Ask Laz: What you need to know when a debt collector threatens to sue


Heidi says she took out a payday loan in 2010 and then forgot about it. Now she’s getting calls from someone claiming to be a lawyer threatening to take her to court unless she pays $250 right away and makes additional payments every two weeks.

Heidi wants to know if she should do this -- particularly in light of the fact that the debt collector refuses to send her proof of her obligation.

ASK LAZ: Smart answers to consumer questions


Right out of the gate, let’s be clear: People with debts have rights. For example, they can’t be subjected to threatening or harassing treatment by collectors. More info is available here.

Next, everyone should be aware that there’s a statute of limitations for most debt, including credit card debt. Payday loans are generally covered by state laws addressing debt resulting from written contracts. In California, the statute of limitations is four years.

This doesn’t mean the debt goes away -- nor does it mean you can forget about your obligations. If you owe money, you should pay it.

But it does mean you can no longer be sued for it.

In Heidi’s case, I suspect she’s getting calls not from a lawyer but an employee of a bottom-feeding company that purchased her debt for pennies on the dollar. It’s trying to squeeze whatever it can out of her before moving on to the next person on its list.

Here’s what you do: Inform the “lawyer” the next time he calls that you’re aware of the statute of limitations. Request a mailing address so you can send a cease-and-desist letter. Also request proof that the collector has paperwork on your debt.

Chances are, you won’t receive such proof, nor will you be provided a mailing address. Keep records on all this. If you are sued by these guys, the judge will not look kindly on their behavior.

If you have a consumer question, email me at or contact me via Twitter @Davidlaz.