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?
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).