Some of you are trying to get your head above water after a rocky three years of high fuel and slow freight. You might well be weighed down by debt baggage related to credit cards and
truck payments. Whatever your intentions about repaying old debt, be aware of the basics regarding the statute of limitations on debt collection, how some creditors and collection agencies try to get around them, and your rights as a debtor.
The statute of limitations for a creditor to file a repayment lawsuit is three to six years in most states. Some are longer. However, “The statute of limitations does not cause your debt to go away after it expires,” says Credit Info Center’s website.
Another consumer credit website, cardreport.com, says a creditor or collection agency can hound you forever, though they generally put less effort into cases beyond the statute, and they are subject to the “cease and desist” provisions of the Fair Debt Collection Practices Act. “Out-of-statute debts can still be reported to credit bureaus for the time limits specified in the Fair Credit Reporting Act,” notes cardreport.com.
The original creditor probably won’t try collecting from you for years because a company can write off a debt as bad after it’s 180 days past-due. This “charge-off” might sound good if you’re down and out, but it will ruin your credit for months, if not years.
Furthermore, another party often will buy the debt, hoping to collect at least part of it, says Steve Rhode, a money coach whose clients include owner-operators. You might even be threatened with a lawsuit after the statute has expired, though the expiration gives you a solid defense.
Repaying any debt is the honorable choice, but if you’re not planning to go all the way, know what you’re in for. Assume the statute has expired on an old debt, but the debt’s current owner is still shaking the trees. Things are looking up, so you decide to pay part of it. One payment – or even the promise of a payment – makes the debt current again, says BCS Alliance.com, another consumer debt website.
Some companies accomplish the same thing in a sneaky way, says owner-operator financial adviser Kevin Rutherford of The Alliance. They offer a credit card with attractive terms, burying in the fine print permission to add your old debt to the balance of your new card as soon as you start using it.
If you’re trying to work your way out of serious debt, keep paying on your truck and try to renegotiate terms with the holders of other debt. “The mistake a lot of truckers make is paying their credit cards before making their truck payment,” says Rhode. “They get their truck repo’ed.”
To be clear on your obligation to pay old debts, your right not to be harassed by collectors, and your state’s statute of limitations, check with an attorney in your state.
Will you owe taxes on a truck you no longer have?
Some owner-operators who have lost a truck during the downturn have had a nasty surprise: a tax bill from the Internal Revenue Service. Turns out the IRS considers as income the difference between what was owed on a truck and the market value of the repossessed truck, says Kevin Rutherford of The Alliance, an accounting firm based in Orlando, Fla. Adding insult to injury, any new owner of the debt can still try to collect it.
RESOURCES
Credit Info Center
www.creditinfocenter.com
CardReport.com
www.cardreport.com
Steve Rhode
www.myvesta.com
(800) 698-3782
BCS Alliance.com
www.bcalliance.com
The Alliance
www.43truck.com
(866) 438-7825
