John Oliver, host of HBO’s “Last Week Tonight,” did an expose on the debt-purchasing industry. These are companies who purchase delinquent, often extremely old, debt that a consumer owes to a creditor for pennies (or fractions of a penny) on the dollar. Last Week Tonight purchased $15 million dollars of delinquent medical debt owed by consumers to prove just how unregulated the practice is and then promptly forgave every cent (with a giant red button no less). While the premise of the show is to provide news with a comedic spin, the lack of government oversight of this industry is anything but funny. Oliver noted the unscrupulous collection practices used by some of these companies, giving examples such as contacting debtor’s parents, calling debtor’s employers at their homes and even threatening to have a debtor’s dog arrested and eaten.
A very common practice of these agencies is to attempt to collect a debt that is so old that the creditor cannot even file a lawsuit against the debtor to collect the money. State legislatures enact laws called statutes of limitation which limit the timeframe upon which an individual may bring legal action against another person. For example, in the State of Missouri, a creditor will generally have 10 years to bring a lawsuit against a debtor for payment of money or property. Although the statute of limitation may be shorter depending on the specific type of debt. This means that a creditor may not file a lawsuit or utilize the legal system to attempt to collect his debt if the final amount owed has been delinquent for 10 years. While debt may be in collection indefinitely (i.e. phone calls, letters, etc. from the creditor to the debtor), the inability to file a lawsuit if the debt is outside of the statute of limitations means a debtor cannot be sued and a garnishment cannot be obtained to satisfy the debt. Consumers who are unfamiliar with the legal system are often harassed by these companies into paying a debt under the threat of a lawsuit, when in fact the company would have no legal basis to bring such an action.
We highly encourage anyone facing collection attempts to first check the statute of limitation in their state to discover if the debt can be pursued through a lawsuit. The inability of a creditor to receive a judgment or garnishment significantly reduces the chance a creditor can collect any funds from a debtor. There are of course situations where debt can be legally pursued through the legal system, and if a consumer finds themselves in a place unable to handle their debt they should contact a reputable attorney to discuss their options to stop creditor harassment and lawsuits.