TIME-BARRED DEBTS

 

TIME-BARRED DEBTS

 

A new practice has arisen in the debt collection industry. Old, charged off debt is packaged and sold to other financial entities for as little as a penny or less for a dollar of old debt. These debts are old and often barred by the statute of limitations which limits the period of time during which a lawsuit may be filed to collect the debt.

 

Thus, a time-barred debt is one which can no longer be collected by legal means due to the passage of time, e.g.┬żlawsuits, wage garnis-hment, liens on real estate, etc. These buyers of old debts are “debt collectors” covered by the Fair Debt Collection Practices Act.