There is a new tactic in bill collection that I need to make sure you know about. David Lazarus of The Los Angeles Times reports that Capital One is sending people bills for old, written-off debt that’s past the statute of limitations and well past when they could sue you over the debt or put it on your credit report.
Cap One is reportedly making these bills look current like any other bill, with the exception that they say “past due” on them. The credit card lender contends they’re just doing this to comply with a Federal Reserve regulation. But I don’t buy it. Lazarus reports the following a Cap One spokeswomen told him that her employer:
“…Was complying with Section 226.5(b)(2) of the Federal Reserve’s Regulation Z, which requires lenders to send a statement for each billing cycle. But it stipulates that ‘a periodic statement need not be sent for an account if the creditor deems it uncollectable, or if delinquency collection proceedings have been instituted.'”
“The regulation requires Cap One to send out statements for charged-off accounts, ‘regardless of whether we are still actively seeking to recover on the debt,’ [a Cap One spokeswoman] said.”
I don’t understand why this makes Cap One think, “We have to send these bills to people.” If you don’t have income to pay a bill, the law has set procedures about what creditors and collection agencies can do. (This is to say nothing of the moral obligation when you owe a debt. If you owe, you should pay.)
So Cap One is using this as a new attempt to collect on old debt by making it appear as if you have to pay. But you don’t. If you choose to pay, that is your decision. Each state has a statute of limitations governing old debt. The maximum time a delinquent bill can be on your credit is 7 years from the time you go delinquent.
Here’s what I want you to know: If you do receive this blast from the past kind of statement from Cap One, know that nothing has changed under the law. If you send even $1, the whole debt becomes a current obligation by resetting the date and waiving your rights under the statute of limitations in many states.
Be aware, be wary and be careful!