FEDERAL statute of limitations for cell phone collections is 2 years

[LuvsRetro]

Tuesday, March 18, 2008 FEDERAL statute of limitations for cell phone collections is 2 years

What Happens If Alabama Consumers Have Suffered A Default Judgment On A Cell Phone Bill?

We recently posted about the widespread problem of debt buyers suing Alabama consumers for cell phone bills more than two years after the bill was not paid. As we noted in the post, there is a two year statute of limitation that applies that debt buyers such as Palisades (AT&T Wireless) and other debt buyers ignore. These suits are often brought by law-firms such as Zarzaur & Schwartz (who represents Palisades in hundreds of cases brought every month in Alabama). A question we are often asked is whether there is anything that can be done when a default judgment has occurred. The answer is “Yes” - you can sue the debt buyer who brought the bogus suit - but the default judgment is often impossible to overcome.

As we discussed, the suit is a violation of the Fair Debt Collection Practices Act (FDCPA) if it is brought after the statute of limitations has expired. Almost every suit over a cell phone bill we have seen is brought closer to five or six years, not two years. So the debt buyer has likely violated the FDCPA by bringing the suit.

But unfortunately the default judgment will often stand. There are certain time limits that apply to getting default judgments set aside. But even if you cannot set aside the default judgment, you can still often sue the debt buyer.

So, if you were sued over a cell phone bill and a default judgment was entered against you, you still have options. Please feel free to contact us for a free consultation. If you have just been sued, then you have even more options. We look forward to helping you any way we can.

Usually STATE law applies to debt collection, but this is FEDERAL law:

The FEDERAL law:  Title 47

There’s all kinds of great stuff at the Alabama Consumer Law Blog with many LINKS missing in my copy/paste of the blog entry.

With regards to getting default judgments from debt buyers for debts with expired SOL vacated, I would definitely sue THEM and then get THEM to vacate the judgement.  After all, the judgment on your credit will cause you damages and I’m sure they’d rather vacate than pay for CONTINUED damages for the next 7 years.

Also, in addition to the FDCPA claims, always check for FCRA claims too.

Alabama Consumers Sued By Debt Buyers Or Collectors - Two Essential Things To Remember

Hundreds and hundreds of Alabama consumers are sued every single month by debt buyers (Palisades, Asset Acceptance, Unifund, etc). First a bit of background and then we will mention the two essential things Alabama consumers should remember when sued by a debt buyer.

...

Check it out, very good info and much of it applies to all states.

[Anonymous]

I was sold a cell phone and service at a TMobile authorized dealer and the company did not honor it. I notified them with no response. I then stopped using the phone and notified them asking them where to send the phone. Again no response. It has been 6 years and I am still getting collection letters and phone calls for $291. Isn't this in violation of the statute of limitations on collection of cell phone bills?

[llecs]

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@Anonymous wrote:

I was sold a cell phone and service at a TMobile authorized dealer and the company did not honor it. I notified them with no response. I then stopped using the phone and notified them asking them where to send the phone. Again no response. It has been 6 years and I am still getting collection letters and phone calls for $291. Isn't this in violation of the statute of limitations on collection of cell phone bills?

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Welcome to the forums!

The above statute, which refers to a 2-year SOL, was written about 80 years ago as a section within the Telecommunications Act of 1934. The section referencing the SOL hasn't been amended since its passage. I wouldn't bank on it as applying to cell phones. I'd rely on your state's SOL on written contracts as the applicable SOL. In fact, there are many suits out there that were won on cell contracts using state's SOL.

Even if SOL had expired, a CA or OC can collect forever. SOL refers to the time frame a creditor has to sue you. So if SOL expired, they can bug you forever, but can't do much other than to report if it is less than 7 years old.

[Walt_K]

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@llecs wrote:

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@Anonymous wrote:

I was sold a cell phone and service at a TMobile authorized dealer and the company did not honor it. I notified them with no response. I then stopped using the phone and notified them asking them where to send the phone. Again no response. It has been 6 years and I am still getting collection letters and phone calls for $291. Isn't this in violation of the statute of limitations on collection of cell phone bills?

---

Welcome to the forums!

The above statute, which refers to a 2-year SOL, was written about 80 years ago as a section within the Telecommunications Act of 1934. The section referencing the SOL hasn't been amended since its passage. I wouldn't bank on it as applying to cell phones. I'd rely on your state's SOL on written contracts as the applicable SOL. In fact, there are many suits out there that were won on cell contracts using state's SOL.

Even if SOL had expired, a CA or OC can collect forever. SOL refers to the time frame a creditor has to sue you. So if SOL expired, they can bug you forever, but can't do much other than to report if it is less than 7 years old.

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I'm sure llecs is aware of this, but just to add for others that may not be aware, SOL is a defense that you must raise in a litigation.  If someone files a suit against you for something that is outside SOL, you cannot ignore it.  If you do, they will win a default judgment against you and you will no longer be able to raise the statute of limitaitons. 

I've seen people on the forums that can't believe they now have to pay a debt that was outside the SOL because they ignored a lawsuit.  You have to remember that statutes of limitations are general purpose legal defenses that were put in place for their own reasons.  These were not consumer protection laws passed for the purpose of allowing you to ignore old debts.  That's just a consequence of SOL.  But you must raise the defense if you are sued. 

[RobertEG]

It is not necessarily the case that a party can bring suit on debt that is knowlingly outside of SOL. 

If the Federal Tellecom Act applies to cell phones, it prohibts the bringing of legal action, and is not limited simply to a consumer defense against an action to recover a debt.  .  Unlike many state laws that require proof of expiration of an SOL under their state civil code, an absolute provision of expiration of an SOL, such as may be occur for cell phone bills, is a predetermined fact.

A long  line of cases hold that collection of a time-barred debt is deceptive as a matter of law regardless of whether a lawsuit is filed or a lawsuit is threatened or whether “further collection action” was threatened. Taylorv. Unifund, No. 98-C-5921, 1999 U.S.Dist.Lexis 13651 [U.S.D.C.N.D.Ill.1999].

The Taylor lines of cases [[Wright v. Asset Acceptance Corp., C-3-97-375, 1999 U.S. Dist. Lexis 20675 [U.S.D.C. S.D. Ohio 2000]; Martinez v. Albuquerque Collection Servs., Inc., 867 F.Supp. 1495, [U.S.D.C. N.M.1994]; Canterbury v. Columbia Gas of Ohio, 2001 WestLaw 1681132 [U.S.D.C. S.D. Ohio 2001].], consistently find efforts to collect a time-barred debt to violate the FDCPA and to constitute deceptive practices.]] hold that a debt collector engages in fraudulent misrepresentation by trying to collect a time-barred debt even if no lawsuit has been filed to collect the debt, or a lawsuit or further collection action threatened.

In Harry W. Brink v. First Credit Resources, 185 F.R.D. 567, 1999 U.S.Dist.Lexis 15121 [U.S.D.C. Ariz. 1999], the court certified a class action against the defendant for precisely the conduct alleged by Deaville. The Brink plaintiff filed his suit under the FDCPA as defendant used false representation and deceptive means to collect or attempt to collect a debt, it improperly attempted to collect a time-barred debt, the mailing were false communications, and the mailings failed to contain required debt collection warnings.

In Stepney v. Outsourcing Solutions, Inc., 1997 WestLaw 722972, 1997 U.S.Dist.Lexis 18264 at *14 [N.D. Ill.1997] and in Kimber v. Federal Fin. Corp., 668 F.Supp. 1480 [M.D. Ala.1987], and its progeny, the courts have consistently held that FDCPA claims are viable where they are premised on a debt collector's knowing attempts to collect time-barred debts. In these cases lawsuits were filed to collect the debts or lawsuits were threatened or "further collection action" was threatened. That is precisely what defendant has done here. Defendant knowingly and fraudulently transferred a prescribed debt onto another account then refused to heed disputes by plaintiff and his counsel. Worse yet, defendant has initiated collection actions, including dunning plaintiff, based on the new account which balance is solely consisting of the prescribed account balance. This plainly falls under the “further collection action” prong of this analysis.

It is fairly settled law that filing suit on a time-barred debt is a clear FDCPA violation. The seminal case is Kimber v. Federal Financial Corp., 668 F.Supp. 1480 (D. Ala. 1987). Also:

Stepney v. Outsourcing Solutions, 1997 WL 722972 (N.D. Ill. 1997)(debt collector’s knowing attempts to collect a time-barred debt violatesFDCPA); Martinez v. Albuquerque Collection Services, Inc., 867 F.Supp.1495 (D.N.M. 1994); Shorty v. Capital One, 90 F.Supp2d 1330 (D.N.M. 2000)(OK to collect time-barred debts as long as don’t sue on them); Spencer v. Hendersen-Webb, Inc., 1999 U.S. Dist. Lexis (D. Md. 12/17/99), (when collection agency reported a stale debt it made a false report, citing Jacron Sales, 350 A.2d 688, 698 (1976)); Simmons v. Miller, 970 F.Supp. 661 (S.D. Ind. 1997); cf. Lindbergh v. Transworld Systems, Inc., 846 F.Supp. 175 (D. Conn. 1994); Commonwealth v. Cole, 709 A.2d 994 (Penn 1998).

[MarineVietVet]

It is fairly settled law that filing suit on a time-barred debt is a clear FDCPA violation

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Settled law doesn't seem to stop some creditors from doing this very thing. They count on consumers not knowing what the law might say about this.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Walt_K]

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@RobertEG wrote:

It is not necessarily the case that a party can bring suit on debt that is knowlingly outside of SOL. 

If the Federal Tellecom Act applies to cell phones, it prohibts the bringing of legal action, and is not limited simply to a consumer defense against an action to recover a debt.  .  Unlike many state laws that require proof of expiration of an SOL under their state civil code, an absolute provision of expiration of an SOL, such as may be occur for cell phone bills, is a predetermined fact.

A long  line of cases hold that collection of a time-barred debt is deceptive as a matter of law regardless of whether a lawsuit is filed or a lawsuit is threatened or whether “further collection action” was threatened. Taylorv. Unifund, No. 98-C-5921, 1999 U.S.Dist.Lexis 13651 [U.S.D.C.N.D.Ill.1999].

The Taylor lines of cases [[Wright v. Asset Acceptance Corp., C-3-97-375, 1999 U.S. Dist. Lexis 20675 [U.S.D.C. S.D. Ohio 2000]; Martinez v. Albuquerque Collection Servs., Inc., 867 F.Supp. 1495, [U.S.D.C. N.M.1994]; Canterbury v. Columbia Gas of Ohio, 2001 WestLaw 1681132 [U.S.D.C. S.D. Ohio 2001].], consistently find efforts to collect a time-barred debt to violate the FDCPA and to constitute deceptive practices.]] hold that a debt collector engages in fraudulent misrepresentation by trying to collect a time-barred debt even if no lawsuit has been filed to collect the debt, or a lawsuit or further collection action threatened.

In Harry W. Brink v. First Credit Resources, 185 F.R.D. 567, 1999 U.S.Dist.Lexis 15121 [U.S.D.C. Ariz. 1999], the court certified a class action against the defendant for precisely the conduct alleged by Deaville. The Brink plaintiff filed his suit under the FDCPA as defendant used false representation and deceptive means to collect or attempt to collect a debt, it improperly attempted to collect a time-barred debt, the mailing were false communications, and the mailings failed to contain required debt collection warnings.

In Stepney v. Outsourcing Solutions, Inc., 1997 WestLaw 722972, 1997 U.S.Dist.Lexis 18264 at *14 [N.D. Ill.1997] and in Kimber v. Federal Fin. Corp., 668 F.Supp. 1480 [M.D. Ala.1987], and its progeny, the courts have consistently held that FDCPA claims are viable where they are premised on a debt collector's knowing attempts to collect time-barred debts. In these cases lawsuits were filed to collect the debts or lawsuits were threatened or "further collection action" was threatened. That is precisely what defendant has done here. Defendant knowingly and fraudulently transferred a prescribed debt onto another account then refused to heed disputes by plaintiff and his counsel. Worse yet, defendant has initiated collection actions, including dunning plaintiff, based on the new account which balance is solely consisting of the prescribed account balance. This plainly falls under the “further collection action” prong of this analysis.

It is fairly settled law that filing suit on a time-barred debt is a clear FDCPA violation. The seminal case is Kimber v. Federal Financial Corp., 668 F.Supp. 1480 (D. Ala. 1987). Also:

Stepney v. Outsourcing Solutions, 1997 WL 722972 (N.D. Ill. 1997)(debt collector’s knowing attempts to collect a time-barred debt violatesFDCPA); Martinez v. Albuquerque Collection Services, Inc., 867 F.Supp.1495 (D.N.M. 1994); Shorty v. Capital One, 90 F.Supp2d 1330 (D.N.M. 2000)(OK to collect time-barred debts as long as don’t sue on them); Spencer v. Hendersen-Webb, Inc., 1999 U.S. Dist. Lexis (D. Md. 12/17/99), (when collection agency reported a stale debt it made a false report, citing Jacron Sales, 350 A.2d 688, 698 (1976)); Simmons v. Miller, 970 F.Supp. 661 (S.D. Ind. 1997); cf. Lindbergh v. Transworld Systems, Inc., 846 F.Supp. 175 (D. Conn. 1994); Commonwealth v. Cole, 709 A.2d 994 (Penn 1998).

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Robert, point taken.  I'll confess that I'm not going to read through all of these cases though someone faced with the issue may want to.  I am guessing the onus is still on a person that is sued for something that is outside SOL to raise SOL as a defense, and that these cases mean that they may then also have a counterclaim against the debt collector under the FDCPA for attempting to collect on a time-barred debt. 

I was mainly trying to warn people not to ignore a suit because it is outside SOL.  It will be much easier to raise the SOL defense than it will be to attempt to have a default judgment vacated.  And without reading further, I'm not sure that the fact that you have a separate claim against the collector is any grounds to vacate the judgment, I would think it would be a completely separate issue.  [I realize this is laziness on my part for not reading the material.  But I'm mainly trying to point out an issue for someone else that might be dealing with this to investigate]

[Walt_K]

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@MarineVietVet wrote:

It is fairly settled law that filing suit on a time-barred debt is a clear FDCPA violation

---

Settled law doesn't seem to stop some creditors from doing this very thing. They count on consumers not knowing what the law might say about this.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

---

One other issue alluded to in Robert's post is that it is not always completely clear what the SOL is.  In some cases it can be clear, but choice of law rules can make it less clear for other types of arrangments.  In any event, while a collector should not bring a suit in certain circumstances, I think we would all agree that there is no upside to ignoring it if it happens.  And that is the problem I have seen several times.  People think a suit is per se invalid if it is outside the SOL.  SOL doesn't work that way.  The court is not going to look at the claim and throw it out for you.  You need to respond. 

[Anonymous]

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@RobertEG wrote:

It is not necessarily the case that a party can bring suit on debt that is knowlingly outside of SOL. 

If the Federal Tellecom Act applies to cell phones, it prohibts the bringing of legal action, and is not limited simply to a consumer defense against an action to recover a debt.  .  Unlike many state laws that require proof of expiration of an SOL under their state civil code, an absolute provision of expiration of an SOL, such as may be occur for cell phone bills, is a predetermined fact.

A long  line of cases hold that collection of a time-barred debt is deceptive as a matter of law regardless of whether a lawsuit is filed or a lawsuit is threatened or whether “further collection action” was threatened. Taylorv. Unifund, No. 98-C-5921, 1999 U.S.Dist.Lexis 13651 [U.S.D.C.N.D.Ill.1999].

The Taylor lines of cases [[Wright v. Asset Acceptance Corp., C-3-97-375, 1999 U.S. Dist. Lexis 20675 [U.S.D.C. S.D. Ohio 2000]; Martinez v. Albuquerque Collection Servs., Inc., 867 F.Supp. 1495, [U.S.D.C. N.M.1994]; Canterbury v. Columbia Gas of Ohio, 2001 WestLaw 1681132 [U.S.D.C. S.D. Ohio 2001].], consistently find efforts to collect a time-barred debt to violate the FDCPA and to constitute deceptive practices.]] hold that a debt collector engages in fraudulent misrepresentation by trying to collect a time-barred debt even if no lawsuit has been filed to collect the debt, or a lawsuit or further collection action threatened.

In Harry W. Brink v. First Credit Resources, 185 F.R.D. 567, 1999 U.S.Dist.Lexis 15121 [U.S.D.C. Ariz. 1999], the court certified a class action against the defendant for precisely the conduct alleged by Deaville. The Brink plaintiff filed his suit under the FDCPA as defendant used false representation and deceptive means to collect or attempt to collect a debt, it improperly attempted to collect a time-barred debt, the mailing were false communications, and the mailings failed to contain required debt collection warnings.

In Stepney v. Outsourcing Solutions, Inc., 1997 WestLaw 722972, 1997 U.S.Dist.Lexis 18264 at *14 [N.D. Ill.1997] and in Kimber v. Federal Fin. Corp., 668 F.Supp. 1480 [M.D. Ala.1987], and its progeny, the courts have consistently held that FDCPA claims are viable where they are premised on a debt collector's knowing attempts to collect time-barred debts. In these cases lawsuits were filed to collect the debts or lawsuits were threatened or "further collection action" was threatened. That is precisely what defendant has done here. Defendant knowingly and fraudulently transferred a prescribed debt onto another account then refused to heed disputes by plaintiff and his counsel. Worse yet, defendant has initiated collection actions, including dunning plaintiff, based on the new account which balance is solely consisting of the prescribed account balance. This plainly falls under the “further collection action” prong of this analysis.

It is fairly settled law that filing suit on a time-barred debt is a clear FDCPA violation. The seminal case is Kimber v. Federal Financial Corp., 668 F.Supp. 1480 (D. Ala. 1987). Also:

Stepney v. Outsourcing Solutions, 1997 WL 722972 (N.D. Ill. 1997)(debt collector’s knowing attempts to collect a time-barred debt violatesFDCPA); Martinez v. Albuquerque Collection Services, Inc., 867 F.Supp.1495 (D.N.M. 1994); Shorty v. Capital One, 90 F.Supp2d 1330 (D.N.M. 2000)(OK to collect time-barred debts as long as don’t sue on them); Spencer v. Hendersen-Webb, Inc., 1999 U.S. Dist. Lexis (D. Md. 12/17/99), (when collection agency reported a stale debt it made a false report, citing Jacron Sales, 350 A.2d 688, 698 (1976)); Simmons v. Miller, 970 F.Supp. 661 (S.D. Ind. 1997); cf. Lindbergh v. Transworld Systems, Inc., 846 F.Supp. 175 (D. Conn. 1994); Commonwealth v. Cole, 709 A.2d 994 (Penn 1998).

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I'm a little confused by the wording so if I have misinterpreted RobertEG's message, please forgive me.

The cited provisions of Title 47 USC do not apply directly to a telecommunications carrier - consumer action.  The Congressional intent of the quoted chapter is to establish the Federal Communications Commission (FCC) and to regulate, in part, the financial transactions between the FCC and carrier.  Whether or not one's cell phone debt is within the statute of limitations depends on state law.

The FDCPA does not in any way prohibit bringing legal action on a time-barred debt.  It simply provides a remedy against those CAs who choose to do so.  While there are some states that actually do prohibit filing suit on a time-barred debt, in those that do not it is up to the defendant to raise the SOL as an affirmative defense or risk having a judgment entered against them.  I can think of several instances where it might be more economically advantageous for a debt collector to sue on a time-barred debt - especially if the potential for loss in a FDCPA suit is far lower than the potential for recovery on a judgment obtained by suing on a time-barred debt.

While a debt collector's choice to initiate legal action where SOL has expired is a FDCPA violation, it is false that, in general, collection activities on time-barred debts are actionable under the FDCPA.  Not one single citation refers to a decision that has held that a debt collector engages in fraudulent misrepresentation by trying to collect a time-barred debt absent specific action by the debt collector that would lead an unsophisticated consumer to believe legal action was imminent.  In fact, absent a threat of litigation or other remedy that the debt collector could not legally pursue, no FDCPA violation exists.

[Debanr8491]

I live in  Georgia and recently received  a letter from Palisades (AT&T) for a cell phone bill from 2003.  I have tried to settle and pay this bill not only in 2003, but several times over the years.  The last attempt was in 2010?  The company the held the debt told me it was written off,  I have checked my credit report it was not reflected. It is now 10years later.  I do not want this to result in a judgement or afftect my credit.  Now they are offering a settlement of $621.  Please advise.