The National Consumer Law Center’s January 2015 article “Zombie Debt:
What the CFPB Should Do About Collecting Old Debt” is full of bad information, no context and bad assumptions. The article says the CFPB, a federal agency, should have the power to ban collecting debt outside the statute of limitations. But the CFPB can’t change state statutes of limitations, that’s beyond their authority.
And the article fails to mention that some statutes of limitations for certain debts like credit cards can be as short as 3 years. It assumes any attempt to collect a debt is wrong. While that may be true for debts 7-10 years old that have fallen off credit reports, collecting on 3 year old debts is not unreasonable.
The idea that time-barred debt collection is inherently wrong is flawed. While collectors shouldn’t be overly aggressive on time-barred debts, the debt was incurred and should still be owed. Statutes of limitations don’t wipe this fact away. Consumers shouldn’t rely on collectors only collecting legally enforceable debts, especially if the debt is only a few years old and still on credit reports.
Settling a time-barred debt is not wrong, any debt can and should be settled for the benefit of all parties involved. But collecting debts using unethical and dishonest means shouldn’t be tolerated and collectors shouldn’t make false threats of legal action or misrepresent debts.
In summary, the NCLC’s “Zombie Debt” report is about old debt outside the statute of limitations but the CFPB’s authority to regulate that goes beyond their mandate. The report also fails to mention that some statutes of limitations are short and collecting on time-barred debts is not inherently wrong. Collecting debts ethically and responsibly is key and consumers should also know their rights.
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