FTC settles debt buyer suit, issues new document

At the same time as the Federal Trade Commission settled a major suit with one of the nation's largest purchasers of consumer credit card debt, it also unveiled a document that will help clarify consumers' rights when they are being pursued by collectors.

The document, entitled " Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts," spells out how consumers should expect to be treated by collection firms under the law, the FTC said. For example, debt can fall out of the statute of limitations, meaning that consumers can no longer be held responsible for it legally, but many collection companies may try to mislead them into paying it anyway.

"Most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations," said David Vladeck, director of the FTC's Bureau of Consumer Protection. "When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt."

If consumers are being pursued by debt collection companies, they will now be able to check online to ascertain what their rights may be in dealing with these businesses.