Statute of Limitations On Unsecured Debts

QUESTION: I understand there is a statue of limitation of 4 years to collect unsecure debt (say, credit card debt). The creditor sold the debt to a collection agency at the end of the 4th year of the debt. My question is would the clock reset on this debt account? I meant a 4 years statue of limitation starts all over again with the new collection agency? what if this collection agency now sold the debt to the second collection agency after number of years unsuccessfully to collect, and the circle repeats itself. What rights as a consumer of unsecure debt has to get this old debt off the record for good?

ANSWER: It sounds like your question relates to credit reporting more than potential lawsuits to collect the debt.
The clock for the statute of limitations on debt starts at the date of default. (Some creditors like to argue the clock starts from the date of chargeoff – -180 days after default.) Unless YOU make a payment, nothing else will restart that clock.
The statute of limitations to collect the debt in court is 4 years.
The amount of time that the debt will appear on your credit report is 7 years from the date of default. It makes no difference how many times the debt was bought and sold, it is still seven years. If you make a payment to any debt collector or debt buyer along the way, then the clock starts all over again.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Defaulted PayDay Loan

QUESTION: Can I be sued in the Texas for a defaulted online payday loan?

I taken out a few payday loans online and pretty much got in over my head paying them back ! Can I be sued in Texas?

ANSWER: Most payday lenders do not sue in Texas. Having said that, they are certainly entitled to sue you if you defaulted on a loan.

I would be curious to know who is threatening the lawsuit and whether they are a “usual suspect” – – the kind of payday lender that actually does file suit in Texas. If they are not customarily in court, then their threat is illegal, and possibly a violation of either the Texas Debt Collection Act and/or the Federal Fair Debt Collection Practices Act. The collection industry for payday lenders is infamous for being abusive. I would suggest you keep track of all collection phone calls and keep all of the collection letters.

If the threat to sue is in writing, I would suggest you forward a copy to a consumer rights attorney. If the threat to sue is made verbally, you might still want to talk to an experienced consumer rights attorney who can do a bit of research and find out whether this collector is blowing smoke, or not.

Finally, you might want to have a look at your credit bureau reports through (That is where you can get your credit reports for free.)

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Not Showing Up To A Civil Suit Court Appearance

QUESTION: What would happen if I do not show up to a hearing concerning credit card breach of contract?

I am a house wife who made regular payments until my husband stopped giving me any money to pay on credit card and anything else at all . I have no income at all to work with and had to move out of our house and in with family just to stay alive due to him canceling my medical insurance and not buying food for the house now I am being sued.

ANSWER: The collection industry can be ruthless. They don’t care what your circumstances: if they can legally collect against you, they will.

Depending on all of the circumstances surrounding your finances, you may want to consider bankruptcy. Bankruptcy will stop the lawsuit against you dead in its tracks.

Otherwise, I suggest you do everything possible to defend yourself. If you/family can afford to hire a consumer rights attorney, that’s your best bet. The creditor/plaintiff is likely to get a judgment against you by default. Even if you cannot afford to pay for the judgment now, the judgment-creditors are patient: they will wait until you find employment, re-marry, gain an inheritance, or win the lottery. Meanwhile, a judgment on your credit reports can be devastating. You should do everything you can to avoid having a judgment entered against you.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Getting Sued Over A Debt Already Paid

QUESTION: A collection agency says they’re going to sue me over a debt I already paid, I don’t know what to do.

I have a few emails of paid in full, but a couple of the companies didn’t send me anything, and when I tried to call them it says it’s no longer a working number.

ANSWER: First of all, I would suggest that you pull a copy of your credit bureau reports. You may obtain a free copy through www. It is the only website that the Federal Trade Commission has approved of for a free credit report. You might find useful information on that website. Also, do you have old bank statements or cancelled checks to prove you paid?

If a third party debt collector is threatening to sue you on a debt that has been paid (whether you can prove it right now, OR NOT) then it seems your rights have been violated. I would suggest you contact a consumer rights attorney who has experience going after abusive debt collectors. They will probably want to look up this debt collector that is threatening to sue you. Specifically, they will want to see if this debt buyer is a common litigator; and also, they will want to find out if this debt collector has a surety bond on file with the Texas Secretary of State. If they do not, then this whole thing sounds like a scam- an illegal scam.

Keep in mind that the federal Fair Debt Collection Practices Act allows you to collect a statutory award, other damages, as well as your attorney fees. That is the reason why many consumer rights attorneys do not charge clients up front for their time. They can get paid for by the defendants. I strongly suggest you get your payment history together and call a consumer rights attorney licensed in Texas.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Sued By A Junk Debt Collector

QUESTION: Sued by a junk debt collector for $1500 on unsecured CC debt from 2011.  This clearly seems to be an attempt to get a default judgment by an attorney who expects that I will not answer. I’ll pay $250 to any licensed TX attorney who will answer on my behalf in the expectation that the junk debt collector will abandon hope due to the presence of an attorney and the weak claim. I seem to be one of many thousands of people who received court docs today judging by the quality of the summons. I’ve been doing research and this seems very easy to defeat. I’m wondering whether or not I should even bother to research how to defeat this when there might be an attorney willing to accept $250 to do it for me.

Last payment on the card was March 19th, 2011. I was served by someone in a $200 car on March 26th, 2015. The lawyer lives 300 miles away. The summons is very sketchy looking.

ANSWER: I don’t know who sued you and who their lawyers are. The debt buyer industry has been empowered over the last 2-3 years for a whole host of reasons. Yes, they may simply be interested in obtaining a default judgment. On the other hand, I have had many debt buyers – the likes of Midland Funding, Portfolio Recovery Associates, and many others up put a fight, even for very low balances. Their attorneys are in court with huge dockets all set for the same day: it is unlikely they would be coming to court for your case only. Plus, if this is a lawsuit in the Justice of the Peace court system, then the Texas Rules of Civil Procedure are severely relaxed, making it much easier to obtain a judgment.

You seem to be a terrific negotiator, considering your online bidding efforts here. Any lawyer that makes an appearance for you in an answer is on the hook for the entire case, not just the answer. An attorney who values their law license and their reputation will not get hired for the limited purpose of filing an answer and then asking the court to withdraw from your case. (I may be wrong, of course.)

If you fail to answer the lawsuit, or if you appear – pro se or through an attorney – and lose the case, the judgment will likely be significantly higher than $1,500.00, including interest, fees, court costs and attorney fees. The damage to your credit report, as well as the risk of post-judgment collection would be reasons for you to hire an experienced attorney.


Collection Case Dismissed For Lack Of Prosecution

QUESTION: I had a debit collection case that was dismissed for Lack of Prosecution.

The case was dismissed for Lack of Prosecution. I had filed a motion to reinstate the case and the judge said he wasn’t going to reinstate. so the  debt was sold to another collection agency. This was the 4 or 5 law firm that has come after me. What can I do to get this off my credit report? The debit type is a private student loan and this loan is NOT a FFELP.

ANSWER: There are two different issues here: the matter of the lawsuit seems to have been resolved if the case was dismissed. I understand that you have concerns that another debt buyer will sue you for it again. That is possible, although unlikely.

On the credit reporting side, you are encouraged to send off a written dispute letter to the credit bureaus and to everyone who ever tried to collect this debt. You should list all of the reasons why you dispute the negative information on your credit report. The fact that you were sued (and that the lawsuit was dismissed for lack of prosecution) does not qualify as a good reason to remove the debt from your credit reports.

If you dispute the debt with the present collector (and every collector beforehand) then they are prohibited by federal law from communicating information about the debt to yet another 3rd party. All of your disputes should be handled in writing, sent by certified mail, return receipt requested.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Ex-Spouse Defaulted On Car Payment: What To Do?

QUESTION: My ex husband had defaulted on his court ordered mediated agreement of my car payment for two months. What should I do?

Our divorce was finalized in Austin, Texas on January 11, 2013, but we both live in different areas of Harris County.  He has been late off and on since our divorce.  I also struggle getting my spousal support.

ANSWER: I will answer this question from a consumer debt/credit perspective. If you want to keep the vehicle and you are trying to maintain good credit, your fastest and most secure way to do that is to make up the missed payments yourself. It will probably be cheaper for you to pay your way through the vehicle then to deal with the repossession costs. Unless your finance company is especially nice (which most are not) they are probably already entitled to repossess the vehicle. Getting it back may mean that you will have to pay the full amount of the vehicle (it’s called accelerating the payments.) In other words, the finance company is not obligated to allow you to simply come current.

I realize that if you start making monthly car note payments yourself, your ex-husband may try to assume that you are taking over that responsibility. I would suggest you carefully document every communication with the finance company- 1) asking how many payments are behind; and 2) finding out if payments have been made each and every month. Ultimately, you will want to be able to show the family court that you would not have made the payments, except that you were at risk of losing the vehicle. If the vehicle is ever repossessed, make sure the finance company has your correct address. They are obligated under Texas Law to send you 2 notices if they sell the vehicle to another person. You are welcome to send any correspondence from the lender to my office for us to review, whether it is pre- or post- repo.

You should consult with a consumer rights attorney regarding all issues on financing, repossession, and your credit score. You should consult with a family lawyer regarding a motion to enforce; you will want to get a judgment against your ex-husband for payback of the monthly note payments and other obligations he is avoiding.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.

How To Proceed With Payment Request Letters Totaling $10,000 From A Collection Agencies

It is important to recognize and understand that if you ever find yourself in such a situation your credit score is probably very low. Thus it will be extremely challenging obtaining the best interest rates for any financing (if you even qualify). At the same token, a lot of the very small debt out there (under $1,000.00) ends up on the debtor’s credit report, ends up in collections, but does *not* end up in a lawsuit. While I do not encourage debtors to avoid paying their bills, it is also clear that one may not be in a position where the debtor can legitimately afford to pay the delinquent bills. The negative lines on a credit report will slowly age, have less impact on the credit score, and after 7 years they will come off altogether.

If one happens to have any particular debt that is significantly over $1,000.00, then there is the possibility of being sued for that debt.

If you ever find yourself in such a situation, it is strongly recommended that you keep track of all debt collection calls that are made to you or anyone else. Most consumers are unaware, that they has debt collection rights. You can download a debt collection call log from my law firm’s website to help keep track of callers. Also, whatever debt collection mail that is received should be reviewed by an attorney. Keep in mind that often times debt collection letters have violations in them, and the consumers are really not knowledgeable enough to notice. Also keep in mind that most consumer rights lawyers will not charge an un front fee to handle debt collection abuse; federal and state laws allow consumers to collect their attorneys’ fees from the “bad guys.”

You should obtain a copy of your credit reports. They are available for free, once every year through It will enable you to have a complete picture of your debt.

Here are some additional suggestions to bear in mind:
1. Do not ignore the collection letters. Keep them; share them with a consumer right’s lawyer. You are welcome to send them all to my office so that I can advise further.
2. Sometimes it is worth considering calling the debt collection agencies to possibly work out a payment plan, but only after you have shared the collection letters with an attorney in the field of consumer rights. It is important to understand that sometimes paying one collector will open a jar of worms with others who are constantly looking at your credit report and probably wondering, “why is this person paying that debt, and not this one?”
3. $10k worth of debt is probably not enough to make bankruptcy the best option.
4. Bill consolidations is hardly ever the best way to go. Nevertheless, one should consult with an attorney to determine whether the debts may ultimately end up in litigation. If that’s the case, then debt consolidation may operate to prevent an imminent lawsuit.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.