I had a car repossessed 5 years ago. I just got a call that the collection agency it was referred to is pursing a judgement against me for $...

Question

I had a car repossessed 5 years ago. I just got a call that the collection agency it was referred to is pursing a judgement against me for $11,000. They offered me a $3,300 settlement but I have to answer and pay by tomorrow. I am wondering if they can pursue $11,000 from me or is this just a scare tactic?

Answer

Yes and no. The statute of limitations (assuming that the car loan is covered by PA law) began to run after the car was sold and there was a deficiency owed. Other states have longer periods so if this was in another state then it may still be a viable case. Also, the statute of limitations is just a defense that you raise in an answer to a complaint if you are sued. That does not mean that you do not owe the debt, although you definitely should not pay them a dime if the statute has run because it will re-set the statute. I have some articles about this on my website at www.rachelhunterlaw.com.

This makes no sense that you have to answer and pay by tomorrow. An answer would only be required if a complaint was filed. Was it? And you do not have to pay when an answer is filed. Now, creditors like to close their books at the end of the month and it is possible that you got a settlement offer which will expire tomorrow.

The question is ... what do you want to do? Do you have the money? Would you like to resolve this? Will you be needing credit any time in the next 3 years?

Depending on the answers to those questions will depend on what you do. There is no virtue to paying a debt after the statute of limitations has expired. So if you will not be needing credit in the next 3 years, then the debt will simply fall off your credit report. If you need a mortgage, that is different. Some lenders don't care about the statute of limitations and wants all debts paid before they will make a loan.

Paying will not improve your credit any so this is not a reason to pay.

Were you in fact sued? In that case, then you need to file an answer and new matter raising the statute of limitations as a defense. Yes, they can sue even after the statute has run; many lawyers will not do this but there could be all kinds of reasons and I don't know the facts. Its up to you to assert the statute of limitations though. If you don't then the defense is waived. You have really waited too long No lawyer is going to be able to draft an answer for you by tomorrow. I would talk to opposing counsel and see if they will consent to a 20 day extension and if so, file a motion for continuance of time and indicate that opposing counsel has no objection.