Should debt collection agencies be able to harass people?

The issue: Should debt collection agencies be able to harass people to collect on very old debts?

Randy Feltman does not remember having a MasterCard 15 years ago, let alone having any outstanding balance. But Portfolio Acquisitions LLC, an Atlanta debt collection agency, insisted that Feltman had applied to Prudential Bank for a credit card in 1994 and owed $6,324.96, including penalties and interest. In 2005 Portfolio went to court to collect it.

In court, Feltman, 56, of Palatine, Ill., argued successfully that the statute of limitations had expired before Portfolio went to court to collect the debt, and that the collection agency lacked the proper documentation. In May, the Illinois Court of Appeals agreed with her. “I feel great they didn’t get away with taking advantage of a hard-working middle-class person who is trying to do the right thing,” Feltman said through her attorney, James Shedden.

The Feltman case highlights the larger issue of the aggressive, sometimes unlawful tactics utilized by some debt collectors, the explosive growth of the debt-buying industry, and the harm to society’s most vulnerable consumers, AARP argued in its brief supporting her. “Collectors have becomeincreasingly aggressive,” said Julie Nepveu, senior attorney with AARP Foundation Litigation. “Unscrupulous collectors are preying upon older people, many of whom have paid their debts but may not have the receipts many years later to prove it.”

In 2007, $110 billion in bad debt was purchased, often after those debts had been transferred between several creditors and even written off by original lenders. Because debt buyers like Portfolio can purchase debts from creditors for a few cents on the dollar of face value, these transactions are profitable even if buyers recover a fraction of the debt they have bought. Attorneys for Portfolio Acquisitions declined to comment on the case.

What it means to you: If you are contacted by a debt collection agency for a debt you do not believe you owe or that is more than several years old, contact a lawyer or legal services bureau to see what rights you have. If you are served with a court summons, be sure to answer it to avoid having a default judgment entered against you.

Emily Sachar is a journalist and author based in Brooklyn, N.Y.