I’m excited to share a recent success where I was able to help a client by challenging a time-barred claim ($8,571.60) from Navy Federal Credit Union. They attempted to reset the 4-year statute of limitations under Pennsylvania law by inserting a date of an involuntary transfer. The issue? NFCU tried to initiate a $1,000 transfer from a member’s checking account, but it failed because there were insufficient funds ($0.00) in the account. Despite the failed transfer, NFCU still charged the member a $29 fee for insufficient funds—an attempt to reset the limitations period with a payment that never actually happened.
What does the 4-Year Statute of Limitations mean?
In Pennsylvania, the law allows creditors to pursue legal action for debts only within a set time frame—4 years from the date of the last payment or acknowledgment of the debt. This is called the “statute of limitations.” After this time period, the debt is considered time-barred, meaning that creditors can no longer legally force repayment through lawsuits or other legal actions.
For a layperson, this means that if you haven’t made a payment on a debt or communicated with the creditor about it for over four years, they can no longer legally chase you for payment in court. It’s a key consumer protection that gives people the opportunity to move forward with their lives without being indefinitely harassed by old debts.
Why is an Involuntary Payment (or an Attempted One) Shady?
Here’s where the situation with NFCU gets tricky. They tried to initiate an involuntary payment of $1,000 from the member’s account. The transfer failed because there were insufficient funds ($0.00) in the account, yet NFCU still charged a $29 fee for insufficient funds. In short, NFCU attempted to reset the statute of limitations by making a payment that didn’t actually happen. This is shady because it’s a tactic that could falsely extend the time creditors have to collect on old debts, potentially stripping away consumer protections meant to provide a fresh start for those in financial distress.
I filed an objection arguing that the claim was time-barred beyond the 4-year statute of limitations. Allowing NFCU to reset the clock with an involuntary payment (or attempted payment) would undermine the consumer protections provided by the statute and render these valuable consumer protections obsolete. To my surprise, NFCU withdrew its $8,571.60 proof of claim.
So, keep an eye on those creditors and debt collectors, and don’t let them pull the wool over your eyes—I’m here, fighting for your financial freedom every step of the way!
