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By last year, Terrie Raymer thought she was in the clear. A nearly $14,000 credit card debt she owed Target was now so old under Oklahoma’s laws that she could no longer be sued to collect the money. It was a relief, and Raymer began making plans to restart her life, including buying a new home.

That’s when she learned a debt collector was attempting to revive the old bill.

Debt collectors lose the right in many states to sue consumers after three or more years. But there’s a loophole: If the consumer makes a payment, even against his or her own will, that can be used to try to revive the life of the debt.

Raymer says she made her last payment in 2013, putting the debt outside Oklahoma’s five-year statute of limitations. But in 2016, a debt collector, Rausch Sturm, sued for the remaining debt and successfully garnished 19 cents from her checking account before dropping the lawsuit when she challenged it. Then last year, Rausch Sturm sued Raymer again, saying her last payment had been made in 2016.

“This [was] very scary as a mother of five,” said Raymer, 54, a social worker from Bixby, Okla. “This lawsuit could have been the nail in the coffin for me.”

The effort to revive Raymer’s old debt was part of what consumer advocates and financial experts say is an accelerating effort within the $11 billion debt collection industry to make profits from debts that the financial industry once wrote off. The practice could prove increasingly profitable as the country’s consumer debt reaches record levels — more than $4 trillion this year — and the industry is able to bring in “tens of billions of dollars” from debt past the statute of limitations every year, according to a report by the Receivables Management Association International.

In Rayman’s case, Rausch Sturm dropped its lawsuit after being contacted by The Washington Post. It declined to comment on Raymer’s case, citing consumer privacy, but said in a statement it complies with all relevant laws.

The efforts to collect on old debts often focus on getting consumers to reset the statute of limitations through a variety of means, including sending them credit cards that let them pay off their old debts or by allowing them to make a small payment to halt debt collection calls. The efforts have contributed to the flood of debt-collection lawsuits clogging courts across the country, consumer advocates say. In New York City, the number of debt-collection lawsuits surpassed 100,000 last year, compared with 47,000 in 2016, according to data from the New Economy Project, an advocacy group.

Texas and Washington state passed legislation this year making it more difficult to revive debt past its statute of limitations, but the industry successfully fought efforts in other states, including New York. And consumer advocates worry that new rules proposed by the Consumer Financial Protection Bureau — the first major update to the Fair Debt Collection Practices Act in more than 40 years — could further bolster the industry.

“Consumers just don’t know the ins and outs of state and federal debt-collection laws and probably will not understand the consequences in the fine print” of making a payment that can revive an old debt, said Christine Hines, the legislative director for the National Association of Consumer Advocates, which lobbied for the CFPB to ban collection of debts beyond their statutes of limitations. “We’re talking about old debt. That’s why it’s called a zombie. They often lack reliable records for both the collector and the consumer to rely on.”

Debt collectors say they comply with the law. Some people may want to pay off a debt after it has passed its statute of limitations to repair their credit score or out of a sense of obligation, industry officials say.

Confusion and deception

The legal treatment of old debt varies widely across the country, depending on the state and type of debt. Often, debt collectors are allowed to ask consumers to pay off their old bills even after the statute of limitations has passed but cannot sue for the money. But that can change if the consumer makes a small payment or acknowledges the debt in other ways.

The lack of federal standards can be confusing to consumers — and to debt collectors.

“There are 50 state legislatures that have different state laws,” said Richard J. Perr, a lawyer at the Philadelphia firm of Fineman Krekstein & Harris who represents debt collectors. “Whether it’s your utility bill, water service or a cellphone bill from Verizon or AT&T to your local doctor, they can all be treated differently.”

The issue has become more common with the rise of debt buyers that acquire debts at a fraction of their value, consumer advocates say. In a 2017 report, the CFPB studied 298 debt portfolios sold online, including on Facebook, and found that a “substantial portion” of the accounts were likely “time-barred” — or beyond their statutes of limitations. One portfolio with a face value of $156 million was being sold for $125,000, or less than 1 cent per dollar, the CFPB found.

The complicated nature of the law can leave consumers at a disadvantage and lead to what is known in the industry as “duping,” or tricking the consumer to revive old debts, said Marc C. McAllister, a professor at Texas State University who wrote the 2018 paper “Ending Litigation and Financial Windfalls on Time-Barred Debts.”

“If you’re unsavvy and don’t really understand what’s going on, you might agree to make a $10 payment just so they will stop calling,” he said. “Now the entire amount has been revived, and they can sue you for the entire amount.”

Jefferson Capital Systems, a debt collector, offered people with old debts past their statute of limitations a new credit card called the Majestic, according to records filed in Georgia’s Northern U.S. District Court.

“Get a new start with the Majestic Fresh Start Solution and pre-approved unsecured Visa card. Soon you can enjoy all the convenience and benefits Visa has to offer,” the company said in letters to more than 3.6 million consumers. But instead of getting new credit cards, the borrowers were enrolled in a repayment program for their old bills, the Federal Trade Commission found.

Jefferson is no longer involved in such programs, said Matt Pfohl, the company’s general counsel, noting that the practice fell into a gray area but was “unfair.” There is now more regulatory scrutiny of the industry and Jefferson’s clients don’t want to be involved in programs that could cause “reputational harm,” he said.

The CFPB fined two of the country’s largest debt buyers, Encore Capital Group and Portfolio Recovery Associates, a combined $80 million after they sent thousands of letters to consumers offering to “settle” their old debts without explaining that the payments would revive the old debts.

In a statement, Portfolio Recovery Associates said it has a “rigorous compliance framework” to ensure that it complies with states’ statutes of limitations. Encore said it does not try to revive old debts and sues only when that is permissible.

Collectors fight restrictions

The industry is fighting legislation across the country to rein in efforts to collect old debts, calling them misguided. Making such collections more difficult could drive up interest rates and make it harder for some people to get credit cards or loans, the industry argues.

The New York state Department of Financial Services recently sent subpoenas to six debt-collection firms after receiving a “substantial” number of complaints, including some involving debt beyond statutes of limitations where demands for payment could not legally be enforced, according to a person familiar with the cases but not authorized to speak publicly about them.

New York’s state legislature also debated a bill this year that would have given debt collectors less time to collect on some old consumer debts — three years instead of six — and prevent the industry from going after the money at all once the debt reached its statute of limitations.

“Tons of creditors wait until the very last second to file that lawsuit, and it’s just not fair,” said state Sen. Kevin Thomas, who sponsored the bill. “This legislation is necessary to maintain a basic level of fairness and due process for all consumers.”

The legislation failed when the industry balked, saying the changes would create new headaches for consumers. Restricting debt collectors’ time frame would prompt many to sue more quickly and more often to beat the clock, industry associations opposing the bill said.

The CFPB has proposed the first major revision of 1977’s Fair Debt Collection Practices Act, what the industry called a long-needed update to the law. But consumer advocates worry the CFPB is giving the industry too much leeway, including more flexibility to pursue old debts by arguing the debt collector did not know a particular bill was past its statute of limitations.

The overhaul by the CFPB would fix a “draconian” system that unfairly punishes debt collectors for not knowing the statute of limitations on a debt, said Perr, the debt-collection-industry attorney and a former president of ACA International, a large industry group. “They are punished for the complexity of the system,” he said.

The bureau acknowledged the difficulty of the issue in its more than 500-page proposal. Some small debt collectors told the CFPB that “determining whether the statute of limitations has expired can be complex,” according to the proposal.

According to the proposal, the bureau is also considering whether to require debt collectors to tell consumers up front when their debt is beyond its statute of limitations.

That is unnecessary, Perr said. “It should not be the responsibility of the debt collector to tell consumers of the statute of limitations,” he said. “Collection agencies are not people’s lawyers. They shouldn’t be giving legal advice.”

The CFPB did not respond to an interview request for this story. The proposal seeks to create “clear rules of the road where consumers know their rights and debt collectors know their limitations,” CFPB Director Kathleen L. Kraninger said in May.

A debt revived

Raymer, the Oklahoma social worker, has been struggling with her old debts for years. After a divorce, she was left with a bill totaling more than $13,000 from a Target credit card. After she fell behind on the payments, the account was turned over to Wisconsin-based Rausch Sturm, a law firm that acts as a debt collector.

“Your journey to financial recovery begins here,” the company says on its website.

Initially, Raymer said, she tried to work out a deal with Rausch Sturm to pay off the bill. But the firm wanted $4,000 a month, more than she could afford. “If they had come to me with a more reasonable payment plan, I would have worked with them,” she said. “I wasn’t in a financial position to do $4,000 a month.”

Rausch Sturm eventually secured a judgment allowing it to garnish Raymer’s checking account. The company had taken just 19 cents from her account in 2016 before Raymer challenged the court order, arguing she had not been properly notified of the suit, which was improperly served to her 14-year old daughter.

The company dropped its suit. But in July 2018, Rausch Sturm sued again. It claimed in court filings that Raymer had made a payment in January of 2016, the 19 cent garnishment, that allowed the firm to continue to pursue the debt.

Changing the date of the last payment from 2013 to 2016 was an unfair attempt to put the debt back within Oklahoma’s five-year statute of limitations, said Raymer’s attorney, Victor Wandres, who filed a motion to have the case thrown out of court. The 19 cents wasn’t a voluntary payment and shouldn’t be used to reset the statute of limitations, Wandres argued.

The firm’s lawyer, Manuel H. Newburger, said in a statement that Rausch Sturm’s policies are “confidential” but that the company does not pursue debts past their statute of limitations. “We have expended a great deal of effort to ensure that we comply with state and federal laws and regulations,” he said