'Zombie Debt' Buyer Slammed For $300K+ In Damages, $100K+ In Consumer's Attorney Fees For Pursuing Lawsuit On 'Stale' Debt

Buried in a story on explosion of debt collection lawsuits by 'zombie debt" buyers, which recently appeared in The Wall Street Journal, contained these excerpts:

• Once debt buyers sue to retrieve debt, they are subject to state laws that impose a statute of limitations, often between five and seven years after the borrower stops making loan payments.

• In 2007, CACV, a unit of debt collector SquareTwo Financial Corp., sued Timothy McCollough in state court in Montana to recover $3,800 on a credit card from J.P. Morgan Chase & Co., and another $5,500 in interest, collection costs and $480 in lawyer's fees.

• Mr. McCollough wrote to the court in March 2008, explaining that he had been living on Social Security income since suffering a head injury in 1990. He says that he hadn't made any payments or used the credit card for more than eight years, putting his account beyond the state's statute of limitations for debt collection. He asked the court to dismiss the suit, saying: "This is the third time they have brought me to court on this account. Do I have to sue them so I can live quietly in pain?"

• In April 2009, a judge awarded damages of $310,000 plus $108,000 in legal fees and costs to Mr. McCollough.

Source: Boom in Debt Buying Fuels Another Boom—in Lawsuit.