Can You Collect on Debt Where the Statute of Limitations Has Expired?

It often happens that if you try to collect an older debt the company or person that you’re collecting from may claim the expiration of the statute of limitations. The statute of limitations is the ultimate time deadline that you have to file a lawsuit. So, if that time period has expired, and you can’t legally bring a lawsuit to collect a debt, can you still try to collect the debt in ways other than filing a lawsuit?

Commercial or Consumer

When it comes to commercial or business debt, this isn’t as much of a problem; the law generally allows you to do or say what you want in the collection of a debt without penalty.

But if the debt is for personal, household, or general consumer purposes, there are a myriad of laws that can get you in trouble, the foremost being the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act or FCCPA.

While these laws are complex, they both generally prohibit the same behavior when it comes to collecting old (consumer) debts: don’t threaten to do something that you legally aren’t allowed to do.

Can You Collect?

So, in the context of consumer or household debt that is too old to be collected through a lawsuit, can you still try to collect that debt without filing a lawsuit?

The answer is generally yes—the fact that your right to file a lawsuit in court has expired, doesn’t mean that you have lost the right to collect on the debt or ask that it be paid in ways other than filing a lawsuit.

The practical problem comes in what you say in collecting the debt. In most cases, to collect a debt, you would threaten, explicitly or subtly, a lawsuit. But if the statute of limitations has expired, making that threat is illegal—you no longer have the right to bring a lawsuit, so saying that you will, or could, bring such a lawsuit, is a lie, and a deceptive practice that would likely violate both the FDCPA and the FCCPA.

That means that if you are collecting on debt where the statute of limitations has expired, you will have to do so in a way that doesn’t mention the possibility or likelihood of a lawsuit or a judgment, or court intervention at all.

Just Filing the Lawsuit Anyway

Be very careful when filing lawsuits on debts where the statute of limitations has expired. On the one hand, statute of limitations is a defense—if the debtor never raises the defense (or just never responds to the complaint leading to a default), you could still get a judgment for the amount owed, even though the statute of limitations has expired.

However, if the debtor does respond, and realizes the time limit to collect in court has expired, you could end up with a counterclaim against you, for violating the FDCPA, FCCPA, or both.

We can help you with claims or lawsuits if you’re owed money or someone says you owe them money. Let the West Palm Beach commercial litigation lawyers at Pike & Lustig help you.

Sources:

consumerfinance.gov/ask-cfpb/can-debt-collectors-collect-a-debt-thats-several-years-old-en-1423/

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0559/Sections/0559.72.html