Collection agency dunning me for an old debt

Factual Questions
1

Did a search of the boards for topics like this and found a couple of threads, but nothing that really mirrored my situation. Hence this new thread on what’s (sadly) becoming a classic topic.

In May of 1995, I moved from AZ to NC and tried to get out of a contract with a big nationwide gym chain (and please, refrain from lectures on blithely signing contracts; I was younger and very naive and know better now) under their “moving clause”. However, they continued to bill me as a customer even though I lived too far away to use their gyms. They turned my account over to a collection agency who would send an occasional letter or make a phone call over a period of several years and then seemed to give up.
Then last Friday, a letter from another collection agency appeared, asking for $1000 but offering to settle for 75%. I know what they’re doing - they’ve bought second- or third-hand accounts from another collection agency and are just beating the bushes to see what game they can flush - and I’m not going to give them a dime. I realize that breaking a contract is wrong, but I did fall under the moving clause. And after looking up other complaints online I have read stories from other people who also followed the contract’s demands to the letter and still got turned over to collection agencies, so you can’t win for losing in this situation.
How can I best resolve this without paying this crowd? The letter said that I have 30 days to respond and challenge the validity of the debt - is it worth it to do so? Should I also contact the big credit agencies as well? Or just ignore this since it’s an old debt? AFIK it has showed up on my credit report, but am not sure. Will definitely get a credit report asap, just waiting on the bank to call me back (they do free “financial checkups” for their customers, which I’ve never had before).
Any straight shooting on this will be appreciated. I just don’t want this to haunt me for the rest of my sorry life, yanno?

2

Well, if you owe the money, you need to pay it. Debts don’t expire. Teh best you can do is try to negotiate with the collection agency for a smaller sum, or make installment payment arrangements. Otherwise it WILL dog you for the rest of your life.

3

If you went delinquent more than 7 years ago, they are now what is referred to as “Beyond Statute of Limitations”.
What this means is they have NO RECOURSE to collect.
Their only option is to appeal to your sense of moral obligation to pay your debt.
Since it appears that you (based on what you’ve said) do not now and never did owe them anything, then that won’t work.
Once an item has hit the Statute of Limitations… it no longer shows up on your credit report. And, if they sue you, you can walk into court and say “Your honor, this is past SOL.” and the case basically gets dismissed. They might even get fined for attempting to sue past SOL, depending on what state they file in.
I would personally write back and say that I did not now and never did owe either them or the original creditor on this account a dime. Inform them that if they attempt to report this alleged debt to any third parties, you can and will gain a judgement against them for libel and defamation of character.
If they have already reported this item (after SOL), inform them that they must delete it immediately or you will file suit against them and gain a judgement for damages plus a punitive award.

4

Well if you did fall under the moving clause you did not break the contract unless there was some penalty you had to pay but never did.

So did you break the contract or not?

5

Cite?

Anyway, here is the Fair Debt Collection Practices Act which outlines what a debt collector may and may not do to collect the debt.

Do dispute the validity of the debt with the agency. Do review your credit reports to see what information is there (good advice whether there’s a debt in question or not).

6

I’m going to give you some very good advice that worked very well for me. Contact the three major credit companies, they all have websites. Equifax, Experion, and Trans Union. Sign up for their dispute services. Dispute the entry for each company. The company maintaining the entry in your credit now needs to prove to the agency that the debt is in fact valid. Most times they won’t bother or won’t be able to find the necessary info in time. I did this with several entries on my credit and most (all but one) were removed in 30 days.

7

Here’s my cite:
http://www.fair-debt-collection.com/SOL-by-state.htm#3

Text from AZ:
Arizona Statutes of Limitation

Written contracts: 6 years, runs from date creditor could have sued account.

Oral debts, stated or opens accounts: 3 years.

Actions for fraud or mistake: 3 years from the date of the discovery of the fraud or mistake.

Actions involving fiduciary bonds, out of state instruments and foreign judgments: 4 years. NOTE: Arizona applies its own statute of limitations to foreign judgments rather than that of the state that originally rendered the judgment whether the judgment is being domesticated under the Uniform Enforcement of Foreign Judgments Act or pursuant to a separate action on the foreign judgment.

An Arizona judgment must be renewed within five years of the date of the judgment.
Text from NC:
North Carolina Statute of Limitation

Express or implied contract, not under seal: 3 years.

Contract and sale of personal property under seal: 10 years.

Open account: 3 years, NOTE: Each payment renews the SoL on all items purchased within the 3 years prior that payment. If no payment is made, the SoL runs from date of each individual charge. Contracts: From date of breach or default, unless waived or performance under the contract is continued.

Judgments: 10 years

Partial payment BEFORE the SoL expires renews the SoL from date of payment.

Payment AFTER SoL expires renews SoL ONLY if, at time of payment, circumstances infer the debtor recognized obligation to pay. Partial payment on open account restarts SoL on purchases made within 3 years of payment date, if acknowledgment can be inferred, starts the statute anew as to the full obligation acknowledged, even if all of the charges were not made within the last three years.NC Continued…

Partial payment by one debtor does not renew the statute of limitations as against any a co-debtor unless that co-debtor agreed to, authorized or ratified the partial payment.

Partial payments DO NOT affect the ten-year limitation on enforcing or renewing judgments.

Bankruptcy, Death or Disability: Filing of a bankruptcy tolls the statute of limitations for the enforcement of contracts and judgments.

The death, minority, disability or incompetence of a debtor also tolls the limitation period until such time as a personal representative of the estate or a guardian of the incompetent or minor is appointed.

8

Bongmaster:
I am afraid that you are incorrect insofar as disputing an item with a credit bureau does NOT force them to prove the debt. It only forces them to make sure that you are in fact the person that they think you are.

9

No. This is not correct. While I agree with you that, morally, one should pay his debts, it’s clear you are talking about a legal obligation. And legally, debts do expire. That’s precisely what a statute of limitations accomplishes.

As (in some circumstances) making a payment on an old debt can re-initialize the limitations period, any reliance on your legal advice could worsen the OP’s position.

I see on preview that others have said much the same thing, with more detail. (I started this reply hours ago and got interrupted.) Standard disclaimers. While IAAL, I’m not your lawyer. For advice that you can rely on, see a l;awyer licensed in your state.

10

Good advice so far- mostly. Do “dispute” the debt by a reply. No need to go into detail, just say you canceled the contract as you moved out of state, and thus you are disputing it. Note that even if they sued (which they can’t) the fact that you did not and could not use the services would be a telling point. IANAL

And note that that is why I feel you do not even morally owe the debt. You signed up for x years of gyms service, you did not GET x years of gym service, thus you are not morally obligated. And, like Jonathan said, you are not legally obligated either.

11

He’s morally obligated by what the contract says, DrDeth; if he fell within the moving clause, then he had no moral obligation to continue his payments; if he didn’t fall within the moving clause he did have a moral obligation to continue payments, because it’s not the gym’s fault that he’s chosen to no longer use their services.

–Cliffy

12

See the following link on Statute of Limitations by state.

http://www.cardreport.com/laws/statute-of-limitations.html

13

Wow, thanks for the replies so far. The links to the Statutes of Limitations were quite helpful. Now I need to try and find out exactly when this was officially deemed a debt by the health club - which I believe would be the date they attempted to collect the membership dues in full.
Zebra, your question is important and that should have been better covered by me in the OP. The week before I moved from AZ, I went to the gym and asked a manager about fulfilling the moving clause. He said that I indeed qualified and gave me an address to mail some sort of proof that I was moving to the new address, such as a bill or letter in my name sent to the new place. No mention was made of a fee or penalty at that time by the manager, nor in my contract if I recall correctly. (Unfortunately for me, the contract and all the documentation related to this issue were disposed of by a family member when I was living abroad in 1998. Apparently, this fitness company is known for ignoring repeated requests for copies of contracts, too) Anyway, I provided the proof that the manager said I should and thought that was the end of the story. When the first letter arrived from the collection agency (in late '96, I think), my first reaction was to call the fitness company, who told me that I was supposed to have paid a fee in addition to sending the proof of new residence, but it was a moot point since the matter was in the hands of a 3rd party collection agency. Hooboy. In researching complaints online about this fitness company, I have seen testimonials from other former customers that they too tried to terminate their contracts when they moved too far away and that some of them even paid this fee and still got reported to collection agencies. Admittedly, these testimonials are not confirmed, so the complainers could all be lying, but IMHO probably not all of them. The complaints sent in to the FTC and BBB about this company are very numerous - it’s almost impossible to get free and clear of a contract with these people.
So there you have it - it’s a real “can’t win for losing” situation and I sure have learned a lot of lessons from it. Dr. Deth nicely sums up my feelings about any obligation I might have to pay this - it’s not like I bought something on credit, took it home and used it, and never paid the bills. After moving to this remote and rural area of the state, I could not use their facilities and don’t see why I should pay good money for services I’ll never be able to avail myself of. I need that $1000 a heckuva lot more than they do. Ok, gonna stop myself before this goes into rant territory!
BTW, I’m female. :slight_smile:

14

I’m looking for a cite right now, but I can’t find a really good one just yet. Regardless of the technicalities, in my case the offending marks were removed because I disputed them, for whatever reason, though I really thought what I had posted was correct. I contaced attorneys who specialize in this area and they all basically do the same thing, dispute the debt on your behalf and when the company fails to prove the debt is valid in a preset amount of time, it is removed. I will continue to seek a good cite.

15

Thanks, Bongmaster! Just to bring this up to date, I sent a letter Certified mail to the agency today, requesting validation of the debt and also giving them a cease&desist communication notice, using a couple of different form letters as guides. Now the ball’s in their court.
If there were some way I could show when the debt was originally incurred, that would be most helpful. Hopefully there will be time for me to go to the bank tomorrow to get a credit report and perhaps some more advice. And in the meantime, just wait to see what tricks the CA might try to pull…

16

Uh, they can’t show validation of the debt if you asked them to cease and desist. According to the terms of the Fair Debt Collection Practices Act, they can contact you only one more time for the express purpose of telling you they intend to cease & desist.

I think you should have done one or the other, not both.

17

What is the moving clause? Why do he and they disagree about whether it covers your situation?

And there is a gray area between your examples - if the company made the clause deliberately misleading, giving the impression you can get out if you move, but in fact that technically you can’t.

18

If the company is the one I think it is, then their policy was (is) that if you move to a location where there is no franchise within 50 miles of your new address then the contract is finished.

I wonder if the OP thought it meant that if you move more than 50 miles away from your original address that the contract is finished.

I know that I pointedly asked my advisor this question.

The thing is that this chain is all over the place and unless you live in the sticks, it might be difficult to actually live more than 50 miles from one of their facilities.

19

Validation of the debt, I believe, needs to be done with the original creditor and the bureaus will notify the proper party once they get your dispute. You would file the dispute with the credit companies (assuming it even shows on your credit report), and file the C&D with the collection agency.

20

According to the letter they sent me and several legal advice websites, they can contact me once more to tell me that they have verified the debt. The actual letter from the debt collectors (which quoted the FDCPA) said I had 30 days to write them and request validation. One they receive my letter, they have 30 days to either validate it or file a judgement, and then let me know what they have decided. Cease and desist only applies to more attempts to collect the debt as though it went unchallenged by me.
Trust me, I did not just jump into this without checking out a lot of resources, both online and personal.