Consumer Law

What Is The Statute Of Limitations For A Debt Buyer Or Collection Suit In Alabama?

By M. Stan Herring

When Alabama consumers are sued, one of the first questions people ask is "What is the statute of limitations" on collection suits brought by debt buyers. Let's take a moment and examine this question.

First, a suit begins when a lawfirm such as Zarzaur & Schwartz, PC or Nathan & Nathan or Nadler & Associates files suit on behalf of debt buyers such as Palisades, Unifund, Asset Acceptance, LVNV, Midland Credit, etc. Normally the suit is brought under one or more of the following: Breach of Contract, Open Account, or Stated Account (Account Stated).

Second, the statute of limitations (SOL) means the time period in which the plaintiff (here the collector or junk debt buyer) has to sue before it is too late.

Third, the reason this is such a critical question is because a suit brought after the statute of limitations has expired is due to be dismissed and the debt buyer (and often the lawyer who brought the suit) can be sued under the Fair Debt Collection Practices Act (FDCPA) as it violates the FDCPA to file suit after the SOL has expired.

With this said, let?s now look at what the SOL is in Alabama for collection suits.
[W e do point out some contracts state that another state?s SOL will be used so you have to examine all the documents to know for certain which state?s laws apply].

Normally in Alabama a breach of contract action is a six year statute of limitations. We see some original creditors (Capital One, Citibank, etc) sue under this but it is not common to see debt buyers sue under this because they rarely have the documents to support making such a claim.

In Alabama, normally an open account is a three year statute of limitations and most credit cards fall under this type of agreement. Most collection agencies or debt buyers do not like this as it is a shorter time period and there is law that suggests (or requires, depending on how it is read) that every charge must be proven by the creditor or debt buyer.

The most common type of suit is an account stated suit for which the statute of limitations is six years. The problem the debt buyers have in this type of theory is that they normally do not meet the requirements. First, the debt buyers normally only send a one sheet piece of paper to the consumer which does not "render and balance" the account. Second, the debt buyers will normally struggle with showing that there has been a "meeting of the minds" as to the amount that the consumer owes the debt buyer. Considering the debt buyer normally can't show anyone that it owns the alleged debt, it is difficult to see how the consumer could agree with the debt buyer on some amount. Finally, the last element is the consumer must "admit liability". The debt buyers try to prove this by arguing the consumer did not "object" to the letter described above - but we have not yet seen a case where the consumer admits liability.

Remember that if you are dealing with an abusive debt collector (including one that sues beyond the statute of limitations) we can help you with this - we sue abusive collectors. Sometimes it is not always the easiest thing to figure out which statute of limitations applies, so feel free to contact us.

Full post as published by Alabama Consumer Blog on March 28, 2008 (boomark / email).