How long does a creditor have to collect on a loan?

Question

I recently received a letter from a loan servicing center about a loan from 1995. I had purchased a car from a finance company that is now no longer in business. I was treated so badly by this company (in person and over the phone) that my stepfather (who was the cosigner) told me to tell them to come and get the vehicle in 1995 which they did. I received a threatening letter from this loan servicing agency saying that I still owe almost $7000 which is more than the car was worth 12 years ago when I bought it. I contacted them and all I got was more threats. My stepfather has since passed away and I am wondering what my legal rights are as far as this.

Answer 1

There are state specifics about statute of limitations for debit collection. YOu can find the general info here:

http://www.bankrate.com/brm/news/cc/20040116b2.asp#il

Answer 2

First check to see if some Credit Service didnt BUY the loan from the compnay when it when bankrupt. Usually these collections places buy the debts for 10 Cents on the dollar and try to collect the full ammount becuase it goes into thier commission. What was the original balance, I would call to settle it for 20Cents on the dollar... tell them at least they get some money than none at all.. they make profit if they get more than the 10% back.

I hope you got some kind of proof that they picked up the car in 1995. Unfortunately we live in a world where evidence is necessary. When you contact a creditor they have , 45 days I think to respond. They need to send any papers or documents proving thier case as well.
Then you have a chance to dispute thier claim. IF you have the necessary burden of proof that they indeed reclaimed the car, it might take a while but you can be cleared. Re-read your agreement that you signed when initally purchased the car... what does it say?? You could have agreed to intrest and other such closing costs if the loan wasnt satisfied as said in the agreement. Call the DMV ... who is this vehicle registerd to NOW? There are many things you can do and need so gather as much info as you can.
It is a lengthly process, and there are many diffrent avenues that may be right for you.
If you cannot handle that, then I would hire an attorney also.

Answer 3

That depends upon state law. Each state has it's own laws on the statute of limitations for collections.

For something that old, it's more than likely that a collection agency has bought the debt for a few pennies on the dollar -- possibly less than 1% of the outstanding debt. From that standpoint they don't need to collect much to turn a profit.

You should check with an attorney before you have ANY contact with these folks. If the debt is uncollectible you can safely ignore them. Any contact from you, especially if you admit to the debt or pay anything on it, will dump it back on your credit file possibly with disasterous results to your credit rating.

If the debt still is legally collectible your best bet would be to make an offer for payment in full, probalby for a small fraction of the total outstanding -- a few hundred at most due to its age. Your offer should include the stipulation that it NOT be recorded in your credit file.

Again, consult with an attorney before you do anything.

Answer 4

One of the biggest misconceptions about repossessions (whether it is at your free will or not) People think that because the car is no longer in your possession, that you are no longer responsible for the debt. Unfortunately more often than you think, thees Companies can wait years after the fact and attempt to collect the debt. I don't think they will get the full $7000. Generally they are only able to collect the losses after the resale of the car ( Worth of car - resale).

It is very common for companies to sell their "Noncollectable" debts to out site collection agencies, this is probably who you are dealing with and this person is going to be very aggressive because they get a commission for every dollar paid back by you. I would suggest using this to your advantage, and negotiate a lower amount.

Unfortunately you signed an agreement to repay a debt, so you still owe regardless of how long it has been since you did business with the company. In this situation, I would negotiate with this company and try to agree on a reasonable amount. Find out what the re-sale price was and subtract that from what the car was worth, that is all i would pay.

Important! DOCUMENT EVERYTHING!!!! And get everything in writing

Answer 5

What amazes me is when we have a parade of people who answer your question one way, stating that you need to get the statute of limitations law in your state to see if they can collect.....

Then you get an answer like Belinda W's saying the SOL has nothing to do with it....you will always owe it so why not just pay up! Not one one word disputing any of the other answers...no sources...nothing.

So now I ask Belinda....when the state law says a written contract has a SOL of 10 years, and a car loan is considered a written contract.....why is this situation exempt from this law?

To answer your question, every state has a statute of limitations law regarding written contracts. The starting date is when you breached that contract, or the date that you failed to make the payment (1995). Look at the link below and see what the SOL for written contracts is for your state. In most cases you should be well under that period.

Answer 6

Legally, until the statute of limitations runs out.

After that they can still ask you to pay them, but there is nothing they can do to you legally. The only way they can collect is if you agree.

Check your States S.O.L. laws. If it has passed, ignore them.

Answer 7

get an attorney