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Rules that could help debtors identify zombie debt

Did you know that your debts have expiration dates? In many cases, if enough time passes without your making a payment, your creditor misses their chance to file a lawsuit against you for nonpayment. These "time-barred" debts may still exist, the creditors may continue to ask for payment and you may even choose to pay them back. However, as long as you do not pay, the creditor no longer has the right to pursue payments through the civil courts.

Unfortunately, many with debts do not realize their debts have expired, and they make critical mistakes that resurrect those old debts. The Consumer Financial Protection Bureau wants to change some of the rules related to time-barred debt to help creditors avoid dealing with zombie debt.

New rules may benefit you

Even if your debt has expired or a bankruptcy court has discharged it, creditors may still contact you for payment, and this can be frustrating. In fact, your creditors may overstep their rights and make threats to frighten you into sending them a payment on a time-barred debt. As soon as you send a payment, even as little as a dollar, the debt's expiration date renews, and the creditor regains its right to sue you for the balance.

The CFPB wants creditors to inform you when a debt they are trying to collect has expired. The agency proposes a law requiring debt collectors who contact you for payment to disclose to you when you are not legally responsible for a debt because of its age and that you may dispute the debt if you choose.

Other consumer advocates worry that even a disclosure may confuse those who owe debt and cause them to take steps to unintentionally renew what has expired. This may be something as simple as acknowledging to the creditor that you owe the debt. These advocates want the law to go further and forbid creditors from even seeking payment for time-barred debt.

Take control of your debt

Zombie debt can be devastating, especially when you are already struggling to pay the debts you owe. If you are dealing with creditors who overstep their rights, you may be ready to put an end to it. If you are feeling the burden of your overwhelming debt, you may find peace of mind by speaking with a New Mexico attorney about your options for finding relief.

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