By John Finnerty
It’s a secret credit card companies don’t want debtors to know: Credit card companies have four years to take action or Pennsylvania law says the debt’s too old to collect.
A bill proposed by state Rep. Pete Daley, D-Allegheny County, would force collection agencies to tell consumers to disclose if the debt they are trying to get repaid is too old. The bill would also require collection agencies to put in writing the amount they claim the consumer owes. Daley is the Democratic chairman of the House consumer affairs committee.
Daley’s bill is important because of this:
Collectors know that if they can coax a debtor into making even a nominal payment, the clock starts ticking again, said Pete Macky, an attorney with North Penn Legal Services in Sunbury. Requiring debt collectors to disclose that debts are too old for legal action would help consumers who might be fooled into making a good-faith effort to satisfy a debt only to arm the debt collector to go after them in court, Macky said.
All states have statute of limitations on credit card debt, but the periods vary between states. In Maryland and Delaware, the statute of limitations is just three years. In New York, New Jersey and Ohio, it’s six years.
Credit card companies bundle up old debt and sell it to other companies, Macky said. As a result, more often than people realize, there are times when debt collectors are trying to get payments on debt that is so old, the consumer is not required to repay it.
Advocates maintain that there are many cases in which collection agencies mislead people about the size of the debt, Daley said.
“The laws in Pennsylvania pertaining to debt collections are, by comparison to others, very adequate. The Pennsylvania Attorney General’s office has done some amazing work in enforcing the law and prosecuting offenders,” Daley said. “This legislation seeks to add one additional requirement to the law that simply asks debt collectors and creditors to fully disclose the debt or judgment being sought against someone and provides those subjects with the knowledge that the debt or judgment can be lawfully collected at that time.”
Macky said he’s certain that credit card companies and banks will lobby fiercely to bury state Rep. Pete Daley’s debt collection bill.
Often, debtors are overwhelmed and do not seek to take advantage of the protections provided by the law, Macky said. People sometimes just stop opening their mail because they can’t stand to face another notice from a bill collector. One of the first questions legal advocates for the poor will ask clients is: How long has it been since the last payment on the debt? There are times when the client will just shrug.
Daley’s bill would only tweak Pennsylvania’s protections for debtors. The state already has a number of strong rules in place handcuffing the conduct of collection agencies.
n Collection agents are only allowed to call between 8 a.m. and 9 p.m., or at work if they are told that your employer approves of personal calls.
n Collection agents can only contact other people to try to locate person, and they are not supposed to say they are calling about a debt.
n Collection agents cannot use harassing conduct or language.
n Debt collectors are not allowed to lie in order to get a person pay a debt.
But despite those protections, overzealous debt collectors are still a problem. Complaints about collection agencies crossing the line are among the most common consumer complaints fielded by the state Attorney General’s Office, a spokesman said.
Finnerty works in the Harrisburg Bureau for Community Newspaper Holdings Inc. He can be reached by email at firstname.lastname@example.org or on Twitter @cnhipa.