Can the debt collector force someone to pay an old debt?

Q. My friend is 76, receives about $950 from Social Security, food stamps, Medicaid, and literally “stranger kindness.” Her friends and neighbors help her by driving her where she needs to go, doctor’s appointment, church, etc. She has no family. She owns nothing but her dilapidated house – a house with no heat or hot water. Recently, she received letters from a collection agency seeking a $9,000 debt that was owed about 10 years ago. It may be a credit card she used when she fell ill with cancer 10 or 12 years ago, but she isn’t sure. She can’t pay a penny for it. Can they make her pay? Is his house in danger?

– A friend

A. We are sorry to hear that your friend is going through such a difficult time.

But she’s lucky to have caring friends like you.

Often when people stop paying their old credit card debt, they think credit card companies won’t pursue them, said Union City bankruptcy attorney Karra Kingston.

But for many people, those creditors eventually come back.

“In New Jersey, the statute of limitations for collecting credit card debt is six years,” Kingston said. “The statute of limitations refers to the window of opportunity in which a creditor can bring a civil action to collect the debt.”

In New Jersey, after six years, the debt is considered “prescribed debt,” she said. This means that if the creditor tries to collect, you can go to court and argue that they have exceeded the statute of limitations and, therefore, the statute of limitations.

Although the statute of limitations may run, that does not prevent a collection agency from being able to collect the debt, Kingston said. It just means they can’t be sued.

“If the statute of limitations has not run, that means the debt collector can still sue. If the debt collector wins the case, they will get judgment against the debtor for the unpaid debt,” Kingston said. “When this happens, they are able to collect the judgment amount by putting liens on the property, garnishing wages and levying bank accounts.”

Kingston said that sometimes people with unpaid debt can settle their debt with creditors or debt collectors. To do this, they would ask the company to take less than is due, she said.

It is important to keep in mind that settling a debt has tax consequences. As a result, you could be hit with a tax bill at the end of the year for the amount forgiven, Kingston said.

If your friend has other debts or the statute of limitations hasn’t expired, bankruptcy may also be an option, she said, allowing individuals a fresh start.

“A lot of people use bankruptcy as a tool to get back on their feet and start over,” she said. “Chapter 7 bankruptcy allows individuals to discharge their debt and start over, while Chapter 13 bankruptcy allows individuals to enter into a three to five year repayment plan.”

Send your questions to [email protected].

Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.comit’s weekly e-newsletter.

Tana T. Thorsen