Debt collectors in New Mexico must now warn debtors that a debt they are trying to collect may be too old to be enforced by lawsuit. The warning must also tell the consumer that any payment on the old debt will restart the statute of limitations.
This comes about by rule instituted by New Mexico’s Attorney General: the statute of limitations is a material fact and thus must be disclosed to the person who owes the debt, according to the AG.
Bravo for New Mexico! I would like to think that California would follow suit. The issue of zombie debt ( old, old debt passed from collector to collector ) is an increasing problem as our economy finds ways to make money on even things like bad debt.
The more remote the debt becomes from the original creditor, the more opportunities for abuse of the debtor.
One of the failings in California’s approach to old debt is that the statute of limitations, the time beyond which a debt is unenforceable, is an affirmative defense. That means that it can only be raised by the person sued on the debt when they file a formal answer to the complaint. The defendant often doesn’t know that, can’t afford a lawyer, misreads (or in reality, doesn’t read) the papers served with the law suit, and the defense is lost.
I would like to see the age of the debt be an element of the plaintiff’s case, which must be pled and proved to get a judgment on a debt. What do you suppose the chances of getting the attention of the California legislature on such an issue this session?
As long as the statute is an affirmative defense, anyone choosing to forgo bankruptcy because their debts are old must remain vigilant for suits filed, and respond within the time limits to get the protection of the statute of limitations.
Image courtesy of dbking