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Columbia Creditors Rights Law Blog

What Creditors Should Know About Time-Barred Debt

debtIf you are a creditor that is attempting to collect on a debt that is owed, it is essential to understand how time-barred debt could impact your ability to collect. In short, there is a statute of limitations on debt. After a specific amount of time passes (that time window is specified by the statute of limitations), a creditor no longer has the right to file a lawsuit against the debtor in order to seek the money owed. However, when a debt becomes time-barred, this does not mean that the creditor is left without any remedies. We will say more about the statute of limitations and how it affects time-barred debt, and then we will say more about other possible remedies for creditors who are owed time-barred debt.

Old Debt and the Statute of Limitations 

The statute of limitations is a particular period of time that exists—a time window—in which a party can file a lawsuit or seek a legal remedy in a court of law. Statutes of limitations exist for many different legal issues, including consumer and business debt. Under South Carolina law (S.C. Code § 15-3-530), the statute of limitations for most types of consumer and business debt is three (3) years. As an article from the U.S. Federal Trade Commission (FTC) explains, the statute of limitations typically begins “ticking” once a debtor fails to make payments on the debt. More specifically, this is the time window for claims arising out of contracts, obligations, and liabilities, which tend to include most agreements between creditors and debts.

If a debtor fails to make payments to a creditor, one of the remedies the creditor has in order to seek repayment is to file a civil lawsuit against the debtor. However, this lawsuit must be filed within three years, or else the creditor is barred from filing a claim. This is what is known as “time-barred” debt. Once a debt has become time-barred, the creditor is no longer able to sue the debtor. However, other remedies may be available to creditors who are attempting to collect on time-barred debt.

Reviving Time-Barred Debt in South Carolina

One way in which creditors in South Carolina may be able to continue seeking the money they are owed is if the debt is revived. What does it mean to revive time-barred debt? First, just because a debt is time-barred does not mean that a creditor (or a debt collector, if the creditor has passed the debt onto a collection agency) cannot continue to contact the debtor in order to seek the money that is owed. To be clear, attempting to collect through contact with a debtor is not time-barred even if the possibility of filing a lawsuit is now time-barred.

When a creditor contacts a debtor about time-barred debt, the debtor may “revive” the debt. Under the South Carolina Consumer Protection Code and § 15-3-120 of the South Carolina Code, a debtor can “revive” the debt by acknowledging that it is owed in writing. The law in South Carolina also makes clear that, when a debtor decides to pay any part of the principal or interest on a debt—even if it is time-barred—that payment is equivalent to making a “promise in writing,” and as such the debt is revived. Once a debt is revived, it is no longer time-barred and the creditor may be able to file a lawsuit.

Learn More from a South Carolina Creditors’ Rights Lawyer

Creditors may have additional options to seek payment for time-barred debt, and a Columbia creditors’ rights lawyer can help. Contact Crawford & Von Keller Law Firm to learn more.

What is the Difference Between a Creditor and a Debt Collector Under the FDCPA?

debtorMost creditors in Columbia, South Carolina know about the Fair Debt Collection Practices Act (FDCPA) and know that debt collectors are required to abide by the terms of debt collection outlined in this federal law. But can creditors also be subject to the terms of the FDCPA? In some cases, creditors may be considered “debt collectors” for the purposes of the Act. We will explain what the FDCPA is designed to do, and then we will discuss ways in which creditors may be considered to be debt collectors under the Act and thus bound by its terms.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act “broadly prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt,’” according to the language of the statute. The South Carolina Department of Consumer Affairs clarifies that the FDCPA requires that debt collectors treat debtors “fairly by prohibiting certain methods of debt collection.” More specifically, the FDCPA prohibits debtors from engaging in any of the following:

  • Contacting debtors before 8:00am and after 9:00pm;
  • Contacting debtors at times the collector knows to be “inconvenient”;
  • Continuing to contact debtors after receiving a written demand from the debtor to terminate further contact;
  • Contacting a debtor directly when the debtor has a lawyer;
  • Failing to notify debtors about their rights to challenge the validity of the debt;
  • Failing to provide basic information to the debtor; and
  • Lying to the debtor about the collector’s identity.

The Act outlines other specific deceptive or fraudulent actions that are also prohibited under the law. But how can a creditor know whether it is considered a “debt collector” under the FDCPA?

When is a Creditor a Debt Collector for FDCPA Purposes?

As an article from the U.S. Federal Trade Commission (FTC) explains, by the terms of the Act, debt collectors are covered by the FDCPA while creditors are not. However, “certain courses of conduct” by creditors can mean that they are “squarely within the jurisdiction of the FDCPA.”

What makes a creditor a “debt collector” under the FDCPA in certain circumstances? First, the FDCPA itself defines a debt collector as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

As the FTC article underscores, many creditors assume that, since they collect their own debts, they are not subject to the FDCPA. However, in many instances where a creditor was also collecting debt under a different business name, courts have held that the creditor was also a debt collector under the FDCPA definition. It is also important to note that, even if you are a creditor who is not covered by the FDCPA, you are still required to avoid deceptive or unfair collection practices under Section 5 of the FTC Act.

Contact a Columbia, SC Creditors’ Rights Attorney

If you are a creditor and have questions about whether you have obligations under the FDCPA, it is important to speak with a creditors’ rights attorney in Columbia, South Carolina as soon as you can. Whether or not specific creditors have obligations under the FDCPA, it is important to understand lawful remedies available for collecting on debts that are owed. Contact Crawford & Von Keller Law Firm to discuss options for enforcing contracts with debtors.

Bankruptcy workout plans offer alternatives for businesses

As a business owner, you probably work with other businesses on a daily basis. Your company provides valuable services to the community, consumers and companies. In return, you expect to be compensated. Unfortunately, not all businesses fulfill the financial agreements. Despite efforts to contact the business and receive payment, they ignore your attempts. This denial could be the result of the other business facing financial hardships.

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Questions to ask yourself before evicting a tenant

There is always the chance it will turn into an expensive, time consuming process for you when you’re forced to evict a tenant. Whether they were once a good tenant who went afoul of their lease, or are problematic and must be removed, evictions are seldom neat and tidy.

This is why it’s often a good idea to have an experienced attorney on your side to ensure the eviction process goes smoothly and you can carry on with your business. Even drafting the proper documents requires considerable precision and an eye for detail. A skilled eviction lawyer will put in the extra time now to make sure things don’t become tangled later.

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Repossession vs. replevin: When to turn to replevin

Movies and television have popularized the “repo man,” and the sight of muscle-bound men hauling away furniture, vehicles, and other possessions. Repossession is a well-known concept among the public.

Replevin is much less known–it can be more expensive and take longer, so most businesses choose not to utilize it.

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Tenant bankruptcy and eviction

If you are a rental property owner, you have probably had to evict tenants for non-payment of rent. It’s a process that no one wants to go through as it is complicated and often heartbreaking. The process is rarely orderly and property damage is far too common.

If your tenant has declared bankruptcy, however, it becomes even more complicated. It may take months to fully resolve. When this happens, time is of the essence and experience with bankruptcy and debt collection becomes even more important than ever.

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When your borrower files for bankruptcy: The dos and don’ts

We all understand that people can get in over their heads and will use the protections of Chapter 13 bankruptcy to keep their property while making payments. But what does this mean if you are the creditor?

Let’s put it right out there: you have rights too. However, there are some things you shouldn’t do as well as some best practice things you should be doing when your borrower files for bankruptcy.

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