      I’m not sure if you think you still owed any money on the card or not but clearly payments have to be applied correctly and you can’t be collected on a debt you don’t owe.

      Or you should not be.

      Best thing to consider is letting the collection agency know exactly what is going on and ask them to send you written proof of what they claim you owe and why.

      False credit reporting is a bad thing and you can normally sue debt collectors that do this.

      If you live in Alabama and want to chat, feel free to call my Birmingham office at 205-879-2447.

      Best wishes and glad you found the information on this page helpful.

      Thanks!

      John Watts

  20. Larry says:

    I lived in Montgomery, Al from 1995 – 2011. I financed a car thru Capital One in 2004. Due to financial difficulties, I returned the car to Capital One’s attorney later in 2005. I have not heard anything from them since. Yesterday, after applying for a job in Florida, the background check revealed that I had a lawsuit on file from Capital One. I knew nothing about it. I still have the same cell phone number through I now live in AZ. I also have a Capital One credit card approved in 2011. A credit line increase that doubled my limit in 2012. Why did Capital One not notify me about any deficiency payments due? What about the SOL? This makes no sense, it’s caused me to loose an excellent job.

    • John Watts says:

      Larry,

      Where were you sued? Alabama or Arizona or Florida?

      Were you served with the lawsuit? Did you know anything about it?

      Capital One Auto and Capital One credit card companies don’t always communicate very well with each other.

      As far as the statute of limitations, that depends on where you are and if you are being sued now. If already sued, you’ll need to know when and where as each state is different.

      Is the judgment on your credit reports?

      Is the Cap One Auto on your credit reports?

      Sorry you are in this situation but first figure out what happened and then get with a lawyer where you live right now to see your options. If that lawyer wants to talk to me about Alabama law, have him or her call me at 205-879-2447.

      Best wishes….

      John Watts

  21. Evelyn says:

    I am being sued by Midland – they filed the suit in November, 2013 which I knew was close to SOL. According to TU, the date of last payment was 10/17/10 and it will fall off my CR 10/2017. Equifax lists DOLA as 11/10. Does AL follow DOLA or DOFD? If the date on which SOL started was 10/17/10 then were they outside of SOL when they filed the suit 11/13?
    Thanks!

    • John Watts says:

      Evelyn,

      If Midland sued you then they always sue under “Breach of Contract” and “Account Stated” which is six years. Now I disagree that breach of contract and account stated are the right theories but that is what Midland will sue you under — either by Zarzaur & Schwartz (Birmingham, Alabama) or Holloway & Moxley (Montgomery, Alabama).

      The bigger problem for Midland is can it show it OWNS the debt.

      Having handled around 200 Midland lawsuits in various ways I have yet to see Midland actually prove it owns the debt.

      On your question directly about when the SOL starts, it is generally when you miss your payment so it maybe that Midland filed this within 3 years which is the Alabama time period for what is known as an “Open Account.”

      Make sure you respond to the lawsuit within the time limit — 14 days in district/small claims court and 30 days in circuit court from when you were served.

      If you have questions or want to get further information from us (we can mail and email you free information) just let us know. Call us at 205-879-2447.

      Best wishes in your case.

      John Watts

  22. Evelyn says:

    In Alabama, does SOL begin with DOFD or DOLA? I’m being sued by Midland and the account in question is reported as DOFD (actually date of last payment) 10/17/10 by Transunion and DOLA of 11/10 with Equifax. Midland filed the suit on 11/26/13. If the clock starts with date of last payment or DOFD (TU says it will drop off my report 10/17) then was Midland past SOL for filing? Bench trial is set for the end of January, but if they were past the SOL should I contact them and ask them to withdraw the suit? They are trying to go for account stated so they may be working on a 6 year SOL. Thanks!

    • John Watts says:

      Evelyn,

      I just saw this one so pardon the repetition of the last comment. :)

      You are right on the account stated — it is 6 years under Alabama law. It is a question about which law applies but assuming Alabama law then that is 6 years.

      I don’t think Midland can properly sue a consumer in Alabama under account stated but it is what they do nearly 100 times a week as they normally sue outside the 3 year SOL for open account.

      I don’t think they will withdraw the case just based on SOL as this is what they do every day — sue people between 4-6 years.

      Give us a call if you want to chat about it — ask for Carolyn and she can set up a call with you or you can give me your information by filling out our contact form here.

      Good luck!

      John Watts

  23. Robert Ingram says:

    There was a judgment filed against me on March 8, 2007, and I noticed on my credit report, they updated it on April 4, 2007 on a credit card which no payments have been made on the debt. According to Alabama Statue of Limitation is 6 years. There has been no payments made on this debt. Six years are up, so why is the lawyer still harassing me?

    • John Watts says:

      Robert,

      If a debt collector obtained a judgment against you in 2007 then they can continue to collect on it.

      The statute of limitations applies to when a collector must SUE you — after a judgment is entered (which means the collector won) then they can collect on that judgment for many years.

      The judgment also makes interest which can easily double the amount of the judgment in a matter of 6 or 7 years.

      I want to make sure we are on the same page about what has happened so give my office a call if you would like to chat — 205-879-2447 and ask for Carolyn. If you have the court documents and letters from the lawyers, you can get those to her so she can organize that for me to look at and I’ll be happy to do a phone meeting with you to see where you are in this process and what your options are at this point.

      Best wishes

      John Watts
      Birmingham, Alabama
      205-879-2447

  24. Derrick Lucy says:

    I recieved paperwork from a law firm on Birmingham concerning a collection account they were given by another company. This old account was a revolving credit account and I lost my job in 2009 and my last payment was in 07/2009. As far as statue of limitations are concerned im not sure if this falls under the 3 years as a credit card would but it appears to be the same because there is no set payment amount or pay off date. Please let me know what my options are before or even if I will receive a summons in the future.

    • John Watts says:

      Derrick,

      They will sue you under “Breach of Contract” and “Account Stated/Stated Account” which they claim is six years to get around the three year statute of limitations.

      Give us a call at 205-879-2447 and let us know who the collection lawfirm is and the name of the company they are collecting for and we can give you a pretty good idea if you will be sued or not.

      I suggest you pull your credit reports for free — you can do that here — because sometimes what the collectors put on your credit reports will not much what they do in a lawsuit. This can be illegal and can give you the right to sue under the Fair Credit Reporting Act (FCRA) and/or Fair Debt Collection Practices Act (FDCPA).

      We’ll be glad to walk you through your options so if you are interested give us a shout at 205-879-2447.

      John Watts
      Birmingham, Alabama

  25. Ben Hitt says:

    ok so i have recently bought a house and all went well, 6 months later im checking my credit score and i see something has went into collections, i lived in tuscaloos in 2011, i had an apartment with some “friends” long story short they ditched me and i had to pay this on my own. the apartment had some kind of crazy thing where if you dont tell them your moving out the lease gets extended for like 6 months. i didnt know this, i left when i thought my lease was up and even told the lady at he front office. i was NEVER aware of this. after being hounded by them for $4,000… i got my dad to get his lawyer to call them and they settled it for $350. now here we are today, this new bill is for the power company that i used at this apartment…. its 3 years old! the power at my current house is in my girlfriends name. i tried calling Alabama power and explaing to them that i never received any bill so i do not think i should have to pay… what should i do? i asked them to send me a detailed bill to my current address. its $235. i know i paid my last bill, but i have sense then changed banks “wells bought my bank” so i have no way of even finding these records. whats my best bet to do? thanks

    • John Watts says:

      Ben,

      Sorry you are dealing with this — ask Alabama Power Company to put in writing what you owe and why you owe it and whether they ever notified you of the bill.

      It may be you owe it or maybe you don’t — but that’s the first step I would do.

      Feel free to give us a call at 205-879-2447 and we can help you look at your credit reports to see what is reporting and then compare that with what APCO sends you if they send you anything.

      John Watts

  26. Jody says:

    I’d like to know the process or course of action I need to take in order to clear up a charged off revolving acct from back around the year 2000. A debt buyer (Portfolio Recovery) has acquired the account and is now attempting to recover an exorbitant amount from me. I have an old credit report from 5/02 that states the account was charged off with a high credit of $222 and an acct balance of $955. Now PR is asking for nearly $1700. I believe I am within my rights to demand they refrain from any attempts at collecting this “debt”. If that is in fact the case how may you suggest that I go about this so that I may be successful? Thank you for any advice

    • John Watts says:

      Jody,

      If Portfolio Recovery is collecting on a debt that was charged off in 2000, then at least in Alabama it is too late for portfolio to sue you.

      It is also too late to report this on your credit reports.

      What has Portfolio said they will do if you don’t pay? They can’t threaten to sue or credit report.

      This leaves simply calling you and writing you without making those threats.

      You can always send a “refusal to pay” letter or a “cease and desist” letter (these are the same things) and if PRA continues to contact you, then you sue for violating the FDCPA.

      Let me know if this did not answer your questions — bottom line is there is nothing PRA or any other collector can do to collect this (if you live in Alabama) other than call or write and you can stop that.

      Usually on ancient debt like this — when they see you will not just pay what is likely then 10th debt buyer/debt collector — then they will go away.

      If you are in Alabama give us a call if you want to talk — 205-879-2447.

      Thanks

      John Watts
      Birmingham, Alabama

  27. rocky says:

    If you have an old debt that is going to fall off your credit bureaus by the end of this year (according to your credit reports). (I get a copy of one credit report to review for annualcreditreport.com every 3-5 months to review changes and so forth.) And on those credit reports Midland shows up, but the original creditor does not – is that a violation of FDCPA laws? I thought collection agencies had to stop reporting when the original creditor stopped reporting.

    • John Watts says:

      Rocky,

      The original creditor and collection agency (or debt buyer) are separate so even if the original creditor is no longer reporting, the new collection agency such as Midland can report.

      BUT.

      If the time period for reporting is over — basically 7 years from when you allegedly defaulted — then it is too late for ANYONE to report, including a new debt collector.

      Midland is a company we have sued close to 40 times I suppose — almost all of those have related to credit reporting. So keep a close eye on what they are saying and in particular if you have disputed it with Midland it must say “Disputed by consumer” or words to that effect.

      If you are in Alabama, feel free to give us a call and we’ll be glad to help you think through your options and see what the best next action is for you to take.

      205-879-2447

      John Watts
      Birmingham, Alabama

  28. Cyrus says:

    Could a collector or mortgage servicer issue a 1099-c four years after the original note holder has issued a 1099-c for the same debt? I have already reported it as income in my taxes filed for 2009.
    I have heard that it is illegal that two lending institutions charge off on the same loan and issue 1099-c on the same property and for the same amount. Am I right?

    • John Watts says:

      That sounds odd to me Cyrus. I don’t think you can be forced to pay it twice.

      I would send a letter, called a “Request for Information” and one called a “Notice of Error” to the servicer to find out what is going on. Show them the 1099 you received from the other company. You have to send these to your servicer — if it is strictly a collector these letters won’t quite work this way.

      Is it a servicer or collector who issued the 1099?

      If you live in Alabama let me know and I’ll be glad to walk you through it. If you are out of Alabama, let me know what state and I may can recommend someone for you to contact.

      Best wishes

      John Watts

  29. Lisa says:

    Hello John
    I got credit card debt on several cards, the last payment I made was in nov 2008 since I lost my job and didn’t have enough money to pay credit cards bill. I’ve been receiving several mail offer from midland and other collection agencies wants to settle at 60 to 70% of the balance. My credit report shows majority of them will wipe out by 2015. I live in Alabama. Can midland and other collection agencies sue me? Since statue of limitation has passes. Also do I need to respond to midland and other collection agencies offer. I have no communication with any collection agencies.
    Thank you

    • John Watts says:

      Lisa,

      The SOL is either 3 or 6 years so sounds like you are either at the 6 year mark or very close.

      The time to stay on credit reports is 7 years and that is next year.

      If you are past the point of the statute of limitations, I don’t see much advantage to settling. But let’s talk about this and make sure we are on the same page.

      My office is 205-879-2447 and if you ask to speak to Carolyn she can get some info from you, we can take a look at the letters and credit reports, then give you our thoughts on the best approach to take.

      Thanks for your comment and question….

      John Watts

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