Tuesday, September 1, 2009
Attack of the Zombie Debt!
Day 11 of 30 days of Debt Collection shows why this blog is head-and-shoulders above your run-of-the-mill legal blog: I'm the only lawyer I know of who's not afraid to tackle the recurring legal problem of zombies.
Uh... Zombie Debt, I mean. Lawyers as a whole would probably not be very effective against zombies, because zombies don't sit easily for depositions and don't care if a court orders them to pay costs.
But Zombie Debt is something that lawyers can very effectively deal with, and it's today's focus.
"Zombie Debt" is debt that can't be collected anymore because the statute of limitations has run on suing you. (I talked about the "statute of limitations" here.) The statute of limitations on your debt that you owe probably varies depending on a variety of factors including where you live, what kind of debt it is, and when you last paid.
In Wisconsin, for example, a typical statute of limitations is 6 years. Anyone you owe money to usually has six years to sue you if you don't pay. That's because most debts arise from a contract, an agreement to pay the money back, and Wisconsin gives six years to sue on a contract. (There can be shorter or longer periods of time. A company can foreclose on a mortgage more than six years later, for example, even if they can't sue you anymore.)
That six years starts running, in Wisconsin, from the date you miss a payment. So if you're paying on a credit card, and you skip the September, 2009 payment, come September 2015, the credit card company can't sue you (at least not in Wisconsin.)
So do you still owe the money?
Good question! Take a gold star. The answer is a bit complicated and again, depends on the state where you live. In Wisconsin, the answer is no, you don't owe the money anymore, because in Wisconsin, the statute of limitations ends both the remedy and the right.
Nice way to put it, huh? What that means is that not only does the statute of limitations end the right to sue a debtor (the remedy for a breach of contract) but the debt itself (the right to receive payment.)
So if you lived in Wisconsin when you borrowed money, and you didn't make a payment for more than six years, you no longer owe that money and it's just too bad for the creditor.
Again, things can get complicated, so don't jump to conclusions. Among the complicating factors are these:
You might have agreed to a statute of limitations in a different state -- most credit card agreements do that, and many of them use Delaware's statute of limitations (which is actually shorter than Wisconsin's.)
You might also have moved. It's too complicated for this post to say which statute of limitations would apply if you took out the credit card while you lived in, say, Alabama, then stopped making payments while you lived in Colorado, and then were living in Wisconsin when the creditor tried to collect, but you can see the problem there. (Wisconsin, though, applies at least some of its laws to protect debtors who live here when the collection is begun. So if you owe money, move to Wisconsin!)(Unless your state has better protections, in which case, tell me so I can urge people to move there.)
As you can see, zombie debt is considerably more complicated than zombies themselves are, so it's a good thing we have lawyers, right? I mean, all you have to so with zombies is cut off their heads, but zombie debt has all these rules and regulations and considerations...
... leaving you to do this: Keep track of your payments. Save your old check registers. If you think a debt is too old and you're dealing with a zombie debt, call a lawyer.
If, on the other hand, you've got regular old zombie problems, I'd call in the army. They're pretty good at that stuff.