Bill collectors have their eye on Nevada. That's because we have the highest percentage of people 90 days behind on credit card payments. That could mean a huge amount of debt will soon be going into collections.
News 3 Investigator Mitch Truswell did some digging and discovered that after a certain amount of time, your legal requirement to pay the debt expires.
It should be clear that we are not telling readers to stop paying debt. What you might not know is that the state of Nevada says there is an expiration date on credit card debt. But it's not quite that simple. That expiration date won't stop someone taking you to court.
"They're trying to get you to confess that you owe this debt. It's just a nightmare."
We can't tell you his name and he asked that we hide his identity for the broadcast version of this story. We'll call him Jack.
Years ago, when money was tight, Jack never paid what he owed on a credit card. It's something he's not proud of. "It's embarrassing. It speaks to your character." And that unpaid debt eventually ended up in collections.
What makes Jack's story unique is that it would lead to changes at one of the nation's largest collection agencies.
What collectors wanted from Jacks was about $3,000. But the debt was more than six years old and that's where the Nevada statute of limitations kicks in. "Under the law, they are not required to pay that debt," attorney Craig Perry said.
But that's not what happened to Jack. "I received, on my doorstep, a summons and, you know - panic," said Jack.
We found at least two other cases just like Jack's. Perry says collection agencies can be relentless. "A lot of people don't know that most laws - there's a time to when action can be brought."
But how could an expired debt even end up in district court? "I think that they think that someone may hit the panic button if they see a judgment and just may pay it," Jack speculated.
Is anyone looking to see if there's an expiration date? In Nevada, the person who owes the debt, in this case Jack, is the one responsible for keeping an eye on the expiration date. Believe it or not, the courts don't have to.
That means if your debt is more than six years old, you could still get sued. "So even though you are innocent, by legal process you're going to have to owe that debt," said Perry.
"My biggest fear is one day they would try to garnish my wages," said Jack. But that never did happen to Jack. He never paid the debt, but he did have to pay legal fees. Said Jack, "I learned the hard way.
Now that the collection agency knows there a six year limitation on debt, here's what they are saying about the matter:
Based on our understanding of Nevada law and the pertinent account information, we believed we could file suit. The Company has changed its procedures to reflect its new understanding of Nevada law.
The state of New Mexico now demands all collection agencies disclose the expiration date when collecting a debt. If the debt has expired, no court judgments are allowed.
We did ask the Nevada Attorney General's Office whether similar action might be looked at there. We were told no.
The clock starts ticking on credit card debt the day it is considered "charged off" by the particular company who issued you the credit. Only they can tell you when that happened.
