Can Debt Collectors Sue for Old Debt?

Debt buyers specialize in purchasing old, defaulted debts for pennies on the dollar and then trying to collect the full amount. Understanding the statute of limitations and your rights is critical when dealing with old debts.

What Is Time-Barred Debt?

A debt becomes "time-barred" when the statute of limitations has expired. The SOL varies by state and debt type, typically 3 to 6 years from the date of your last payment or account activity. Once the SOL expires, the debt is too old for a collector to successfully sue you — but only if you raise this defense in your Answer.

Can They Still Sue?

Technically, a debt collector can file a lawsuit on time-barred debt. Filing a lawsuit is not automatically blocked by the SOL. However:

• If you raise the SOL defense in your Answer, the case should be dismissed
• Several courts have ruled that knowingly suing on time-barred debt violates the FDCPA
• Debt buyers like LVNV Funding and Midland Credit Management have been penalized for this practice

What Is Zombie Debt?

"Zombie debt" is old debt that keeps coming back. This includes:

• Debts that are past the statute of limitations
• Debts that were previously settled or paid
• Debts discharged in bankruptcy
• Debts that belong to someone else (identity mix-up)
• Debts that have been sold multiple times between debt buyers

Dangers of Acknowledging Old Debt

How Debt Buyers Acquire Old Debt

Debt buyers purchase portfolios of thousands of accounts for 2-5 cents per dollar. The older the debt, the cheaper it is. A $5,000 credit card debt might be purchased for $100-$250. The debt buyer then tries to collect the full $5,000 plus interest and fees. If they collect even a fraction, they profit enormously.

The problem: after multiple resales, account records become unreliable. Names, amounts, and account numbers may be wrong. This is why challenging documentation is such an effective defense against debt buyers.

Your Rights With Old Debt

• Right to dispute: Always dispute old debts in writing within 30 days of first contact
• Right to validation: Demand the collector prove the debt is yours and the amount is correct
• Right to the SOL defense: If the debt is time-barred, raise it in every communication
• Right to stop contact: Send a cease-and-desist letter to stop calls and letters
• Right to sue: If the collector violates the FDCPA, you can sue for damages

What to Do If You Are Sued for Old Debt

1. Do not ignore it. Even if the debt is old, ignoring the lawsuit results in a default judgment.
2. Check the statute of limitations. Determine when your last payment was and compare it to your state's SOL.
3. File your Answer. Include the statute of limitations as an affirmative defense.
4. Challenge documentation. Demand proof of the chain of title, especially if a debt buyer is suing you.
5. Consider an FDCPA counterclaim. If they knowingly sued on time-barred debt, this may be a violation.