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Debt Collection Laws in Montana

Patrick Austin, J.D. | August 02, 2023

Edited by Hannah Locklear

Summary: Residents of Big Sky Country who are being pursued by an intimidating and unscrupulous debt collector should not throw their hands up in despair. Instead, they should seek refuge in the legal rights and protections afforded under the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and Montana’s statute of limitations on debt.

Experiencing a barrage of incessant phone calls day and night, coupled with menacing letters arriving in the mail, and enduring other forms of intimidation from an unethical and overly aggressive debt collector can be an utterly unpleasant and unforgettable ordeal. This holds true for many, including the residents of Montana. Should you find yourself pursued by such a debt collection agent or agency, rest assured that there are legal provisions in place, both under Montana law and federal law, to safeguard you while engaging with a debt collector regarding a delinquent account.

This article provides a comprehensive overview of debt collection laws in Montana, including laws pertaining to the statute of limitations.

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The Fair Debt Collection Practices Act protects you from unruly debt collectors

The Fair Debt Collection Practices Act (FDCPA) is a federal law governing the practices of debt collectors, and it applies to Montana residents. In addition, the FDCA provides Montana consumers with notable legal protections against certain predatory, unfair, or harassing practices, including:

  • Calling your home late in the evening or extremely early in the morning (before 8 a.m. or after 9 p.m.)
  • Using abusive, inappropriate and harassing language while discussing a debt
  • Pursuing a consumer for a debt they do not actually owe
  • Failing to announce themself as a debt collector
  • Asking you to pay fees, interest, or other illegal expenses
  • Using profanity or threatening language
  • Calling at work when they know it is not allowed
  • Calling at obviously inconvenient times
  • Discussing your debt with your friends or family members
  • Pretending to be calling from a government or law enforcement agency
  • Pretending to be an attorney

These are just some of the actions prohibited under the FDCPA, and all debt collectors in Montana must abide by these rules.

The FDCPA also states that debt collectors are prohibited from using any misleading or deceptive representation in their effort to collect on a debt. In addition, the FDCPA requires debt collectors to substantiate that you actually owe the debt being pursued. For example, you can demand a debt collector issue a Debt Validation Letter confirming you actually owe the debt.

Another consumer-focused feature of the FDCPA is if you can present evidence to a court that a debt collector violated the FDCPA, you may have grounds to request monetary damages from the violating debt collector. This is because there is a provision within the FDCPA enabling consumers to seek recovery up to $1,000 in damages from debt collectors deemed to have violated the federal law. Furthermore, to obtain the $1,000 in damages, a consumer simply has to show that the collector violated the FDCPA. This means the consumer does not have to show actual harm.

In addition to potentially recovering monetary damages, a court has the authority to order a debt collector who violated the FDCPA to halt certain collection activities. This is known as "injunctive relief." For example, a court has the authority to force a debt collector to cease all communications (both phone calls and letters) with you if they have violated the FDCPA.

The Fair Credit Reporting Act offers you additional rights and protections

Along with the FDCPA, the Fair Credit Reporting Act (FCRA) is another federal law providing statutory protections to consumers in the context of debt collection. For example, the FCRA features the "Furnisher Rule" which governs how debt collectors report certain debt-related information to credit reporting agencies and what information must be included on a credit report about a delinquent account. For example, the FCRA’s Furnisher Rule impacts debt collection practices in North Dakota in the following ways:

  • Debt collectors cannot report information they believe to be untrue or inaccurate or that they've been told is untrue or inaccurate
  • Debt collectors are required to have policies and procedures in place to verify they are reporting information on the right person (including identifying information)
  • Must maintain the records for a reasonable amount of time
  • Must provide the date of the original delinquency and must have procedures in place against re-aging and duplicate reporting
  • Must correct and update information where necessary

Under the Furnisher Rule, debt collectors also need to notify credit reporting agencies when the reported information is the subject of an active dispute and when an account is changing status from delinquent to closed.

Respond to a debt collection lawsuit in Montana

If a debt collector is acting within the applicable statute of limitations in Montana, there is the possibility they will decide to file a debt collection lawsuit against you in an effort to collect on the debt. If you are served with a debt collection lawsuit, be proactive and respond to the Complaint.

Ignoring your debt lawsuit does not magically make it go away. Instead, it just means the debt collector will be able to file a Motion for Default Judgment, declare victory, and seek to garnish your wages and/or access funds in your bank account.

Here are things you can do when responding to a debt collection lawsuit in Montana:

  • Do not admit that you owe what they say you owe. Instead, make the debt collector affirmatively prove that you owe the amount alleged. Also, make the debt collector affirmatively establish that you are the individual who owes the debt.
  • File your formal Answer with your clerk of court, ideally in-person to ensure it is filed within the applicable time limit.
  • Obtain a stamped copy of your Answer from the clerk of court.
  • Mail a copy directly to the debt collector with a return receipt.

To learn more about how to respond to a debt collection lawsuit in Montana, check out this video:

The statute of limitations on debt in Montana may be your best defense

If a debt collector pursues a Montana resident, it is important to develop a general understanding of the statute of limitations on debt collection within the Treasure State. Knowing the applicable statute of limitations is worthwhile because, once the statute of limitations has lapsed on a debt allegedly owed, the debt collector is legally prohibited from pursuing repayment via a debt collection lawsuit.

In Montana, the statute of limitations on written contracts, obligations, or liabilities is eight years. For verbal contracts, accounts, or promises, the applicable statute of limitation is five years.

Basically, this means most types of consumer debt (e.g., credit card debt, auto loan debt, personal loan debt, etc.) has an applicable statute of limitations period of eight years.

The table below further outlines the statute of limitations on debt in Montana:

Statute of Limitations on Debt in Montana

Debt Type Deadline
Credit Card 8 years
Medical 8 years
Auto Loan 8 years
Student Loan 8 years
Mortgage 8 years
Personal Loan 8 years
Judgment 10 years
Mont. Code § 27-2-201 and § 27-2-202

Do not pay an old debt before checking Montana’s statute of limitations

If years have elapsed since a payment was made on a delinquent account in Montana, do not fall into a common trap set by debt collectors - making a relatively small, partial payment toward the debt. Why? Because once you make a voluntary payment on a lapsed debt, the payment effectively resets the clock on the statute of limitations in Montana.

Basically, this means a new payment will start the clock back at zero and the debt collector is afforded an additional eight years to try and recover on the delinquent account.

A fairly common tactic within the debt collection industry is to purchase old debt that is beyond the applicable statute of limitations. Oftentimes, these debts are purchased at a significant discount. Once purchased, debt collectors turn around and try to trick or convince consumers that they should make a nominal payment toward the debt. The goal? Get the clock to start back at zero so the debt collector can file a lawsuit against you in a Montana court.

So, before you make any payments to a debt collector, be sure to check the statute of limitations on your debt, which is generally eight years in Montana. If it’s been more than eight years since you took any action on your debt account, then you cannot be sued for it.

How to respond to a debt collection lawsuit pertaining to an old, expired debt

The statute of limitations on debt in Montana is effectively a legal restraint on creditors and debt collectors from suing you after eight years have lapsed. Despite this intent, many debt collectors, unfortunately, ignore this prohibition and attempt to file a lawsuit regardless of the old age of a debt.

Debt collectors do this with the objective of using the debt collection lawsuit as a negotiating tool that can be used against an unsuspecting consumer. The debt collector will routinely point to the lawsuit and pressure a consumer to repay the debt out of misbased fear that a court will enter a judgment against the consumer.

Here is the truth - if you are sued for an old debt that is beyond the statute of limitations, you can fight (and prevail) in a court of law against the debt collector.

When you first receive a Summons in the mail, your initial reaction may be to avoid it. This is the wrong choice. It is essential to file a written response — known as an Answer— when it comes to being sued for the expired debt. Your Answer should be filed with the Montana court clerk, stating that the debt the creditor is trying to collect on an expired debt. You will simply explain that the debt has fallen outside the Montana statute of limitations and that you are using this as a defense to the lawsuit.

Once an official Answer is filed in a Montana court, the next step is to demand an account history for the debt. Debt collectors are legally required to produce documentation confirming your alleged ownership and responsibility for a debt. Relevant documentation typically includes the original creditor agreement.

If the debt is older than eight years, debt collectors must also produce proof that you made some type of payment on the debt that would trigger a restart to the statute of limitations. The documentation needs to contain the following elements:

  • The date the payment was made;
  • How much the payment was for;
  • How payment was issued; and
  • Whether payment was via bank transfer, check, or cash

If this information cannot be produced by the debt collector, then a Montana judge is authorized to dismiss the lawsuit. Note that it is your responsibility to raise the statute of limitations as a defense. The judge will not check for you.

Use the statute of limitations as a defense in your debt case.

Key takeaways

Debt collection laws in Montana, and at the federal level passed by Congress, are available to level the proverbial playing field between a consumer and a debt collection agent and/or agency. Here are some key takeaways on this article on debt collection laws in Montana:

  • The Fair Debt Collection Practices Act (FDCPA) safeguards against abusive and unfair practices, such as harassing calls and false debt claims.
  • The Fair Credit Reporting Act (FCRA) ensures accurate reporting of debt-related information to credit agencies.
  • If you’ve been sued for debt in Montana, you should respond to the case with a written Answer. SoloSuit can help you draft and file an Answer in minutes.
  • Knowing Montana's statute of limitations on debt can be an essential defense against debt collectors, as debts beyond the limitations cannot be pursued in court. Montana’s statute of limitations on debt is typically eight years.

If you’ve been sued for a debt in Montana, respond to the case with SoloSuit’s Debt Answer form and increase your chances of winning by 7x.

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