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New Mexico Regulations Help Bar Collection of Old Debt

Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.
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One of the things that has infuriated me over the years is the creditor practice of selling off old debt to companies called "factors" who then flip them over to unscrupulous collection agencies to collect.  On far too many occasions it is on defaulted debt that has passed the applicable statute of limitations.  This, in my opinion, violates the Federal Fair Debt Collection Practices Act (FDCPA), as it involves debt collectors making fraudulent misrepresentations of fact to debtors (i.e. that the debt is still collectible in a court of law).  Well, I was pleased to see that the State of New Mexico agrees.

On March 15, 2011, regulations promulgated by their attorney general went into effect that require debt collectors to inform people that the debt they are trying to collect was too old to collect in a court proceeding. Imagine that!  Collectors forced to say, "Our client bought this debt, but you don't have to pay it."  How many agencies do you think are going to comply with that?  In a statement on their web site, Attorney General King said,

"If the debt is time-barred, the debt collector must so inform the debtor in both written and telephonic communications. The Rule also requires the debt collector to tell debtors that they would "revive" the debt (start a new enforcement period running) by making a partial payment on the obligation in any amount, or by signing a written admission or new promise to pay."

He also affirmed my position that the failure to do so violates the FDCPA as a material misrepresentation.

"Under the state's Unfair Practices Act, the fact that a debt is so old that a person can not be sued to collect on it is considered material.  If it is material, New Mexico law requires that it be disclosed to the debtor. This Rule is intended to ensure that debt collectors provide important information to consumers so that they can make informed decisions when they are confronted with a demand to pay an old unenforceable debt."

Wow!  This, hopefully, will provide significantly greater protection for New Mexicans.  I just hope that more states get on the bandwagon and enact similar laws and regulations to prevent these abuses, especially in these tough economic times!
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