Debt Collection – Know What Your Rights Are

Last night on the HBO show “Last Week Tonight,” host John Oliver forgave nearly $15 million in time-barred medical debt. He was able to do this after setting up a collection company and purchasing the debt for about $60,000.

This debt portfolio and many more like it, is often called zombie debt, because it cannot be collected through legal action. Even though the debt obligation is so old and is past the statute of limitation debt collection companies still buy and sell lists of accounts like this because they know they can influence, or often bully, enough people to pay up so they make a profit.

While Massachusetts does have restrictions on debt collection tactics, which can be viewed at the Attorney General’s website, not all collectors follow the law. They rely on the fact that many of those listed in the portfolios they buy don’t know what their rights are. And even if they do, determining whether a debt is too old to be sued over, or if you even owe it in the first place can be overwhelmingly confusing. In our work helping clients with their debt, it is extremely common that on one credit report, many of the entries coming from numerous different companies are all for the same one debt. Someone has an old utility bill they were unable to pay years ago. That debt is sold off to one debt collection company, who then sells it to another company, or hires yet another company to collect on their behalf. Yet in the mail they have letters threatening legal action from each company.

At MDRF, we specialize in helping individuals discharge debt through Chapter 7 bankruptcy for free. But the discharge may not prevent an unscrupulous debt collection company from using illegal  tactics to make money off of discharged debt. So we make sure every client knows their rights, and makes us their first call when those rights are violated.

Before officially forgiving the nearly 15 million in medical debt, John Oliver made sure to note that the real important take-away is that we need to make this process less confusing. We also need to ensure that every person is well aware of what their rights are.  John Oliver’s 20 minute segment is a great first step in educating the public.

If you get a letter or call from a debt collector, don’t take what they say for granted. Read about Massachusetts’ protections and if necessary, get an expert’s advice.