Debt Collectors & Banks Scheme to Revive Old Debts
The WSJ reports that debt collectors are teaming up with some banks to offer a credit card to consumers who have old credit card debts. The old debts are barred by the statute of limitations. The debt collectors send misleading letters to the consumers stating that upon payment of a few hundred dollars on the old debts, the bank will issue a credit card. What the solicitations do not make clear is that the payment will revive the old debts. In other words, payment starts the statute of limitations running again.
In California, the statute of limitations is four years from the date of last activity–the last payment or debit on the account. Some states, however, have statutes as short as 3 years or as long as 10 years!