Zombie Debt Collectors Find You At Grandma's

Palisades Collection is offering Jeremy a great deal: he can pay half off his debt of $237.64 and get the account settled! Small snag, though, Jeremy never ordered the Verizon service they’re trying to collect on, the debt has passed the statute of limitations, and he got it expunged from his credit report years ago. Still, Palisades persists in sending collection notices for him to his grandma’s house. What’s a boy to do? Read on and find out.

In a series of letters, Jeremy writes:

7/03/08

Today, I got a letter in the mail, at my Grandma’s house, where I lived up until 6 years ago. It was a “settlement offer” from Palisades Collection.

It stated that I owed $237.64 and I could pay half of the “debt” and settle the account.

There are numerous problems here (like the fact that I don’t ever remember having this service through Verizon North, even if I did it was from at least 8 – 9 years ago), but the main one is the fact that, by going through old credit reports, I found that this was originally posted to my credit in 2006. It was actually removed from my credit report 05/08. There is no traces of it. This is the first communication that I have gotten from this “company”.

What should I do? What are my options here? I’m sorry, I’m totally credit illiterate.

8/11/08

I sent a Debt Validation letter to Palisades Collections. They received the letter on July 11. The 30 days are now officially passed for them to validate my debt. Also, on the date I mailed out the letter to them, I filed a complaint with the BBB, because I knew it was an invalid debt simply because it was outside the statute of limitations in Michigan. Today, I got a letter in the mail from the BBB that had the response from Palisades. Their response included, now get this, the debt validation materials they were supposed to send to me. So, the BBB got it, and I didn’t. Also, according to the “validation”, the date listed as the first date of default was December 13, 2001, which is one year outside the statue. I re-contacted the BBB with this new information, but I am unsure of where to go from here.

9/10/08

Just wanted to update you once again on this whole thing with Palisades Collection…..

I got another letter in the mail from the BBB with their response from Palisades Collection. It included something that I thought was interesting….

“Please also note that it is my understanding that while the expiration of the statue of limitations prohibits a creditor from enforcing the debt through litigation, it does not prohibit collection of the debt.”

What does that mean? How are they thinking they might be able to collect on something that they can’t legally collect on?

Jeremy,

If it’s any consolation, this is not the first time we’ve heard of Verizon selling dead old accounts to debt collectors who then try to fraudulently collect on them. One time they tried to pry $142 from a fluffy white dog.

If the debt is valid and the statute of limitations have passed, they can’t sue you to collect the debt but there’s nothing to stop them from sending you letters. In other words, free kindling. If the debt is invalid and they didn’t verify the debt to you, I believe you can sue them under the Fair Debt Collection Practices Act (FDCPA) for statutory damages. I’m not a lawyer and you might want to speak to one about the particulars of your case, but I’ve also seen people successfully sue FDCPA violators in small claims court on their own. You might just want to send them a “drop-dead” letter, this post has a template for writing one.

(Photo: TrailofTerror, Getty)

Comments

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  1. SkokieGuy says:

    And wouldn’t mailed letters attempting to collect an invalid debt be a mail fraud issue? If so, this is a Federal offense.

    I also recommend your State Attorney General (and the one in the state where the collection office is located) over the BBB.

    Sending the AG’s a letter and copying the collection agency will likely produce a desirable result – namely they move on the the next sucker (or fluffy white deadbeat dog).

  2. esd2020 says:

    First you have to send them a letter (certified, ideally) stating that they are not to contact you regarding this debt as per the provision of the FDCPA. And that if they continue to contact you in violation of the law, you will sue them for statutory damages.

    And if they keep writing, follow through with the threat. It’s illegal for them to keep hassling you after you ask them to stop in writing.

    • humphrmi says:

      @esd2020: Absolutely. The law prohibits them from suing on a stale debt, but they can keep attempting to collect – IF you do not tell them to stop. Once you tell them to stop, if they continue, you can collect damages in court. And of course if they sue you outside the statute of limitations, you’ve got some nice prize money coming your way.

      • Corbin123 says:

        @humphrmi: “And of course if they sue you outside the statute of limitations, you’ve got some nice prize money coming your way.”

        Not quite. As was said, the running out of the statute of limitations is an affirmative defense. The company is still well within their rights to bring a claim, and will not be penalized because the statute of limitations has run on it. The case will just be dismissed.

        • humphrmi says:

          @Corbin123: Depends on the state, county, jurisdictions. Plaintiffs are expected to know the statute and bringing stale lawsuits in many jurisdictions is considered frivolous. Most jurisdictions have (admittedly little-enforced) laws against bringing frivolous suits.

          So in theory, when a frivolous suit is dismissed, the defendant can ask for costs plus sanctions against the plaintiff’s attorney. If the judge agrees, the sanctions generally go to the defendant.

          The way to make sure you get sanctions is to speak often about the statute when negotiating with the collections agency. If their lawyer calls you, speak often about the statute. When you’re in court, requesting dismissal due to the statute, speak often about how hard you tried to avoid coming into court today but the plaintiff and their lawyer just wouldn’t listen to you and seems intent on dragging you into court.

          Judges don’t like having their time wasted. If you sound like you honestly tried to avoid court on a stale debt, a pi$$ed off judge is more likely to issue sanctions.

  3. esd2020 says:

    Also, you don’t have to guess about what the law is. It’s pretty short. You can read it yourself: [www.ftc.gov]

  4. rshettle says:

    Call a lawyer and sue the pants off them!

  5. coren says:

    They can’t enforce the debt, they can ask you for the money though, although I believe you can basically get them to stop because it’s spam at this point (no existing business relationship, unwanted solicitation, etc)

  6. mwshook says:

    “Please also note that it is my understanding that while the expiration of the statue of limitations prohibits a creditor from enforcing the debt through litigation, it does not prohibit collection of the debt.”

    If this was a *valid debt*, that a person had been financially unable to pay for the last 8 years, there is still the remote possibility the person may WANT to repay it, because it is the right thing to do.

    • angryhippo says:

      @mwshook:

      I think making a payment on a dead debt would actually damage your credit more by “reviving” it.

    • PinkBox says:

      @mwshook: The only problem with that is the original debtor won’t be the one getting the money, and the person paying the debt will be left with a shiny new mark on their credit report for the next seven years.

      So much for doing the right thing, huh?

    • JulesWinnfield says:

      @mwshook: The expiration of the statue of limitations does not prohibit a creditor from enforcing the debt. The statute of limitations is an affirmative defense that is waived if it is not pleaded in a timely manner. In other words, a creditor can always take a chance that the debtor might throw away the defense.

      On the other hand, an actual payment made by a debtor under circumstances establishing that it is intended as a part payment towards a larger debt starts the statute of limitations running anew on the balance, even if the payment is made after the statute of limitations has expired.

  7. Hogan1 says:

    It probably costs them a few $ to mail each of those “requests”. Collect them and when you have enough burn them along with a copy of their company logo or name. Take pictures of the process and send them to the company.

  8. as a future lawyer, I’m just glad that someone knew it is a statuTe of limitations and not a three dimenstional sculpture…

  9. mannyv says:

    If they’re still sending you collection letters, then head over to fatwallet and see how to extract money from them.

    [www.fatwallet.com]

    [www.fatwallet.com]

    With a small time investment (spent canvassing lawyers in your area), you could win a few thousand dollars. The lawyer’s fees will be paid for by the collector.

    Whack ‘em.

  10. The best way to resolve this issue is claim this debt as ID theft. You will need to send to Palisades two things -

    1.) A police report documenting the ID theft, which you can obtain by taking a copy of the collection letter with you to a local precinct and ask to file a police report for ID theft.

    2.) A FTC ID Theft Fraud affidavit that has been signed and notarized. Click here for the form-
    [www.ftc.gov]

    Make sure the Affidavit is notarized (important) and send both forms along with a note stating that this account was opened without your knowledge or authorization. They cannot continue to collect without proof it’s yours once you send them these two items.

  11. cottercutie says:

    1. Don’t claim ID theft unless you have actually been a victim of ID theft. Filing a false police report is fraud.

    2. They can try to collect it until they are blue in the face, but you also need to be proactive about it. Just because the statute of limitations for a lawsuit has expired, it will not stop many companies from filing to obtain a default judgment against you.

    3. As for “extorting” money from them? I suggest you read up on Palisades over at http://www.creditboards.com along with the reasons you can and should sue over. Search for the “FOAD” letter after you’ve read up a bit.

    Suing a company blindly for what you perceive to be violations, just like filing false reports of ID theft, hurts those with LEGITIMATE claims.

    • @cottercutie: If he did not open the account, then you can claim it’s ID theft. I agree that if you have any reason to believe that it IS your account, then no- don’t report it as ID theft.

      I was under the impression that this was clearly not his account.

    • mannyv says:

      @cottercutie: Suing a company blindly for what you perceive to be violations, just like filing false reports of ID theft, hurts those with LEGITIMATE claims.

      Well, not really. First, a lawyer will screen out a case with merits (ie: one that they can win) from the chaff.

      Second, any given individual doesn’t know if a claim is legitimate or not. What you’re basically saying is “the issue is too minor for the courts/etc to deal with.” That’s a load of hooey. The system exists for you to use it! The law isn’t just for important things, like murder, etc. The law is for everyone…mostly.

  12. MudMt says:

    Got a letter to your Grandma’s house? That’s nothing. My brother had a debt collector who was trying to collect on a debt where a payment plan had been made out by mailing our half brother’s ex-wife of six+ years. We handled that one, but seriously, what the hell debt collectors?

  13. framitz says:

    Simply IGNORE the collector. I’ve been in a similar situation and simply ignoring them did the trick. They got tired of trying to collect the non-existing debt and after a few months the mail stopped. Just throw their crap away and move on. Why waste more time and effort than it takes to simply throw the mail away?

  14. Dilbitz says:

    I’m in this situation over a measly amount from Capital One. The original debt was $500 way back in 2000 (I lost my job and couldn’t pay). I tried paying some of it to one collector and they took my money and never applied it to the debt…now I don’t trust any of them. One took me to court and got a judgement against me for $1300 back in 2001. The judge just told me to contact the collection agency and figure out a payment plan with them. I said I could maybe manage $20 a month since I was unemployed. They said that there was no way that they would accept that and they wanted info on all my assests and I basically told them to go screw themselves cause I’m not providing them with anything. I finally wrote a letter to them three years ago asking for info on this matter and they never responded. The debt was supposed to be off my credit report April 2008. I can’t get another free report until February to see if it really was off it. Just the other day, my mom got a phone call from someone looking for me (using my maiden name…I’ve been married for 6 years)…are they looking for me again????

  15. ideagirl says:

    AT&T seels stuff to Palisades, too. Years ago they did the exact same thing to me but with AT&T. I worked at a law firm at the time, a certified return receipt letter on company letterhead did the trick.

  16. Whitey Fisk says:

    “Please also note that it is my understanding that while the expiration of the statue of limitations prohibits a creditor from enforcing the debt through litigation, it does not prohibit collection of the debt.”

    In other words, they have no legal standing to force you to pay but, hey, that doesn’t mean you CAN’T pay! We’d like your money anyway!

  17. greggen says:

    I have an old discover card debt (from 1990) that keeps on cropping up every 6 months or so…

    Dont bother with sending them a letter asking them to stop.
    They are ‘skimming’ buying old debt and spamming out demands for payment. They know its too old to really collect on. If you send a letter (registered) they will simply sell the debt to someone else and a new collector will be contacting ya.

    Oh, and if you ignore it, they will simply sell the debt to someone else and a new collector will be contacting ya.

  18. hypoxia says:

    If you sue under the FDCPA I believe falls under the jurisdiction of federal court, not small claims. I’m currently suing the everloving hell out of a debt collector for multiple violations and it falls under the jurisdiction of federal court, not small claims. I could be over-generalizing here, though.

  19. TreyWaters says:

    Another thing that may help is to contact your state’s Attorney General.

    Embarq started harassing me over a Yellow Pages ad someone who happened to have the same name as me opened and defaulted on. After 3-4 months of me telling them they had the wrong person, and the same 3-4 months of them telling me “sorry, we won’t call you again”, I wrote to my AG with the details.

    In the “requested resolution” section of my complaint form, I asked for, in writing, that they would never call again. Once I got back the response from my AG, the calls stopped.

  20. flow202 says:

    Your best bet is to contact a lawyer in your state who specializes in FDCPA (Fair Debt Collection Practices Act) cases. The FDCPA awards plaintiff’s attorneys fees so you will not have any out of pocket fees if a lawyer decides to take your case. Try the National Association of Consumer Advocates. I’ve included a member search page.

    [members.naca.net]

  21. flow202 says:

    Your best bet is to contact a lawyer in your state who specializes in Fair Debt Colllection Pratices Act (FDCPA) cases. The FDCPA awards a winning plaintiff’s attorneys fees so you will not have to pay out of pocket for representation. I suggest the National Association of Consumer Advocates. I’ve included a member search page.

    [members.naca.net]