Portfolio Recovery and the Statute of Limitations

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The statute of limitations is the time period during which a creditor or debt buyer can legally file a lawsuit to collect a debt. Once this time period has expired, the debt is considered “time-barred,” meaning the creditor or debt buyer cannot use the court system to force repayment.

However, they can still attempt to collect the debt through other means, like phone calls or letters.

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Who is Portfolio Recovery Associates?

Portfolio Recovery Associates, LLC (PRA) is a major debt buyer that purchases delinquent debts, such as credit card accounts, personal loans, and medical bills, from original creditors. PRA buys these debts at a fraction of their original value and then attempts to collect the full amount from the debtor, often through letters, phone calls, or lawsuits.

While PRA has the legal right to collect on valid debts, they must adhere to state and federal laws, including the statute of limitations for filing lawsuits.

What is the Statute of Limitations on Debt?

Key Points About the Statute of Limitations:

Time Frame: The length of the statute of limitations varies by state and type of debt. Depending on state law, the statute of limitations for most debts, including credit card debt, is four to six years from the date of the last payment, date of default, or acknowledgment of the debt.
Resetting the Clock: Making a payment, acknowledging the debt in writing, or agreeing to a repayment plan can potentially restart the statute of limitations, giving the creditor or debt buyer more time to sue.

Does the Statute of Limitations Apply to Portfolio Recovery?

Yes, the statute of limitations applies to debt collection lawsuits filed by Portfolio Recovery Associates. If the debt is time-barred, PRA cannot sue you to collect it. However, they may still contact you to request payment unless you specifically ask them to stop.

How to Determine if a Debt is Time-Barred

Here’s how you can check if the statute of limitations has expired on your debt:

Check the Date of Last Payment

Courts often hold that the statute of limitations often begins from the date of the last payment or the last time you acknowledged the debt. Review old bank statements or creditor records to confirm this date.

Review Your Credit Report

Your credit report will show details of the debt, including the date of last activity. Use this to verify if the debt is within the statute of limitations.

Consult State Laws

Each state has different rules for the statute of limitations. Usually the timeline is 4 to 6 years for credit

What to Do if Portfolio Recovery Contacts You About an Old Debt

If you believe the debt is time-barred or have questions about its validity, here are the steps to take:

Avoid Resetting the Statute of Limitations

Do not make any payments or acknowledge the debt until you’re sure it’s valid and within the statute of limitations. Any acknowledgment could restart the clock.

Respond to Lawsuits

If Portfolio Recovery files a lawsuit against you, don’t ignore it. File a response and assert that the debt is time-barred as a defense if applicable.

Consult a Debt Defense Law Firm

A debt defense law firm like Weston Legal can help you verify the debt and assert your rights if PRA attempts to sue you for a time-barred debt.

What Happens if Portfolio Recovery Files a Lawsuit After the Statute of Limitations?

If Portfolio Recovery files a lawsuit for a time-barred debt:

File a Response: Respond to the lawsuit and assert that the debt is past the statute of limitations. You must prove this defense.
Provide Evidence: Use documentation, such as credit reports or statements, to prove the last payment date.
Request Dismissal: Courts will dismiss the lawsuit if you can demonstrate the statute of limitations has expired.

Can You Still Pay a Time-Barred Debt?

Even if a debt is time-barred, you have the option to pay it voluntarily. However, consider the following:

Impact on Credit: Paying an old debt may not improve your credit score if the debt has already fallen off your credit report (after seven years in most cases).
Restarting the Clock: Making a payment can revive the statute of limitations, allowing the collector to sue you for the remaining balance.

Conclusion

Portfolio Recovery Associates has the legal right to collect debts, but they must comply with the statute of limitations in your state. If the statute has expired and they file a lawsuit to collect you need to prove that it’s a violation of the statute of limitations. Get with a debt defense law firm like Weston Legal for more information.

Mike Weston, Esq.

Mike Weston is a seasoned debt lawsuit defense attorney and founder of Weston Legal. Since 2005, Mike has devoted his career to compassionately helping consumers struggling with issues involving their personal and business debts. Mike is grateful to have been able to help tens of thousands of clients become empowered with knowledge on the path to financial stability.