Bankruptcy

New Rule Requires that Collectors Disclose that a Debt is Time-Barred

By Nathalie Martin

Not too surprisingly, people are less likely to want to pay a debt that they can no longer be sued on. This fact has caused one state to require disclosure that a debt is time-barred, in order to comply with the state's unfair practices act. More specifically, the New Mexico Attorney General just released a rule requiring debt collectors to determine whether a debt is time-barred and to disclose this fact when collecting time-barred debt in New Mexico. The rule defines time-barred debt as "any debt that is not enforceable in a judicial proceeding because the applicable statute of limitations has run."A copy of the final rule, as well as the Attorney General's statement regarding adoption of the rule, is available here. For a little more information on how this came about, see this article by UNM psychology Professor Tim Goldsmith and I. We are thinking a few other states might follow suit.

Full post as published by Credit Slips on December 17, 2010 (boomark / email).