Collection Notice Of Disputed Debt

Date: March 30, 2011
Posted In: DLP Law

              Ally received a notice from a collection agency advising her that she must respond to the letter or face a suit within thirty days. Ally had incurred a bill back in 2006 from a cosmetic company which she had questioned and never paid. Ally was unsure whether she should try to negotiate payments on the debt or whether she owed it at all.

ISSUE:          Does Ally have an obligation to pay the debt legally?

ANSWER:     No. There is a four year statute of limitations on contractual debts. Should Ally make any kind of payment, the date of the payment would start the running of the four year statute of limitations all over again.

            Ally should notify the credit agency that she is not responsible for the debt and the same would be barred by the statute of limitations. She should notify the collection agency that for any reason this bad debt shows up on her credit report, she will immediately take action under the Fair Credit Reporting Act against the debt collection agency. In effect, Ally will become the Plaintiff in the suit as opposed to the possible Defendant.

            Collection agencies are buying mass amounts of potential debt collection activities for pennies on the dollar in hopes of collecting on some of them. Consumers should beware of this activity.

Disclaimer: The above article is for instructive purposes only and each case is fact sensitive.  Consultation with an attorney should be obtained instead of reliance upon the legal issues discussed in this column. 

Tom Cummings
Thomas P. Cummings has been a Partner with Dougherty Leventhal & Price, LLP since 1996 and has been with the firm since 1991. He focuses his practice on workers’ compensation, Social Security Disability and personal injury cases.