Q: is it legal for someone to buy a charged off account and try to collect on it?
I just received a summons for a credit account that was charged off in January of 2013. Someone has bought the account and now wants to sue me for it. Is this legal? Isn't there a time limit on when this can be done in Michigan? What do I do?
A:
Yes, debt collectors can sue you for charged off accounts. However, if you received a 1099-C (cancelation of debt), they should not be able to collect the entire balance. Regarding statute of limitations, it begins to run from the date of your last payment or the date of default, whichever is more recent. If it's a credit card, the SOL is likely 6 years, (I would need more information to answer this definitely).
What do you do? First of all, don't default. Be sure that you file an Answer or hire a lawyer within 21 days of service, (or 28 days if served by mail).
One way to combat an old charge off is to pull your credit report and see if this account is showing. And if so, if it is accurate. The Fair Credit Reporting Act can sometimes be used to defend yourself in a legal action, by attacking the debt collector for reporting it wrong.
Also keep in mind that if the debt is relatively small, (maybe less than $2,000), and you think you owe it, and there is no FCRA violation, the best strategy may be to simply make an offer to settle. In doing so, I suggest you avoid entering into a Judgment, because that could go on your credit report.
Mark Bredow agrees with this answer
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