What can I do about a debt collector wanting me to pay4 or5 times the amount of the original debt?

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What can I do about a debt collector wanting me to pay4 or5 times the amount of the original debt?

I had a debt for a car I couldn’t finish paying for when I lost my job 8 years ago and I contacted the credit union a year later to settle it but I was told the debt was charged off as a lost. The debt was $3600 and I hadn’t heard from them anymore. Now I have a collector contacting me wanting me to pay over $12,000 for that same debt. Is this legal? I asked her why didn’t they contact me when I originally called the company and she told me that a lot of paperwork got messed up after hurricane Katrina. The debt was originated in LA. What can I do about this matter?

Asked on January 5, 2012 under Bankruptcy Law, Texas

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

First, is the debt a claim or an actual judgment? If the debt is simply a claim, then perhaps the debt would be time barred by the applicable statute of limitations in your state if a lawsuit was filed.

I suspect that the substantial increase on the $3,600 amount is due to accrued interest on the principal and late fees.

I suggest that you consult with an attorney that practices in the area of consumer matters to see if the claim against you is simply a claim and not a judgment. If only a claim, you might be exempt from having to pay it because of the applicable statute of limitations.


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