Comment by mrstatute | Hacker News Reader

Comment by mrstatute | Hacker News Reader

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It's much more complicated than that. The law doesn't wipe the slate clean. Rather, it gives the debtor an affirmative defense against a lawsuit after X years. It does not stop a debt collector from trying to collect on otherwise uncollectible debt (phone calls, letters, calls to friends, family, and employers if the debtor doesn't respond). Additionally, debts barred by the statute of limitations can sometimes still crop up as "zombie debt" years or decades later. Collectors can (and will) put a new records on a person's credit report, preventing most debtors from rebuilding their credit.

When a debtor stops paying debts entirely, it can start a whirlwind of problems. They can be barred from finding housing, certain types of employment, their actual current jobs (certain professional licensing require financial responsibility). Additionally, most debts end up in the hands of collection attorneys (CA) who will sue en masse to obtain judgments. This effectively stops the statute of limitations and gives the CA 10 years, 20 years, or a lifetime to collect the debt. In these cases, a well-timed bankruptcy is (and should be) an option for people. In some cases of debt -- student loans for example -- the debt is presumed non-dischargeable and can create a lifetime of hardship for the debtor.

>phone calls, letters, calls to friends, family, and employers if the debtor doesn't respond)

They are only allowed to call to locate you, and they aren't allowed to tell people why they are calling.

Since the debt is past the statute of limitations, there's no reason to hide from them. You can send them a cease and desist letter to make them stop contacting you.

>Collectors can (and will) put a new records on a person's credit report, preventing most debtors from rebuilding their credit.

They can’t change the date the item went into collections. If they add an item and say that it’s new debt you can dispute it.

Of course debt collectors can always break the law and do whatever they want, but if they violate the FDCPA you can sue them for actual damages and statutory damages.

>Additionally, most debts end up in the hands of collection attorneys (CA) who will sue en masse to obtain judgments.

Yes, this is the real problem if you stop paying. You can still go bankrupt after this point though.

> Yes, this is the real problem if you stop paying. You can still go bankrupt after this point though.

You sound like you have a lot of first-hand experience in this area. Mind sharing how?

Sure. I helped an older family member who was being threatened by collectors over some very old, unenforceable debt.

Also: Tacking on fees allows a debt collector to effectively 're-up' the debt, which resets the clock on the statute of limitations.

That tactic has been shot down by the courts, but there are some big loopholes to it. Any acknowledgement of the debt (normally in writing) or any token payment by the debtor can reset the clock. Sometimes, debt collectors employ shady practices to get the statute reset, such as telling the debtor, "If you pay us $10, we'll stop calling you for three months." This token payment will reset the clock.

Once upon a time (40+ years ago?) accepting partial payment for a debt using an instrument that declared something to the effect of, "for the satisfaction of all debt", was enforceable. This became a problem when automated payment processing systems became prevalent. Savvy debtors--presumably mostly lawyers--could write a check for $10 that extinguished a $10,000 medical bill once cashed. Needless to say, the law was quickly changed before it became too prevalent--much more quickly than laws designed to protect consumers.

Unlike the loophole regarding debt acknowledgment you mention, this loophole was an artifact of mercantile law. Terms on negotiable instruments are typically strictly enforced as compared to regular contracts, to ensure maximum efficiency of payment systems. (Or at least the rules for what's enforceable are very brightline, and aren't particularly concerned with fairness. Magical phrases are still very much important.)

Interesting article I found on this subject: https://tddlaw.com/accord-and-satisfaction-effectiveness-of-...

"The takeaway from these two cases is that accord and satisfaction can only settle a disputed debt when both parties have knowledge of the outstanding issues to which the debt pertains, and the party negotiating the check has reasonable notice that by depositing the check the dispute is completely settled for the amount of the check."

I wonder if you could put a 'warning sleeve' or something around a check that is sent to someone who may process it automatically.

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