Yesterday, I obtained a letter from a monetary agency right here in Iowa, the place I’ve lived for 14 years. It said that I owe cash that hasn’t been paid on a automotive that I co-signed in 1999 for a roommate once I lived in Florida. She didn’t have sufficient credit score, however I came upon that she died in 2000.
I feel that her son stored the automotive (no will). He should have made some funds, or he traded the automotive. I’m unsure what he did. I’ve lived in Iowa for 14 years and have lengthy misplaced contact with him.
The letter stated that I’ve to pay for the automotive she purchased in 1999. Can they cost me after 22 years? Please let me know if I’m accountable. I’m retired now. I stay off my Social Safety. I’m 69 years previous and may hardly survive.
-Q.
Pricey Q.,
I wouldn’t pay a penny of this debt. That is clearly a case of zombie debt, which is debt that has already been paid or is so previous that it’s now not collectable.
However that doesn’t cease sketchy firms from making an attempt. Businesses purchase tons of historical accounts for pennies on the greenback, or generally even much less. In the event that they scare only a small fraction of individuals into paying up, they’ll make a revenue.
In fact, it’s best to pay money owed that you owe when you’ll be able to afford to take action. However you actually don’t know if this mortgage truly went delinquent. Even when it did, your roommate’s lender had loads of time to sue you. It selected to not. It’s extra necessary to care for your primary wants than to pay a mortgage you co-signed on 22 years in the past.
Every state has what’s known as a statute of limitations for taking debtors to courtroom. This window can vary from three to 6 years, relying on the state. In Florida, it’s 5 years for written contracts, together with automotive loans.
As soon as the statute of limitations has handed, a debt collector should still attempt to get you to pay up. However they’ll’t sue you for it. As soon as seven years have handed because the account went delinquent, it ought to now not be listed in your credit score stories, both.
Technically, you continue to owe previous debt. However there actually are not any penalties in case you don’t repay it. They’ll’t get a courtroom judgment. They aren’t allowed so as to add adverse data to your credit score report, although some debt collectors use this unlawful tactic. They’ll’t garnish your wages or financial institution accounts.
And for the report, your Social Safety advantages can’t be withheld except you owe the federal government for taxes or federal scholar loans, or you could have unpaid alimony or little one help. A debt collector can’t garnish your Social Safety for delinquent shopper debt, like automotive loans or a bank card.
The true threat comes in case you make even a small fee. Relying on the legal guidelines of your state, you can restart the gathering clock. The identical goes for in case you’d acknowledge that you simply owe this debt.
Usually, I wouldn’t advise ignoring any monetary matter. However I feel that could be your finest strategy right here. This firm in all probability buys an enormous variety of accounts, understanding that the overwhelming majority of the individuals they contact by mail won’t ever reply. I’m afraid that contacting them would spur them to take extra aggressive actions.
This firm is aware of it may possibly’t legally sue you. Within the unlikely occasion it will attempt to take action anyway, the case would mechanically be dismissed because the statute of limitations has expired.
However do get a replica of your free credit score stories from every of the three bureaus to confirm that this account isn’t listed. Unpaid debt shouldn’t seem in your credit score stories as soon as seven years have handed because the authentic delinquency. If the account continues to be listed, use the Client Monetary Safety Bureau’s pattern dispute letter to have the debt eliminated.
If the company continues to contact you, chances are you’ll wish to request a debt validation letter asking for details about the cash they’re claiming you owe. It’s important to keep away from acknowledging that you simply owe something. By no means do you have to present private data, like your Social Safety quantity or banking information.
In the event that they reply, you’ll be able to ship a letter stating that the statute of limitations has handed and demand that they cease contacting you. Report the corporate to the Federal Commerce Fee or your state’s lawyer basic in the event that they proceed to take action.
I’d solely talk with this firm if completely mandatory, although. You’re now not answerable for this debt. Don’t let any debt collector let you know in any other case.
Robin Hartill is an authorized monetary planner and a senior author at The Penny Hoarder. Ship your tough cash inquiries to AskPenny@thepennyhoarder.com.
This was initially printed on The Penny Hoarder, a private finance web site that empowers hundreds of thousands of readers nationwide to make sensible choices with their cash by actionable and inspirational recommendation, and assets about find out how to make, save and handle cash.