18 Apr Collection of Time-Barred Debt Prohibited in New Mexico
Two years ago, the New Mexico Attorney General’s Office proposed regulations that would help control debt collector abuses (as reported by Bankruptcy Law Network here) by requiring debt collectors to inform people that the debt they were trying to collect was too old to try to collect in a court proceeding. The final rule went into effect on December 15, 2010 but applicability was delayed for 90 days, until approximately March 15, 2011 — it is now fully in effect in New Mexico.
Here’s part of the Attorney General’s statement:
The Rule, â€œCollection of Time-Barred Debt,â€ requires all debt collectors doing business in New Mexico to make a good faith determination of whether a debt is â€œtime-barredâ€ (beyond the judicial enforcement period established by the applicable statute of limitation). If the debt is time-barred, the debt collector must so inform the debtor in both written and telephonic communications. The Rule also requires the debt collector to tell debtors that they would â€œreviveâ€ the debt (start a new enforcement period running) by making a partial payment on the obligation in any amount, or by signing a written admission or new promise to pay.
“Under the state’s Unfair Practices Act, the fact that a debt is so old that a person can not be sued to collect on it is considered material,” says Attorney General King. “If it is material, New Mexico law requires that it be disclosed to the debtor. This Rule is intended to ensure that debt collectors provide important information to consumers so that they can make informed decisions when they are confronted with a demand to pay an old unenforceable debt.”
See also this earlier BLN post by Michael Doan about federal and state rights to sue based on time-barred debts.
Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.
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