Court Rules that Offering Settlements of the Debt without Statute of Limitations Disclosure Is Deceptive
In U.S. law, claims cannot be brought after a certain period of time called the statute of limitations. The statute of limitations is meant to protect those who are sued for “stale” claims – you cannot be expected to defend yourself against allegations from several years or even decades ago because you and others involved may no longer remember what happened. The statute of limitations is an especially important protection to consumers being sued over a debt. In a world where unfortunately identity theft is more and more common, it can be almost impossible to prove that you do not owe a debt that allegedly became due several years ago.
However, the debts past the statute of limitations (called “time-barred debts”) can be sued on again, under some circumstances, if a consumer voluntarily makes a payment on the debt. Debt collectors will use deception and the confusing nature of the law to trick consumers into making a payment on a time-barred debt, which then restarts the statute of limitations and allows the debt collector to sue on the debt.
This was the deception alleged by a Maryland consumer in the lawsuit Jennings v. Dynamic Recovery Solutions, LLC. Defendant allegedly sent Plaintiff a collection letter that provided three settlement offers:
“1. Our office will allow you to resolve your account for $4,371.83. Your payment is due on April 21, 2019. We are not obligated to renew this offer. Upon receipt and clearance of this payment, this account will be considered satisfied and closed. A satisfaction letter will be issued or;
2. Our office will allow you to resolve your account for $4,857.59 in 2 payments of $2,428.80 and $2,428.79. Your first payment is due on April 21, 2019. We are not obligated to renew this offer. To comply with this offer, payments should be no more than 30 days apart. Upon receipt and clearance of these two payments, this account will be considered satisfied and closed. A satisfaction letter will be issued or;
3. Our office will allow you to resolve your account for $5,343.35 in 3 payments of $1,335.84 and a final payment of $1,335.83. Your first payment is due on April 21, 2019. We are not obligated to renew this offer. To comply with this offer, payments should be no more than 30 days apart. Upon receipt and clearance of these four payments, this account will be considered satisfied and closed. A satisfaction letter will be issued[.]”
And then the letter separately stated:
“The law limits how long [Plaintiff] can be sued on a debt. Because of the age of [Plaintiff’s] debt, Cavalry and [Defendant] cannot sue you for it and Cavalry and [Defendant] cannot report it to any credit reporting agency.”
What Defendant did not say in the Letter is that if Plaintiff made any payments to the account, such as through the settlement offers provided by Defendant, the debt would not longer be time-barred and thus Defendant would be able to sue Plaintiff for it. The Court held that “a letter offering options for settling a time-barred debt violates the FDCPA where it states that it cannot sue for the Debt but does not advise the consumer that acknowledgment of the debt or a partial payment could restart the statute of limitations on the debt.”
The Law Office of Ahmad Keshavarz has and will continue to vigorously defend consumers’ rights to not be sued on timebarred debts. If you think you have been sued on a time-barred debt or tricked into making a payment on a time-barred debt, you may have rights under the Fair Debt Collection Practices Act and other consumer protection statutes. Please call (718) 522-7900 to set up a consultation. We are located at 16 Court St., 26th Floor, Brooklyn, NY 11241 and represent consumers throughout the New York City area.
