NEVER deal w/Collection Agency
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  1. #1
    Join Date
    Mar 2000

    NEVER deal w/Collection Agency

    I keep seeing posts about collection agencies trying to collect debts and it cracks me up. When you know your rights they become a big joke!!!

    The first point about collection agencies is that you NEVER talk with them (unless it's to get an address to send a certified letter). EVER. Period. Here's why. You have no debt with any collection agency. You have not agreed to the "assignment" of the debt in writing or verbally. You have not received goods or services (consideration) from the collection agency.

    They'll want you to think you owe them, but you don't. In fact, once you get a "collection letter" you should NEVER talk to them. The only way a collection company can collect one of your old debts is if you allow it. You can allow it by either agreeing to the assignment in writing, or by making a promise to pay them something. By doing that, you have, in effect, given them permission to collect it. See why you'd never talk to them!!!!!!!!!

    So what do you do? You send them 3 letters. VALIDATION is the key to your success.

    I accidentally ran across the validation concept. It's a "prove it or lose it" letter you send to collection agencies and/or to original creditors. You send a series of 3 or so letters asking for validation of the debt.. 9 times out of 10 you don't even get a response at all. If they don't respond, or don't respond properly, the debt doesn't exist. Case closed. By the way, this is an affirmative defense if the original creditor ever tries to sue you. You asked for proof, you didn't receive it.

    According to the Fair Debt Collection Practices Act, while you're requesting valition, the collection company can NOT contact you except to send the validation (so it simultaneously acts as a cease and desist letter too).

    You can find the letters here:
    Debt Validation - experts please help thread 32878
    Debt Validation2 - experts please help thread 32879
    No Debt Validation=Remove trade line letter thread 32991

    Send all correspondence certified return receipt requested. You have to have proof they received your letters always.

    1. send validation 1 letter (30 days)
    they won't respond
    2. send validation 2 letter w/copy of first letter in it You can add into this letter that you want complete removal of the trade line. (15-20 days) they'll remove it or not respond
    3. send trade line removal letter (you want it done immediately).

    Once they know that you know they have no claim, and once they've gotten the first 2 letters (and not responded) you now have cause for damages. They must remove the info off your reports or they're KNOWINGLY harming you... and that's lawsuit time!!!

    Try to send the letters to a supervisor or manager.
    By the way, right now I'd send disputes to all 3 of the bureaus: not mine. It's not.

    If the creditors don't respond to the credit bureaus, you'll get it off the report anyway. But you still have to get the agency to stop trying to collect it. The bureau listing is just the blackmail part to get you to deal with the collection agency. If it wasn't on your report, would we EVER bother contacting them? Not unless they filed a lawsuit.

    By the way, if the CRAs "verify" it and the collection company still tries to collect after not sending you anything. File an FTC complaint!!! Send all copies of letters/ and proof of receipt. You really would have a case.

    Normally, the letters do work and you don't have to go that far. Collection companies know they don't really have a let to stand on (as long as you haven't agreed to pay them). Have fun! Keep a log of what you do in case you need proof (and copies of all letters sent and received of course).

    This normally takes 3 months or less. Don't expect faster. Even if the bureau takes it off the first time you ask, still send at least the first 2 validation letters to the collection company.

    You may want to check the statute of limitations. (the time period they have to legally collect on the debt) If it's over or close, you don't even have to worry about the original creditor sending it off to another collection agency (though they might try). I've only had this happen with Citibank (they sent an account out for collection 5 years after the Ga SOL had run out).

    YOu can find your state's statute of limitations at: just for your own info.

    Initially, I'd just send validation to the collection company. If they ever try to send it to another colleciton company, repeat the process and send the validations to the original creditor too. Otherwise, I'd let the original credit alone for now.
    There is a concept that since the original creditor "sold" or assigned the debt to the collection agency that they've received all the money that they're entitled to, and thus you now don't owe the original creditor... but that's for another day. Just deal with the collection agency and the CRAs for now. :) Good luck!

  2. #2
    Join Date
    Mar 2000

    RE: NEVER deal w/Collection Ag


    What is your source for the statement that a collection agency's failure to validate a debt is an affirmative defense in a lawsuit to collect the debt? I have never heard this before and would like to think it is true but I have never heard of this before.

  3. #3
    Join Date
    Feb 2001

    RE: NEVER deal w/Collection Ag

    thank you for your detailed post Marie.. I hope to use this and will see what will happen with all my debts.. they are in the hands of collection agencies currently..

  4. #4
    Greg Guest

    RE: NEVER deal w/Collection Ag

    This is only good if the collection agency doesn't respond. What do you do if they are able to provide proof?

  5. #5
    PFM Guest

    contract law: assignment of r



    (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the
    person receiving delivery the right to enforce the instrument.
    (b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor
    to enforce the instrument

  6. #6
    Join Date
    Feb 2001

    RE: NEVER deal w/Collection Ag

    Hi Marie,

    I wanted to first thank you for the time you took in posting such an informative review process of what should be done..

    I still have a few questions based on the few things you have said and wanted to confirm with you the process I should take from this point forward.

    First, here is one my situations:

    NCO has bought 3 of my bad CC debt. They are now demanding $17k. The original debt before they bought it was $14k. They told me they are willing to settle for $6500. I offered $5k. That has been the extent of the conversation.

    Now, I checked with the web page for SOL and I found out that:
    Oral: 2 yrs, Written Contract: 4 yrs, Promissary: 4 yrs, Open Ended Accts: 4 yrs.

    Now, these incidents with the credit cards originally occurred in 1997. Given this, what do I have left and what are my rights?

    From your post, I am going to send the first and second letters to the manager of the collection agency.. this is for the "validation" process. Now, two things can occur...

    1) They respond and write back. What do I do then? This is not covered in your post..

    2) They do not respond. I send the second later.. they respond, back to question 1. They don't respond. Now what do I do? Do I write them a third letter and demand they remove the derogatory marks from the CR? What if they don't? Do I then write to the CRA?

    Also, doing this process - what does this solve? The goal is to remove the negative marks the collection agencies have placed on my CR.. but as to the original debt, doesn't that still remain? How do I get this removed?

    Even if you have "cause for damages", what can I do next? How is it lawsuit time for me? Isn't this more trouble than it's worth?

    Also, you say:
    "By the way, right now I'd send disputes to all 3 of the bureaus: not mine. It's not. "
    Is there a form letter I can use for this? Isn't it true that if I send a letter to them that I should only state one error at a time? Doesn't having 20+ bad marks make it look suspicious or have them flag something in the computer saying that I am trying to repair my credit?

    "If the creditors don't respond to the credit bureaus, you'll get it off the report anyway. "
    Is this what happens after I say that "it's not mine" ? Should I argue only one at a time for this? If I still owe the original creditors, then won't they respond or will they usually not because they sold it to the collection agencies already?

    One off topic question: I just recently paid a collection agency that was about to place a lien on my paycheck. I ended up settling.. they had paperwork and had everything legitiate in court, obtained judgement and it was 3 steps before the lien was takning place. I also got informed from my company stating the lien was about to occur.. I ended up paying for this. Was there any way out of this? Also, this most likely now appears on my CR, right? If so, do I get it removed by challenging the validity of this as well? That is what the collection agency told me.. and they said that they won't respond which will get it removed in 30 days. Is this true?

    Thanks again for everything and I eagerly await your response!!

  7. #7
    Join Date
    Feb 2001

    RE: contract law: assignment

    ..and this means??

  8. #8
    Join Date
    Mar 2000

    Michael's letters

    Look at Michael's website: the validation letters are beautiful! I'm not a lawyer, so please take this for what it's worth. But my research shows case law. Funny, had I had these letters 4 years ago I would've not filed a BK. I used the validation letters to tell a collection company to buzz off.. and without a valid debt all tradelines regarding it disappeared as well. One collection agency actually sent flowers as an apology for the harassment!

    I don't admit to understanding it all, I just know the letters make collection agencies go away.

    With regards to the case law: Michael's letters quote : "As I have not heard back from you in over 30 days since my notice of dispute dated XXXX, and since you have not supplied the demanded proof of the alleged debt, under the doctrine of estoppel by silence, Engelhardt v. Gravens (Mo) 281 SW 715, 719, I may presume that no proof of the alleged debt, nor therefore any such debt, in fact exists."

    My other info comes from a guy named "due process". He's on the credit-repair yahoo egroup (hope that's ok to say here). From my notes from his posts, (his words)here's the affirmative defense info:

    With regards to assignments: "Case law tells us that even though a creditor can legally assign an account to a collector, it is not enforceable unless the debtor agrees to the assignment. The collector has no standing to collect without your consent. The agreement can be established by making a payment to the collector. This is called "consideration."

    In order for you to be obligated to any assignee, you must have derived some benefit from the assignee, or paid a bill to them, or signed a new written agreement (a novation). You must agree to the assignment or it is not enforceable.

    The affirmative defenses include "accord and satisfaction," "statute of frauds (no contract in writing)," and "failure of consideration," for most of these types of cases. These defenses are to be used when the "debtor" is sued by one of the assignees (it doesn't matter if the original creditor ends up as one of the assignees).

    The first is "failure of consideration" which means, there is no evidence that an agreement was made, no payment, no exchange of any benefit or detriment to any party. The second is "statute of frauds" which means there is no contract in writing between the parties. Because the original creditor never actually named the new collector as an assignee in the credit agreement, the assignee can never be a party to that agreement unless permitted by both the debtor and creditor.

    The third used is "accord and satisfaction" which means the debt has been satisfied in full. The analogy is if you owed your neighbor $100 and a friend paid the debt for you and your neighbor accepted $75 in satisfaction of the debt, neither your friend nor your neighbor can sue you for the $25 because they accepted another amount in lieu of the original debt. It can also be called a "novation." This also happens because of an assignment. If a debt is assigned to a third party collector, it is no longer legally enforceable because the creditor has waived his standing or rights to collect. The same applies to the third party collector. No one can put himself in harms way (incur a debt knowingly and voluntarily) and then expect to be awarded damages for his losses.

    In any case, these defenses don't need to be spelled out when addressing a collector (not the creditor) with a request for validation. The statute takes care of all that for you. Keep it simple. Most of these cases are won, in my opinion, because of the collector's poor record keeping and the incompetence of collector employees. I always recommend that you don't discuss a collection with anyone over the phone, but request that all correspondence about the dispute be done in writing. Always get the name, phone number and company name from the caller and tell them not to call you anymore. If they do,they can be fined by the FTC.

    The credit history is another project. You can legally force the collectors and bureaus to remove those items, for the same reasons an assignee collector cannot enforce any collection. You may not be able to do the same with the orginal creditors unless you can prove they repudiated the debts or that there was some accord and satisfaction in the form of an insurance claim or write-off, as a consequence of the assignment."

    Ok, that's the end of my notes on what "due process" has posted. I suggest you also join that group, read everything he's posted on the subject (it's quite extensive) and ask HIM questions if you have them. He also posts his letters for free, just like Michael does on this board.

    I'm not a subject expert here and I'm not even going to try to be. I posted this info because I got a few questions regarding validation. If my understanding or wording is incorrect, I hope this post helps.

    I am certain that,while I'm not an expert, these letters make collectors disappear! Michael's letters work incredibly!!! And I think why they work so well is based on what "due process" explains.

    Does this help? Hope so. There are a lot of experts on this board... they may be able to add. :) These 2 boards, by the way, have made all the difference in my credit, and thus in my life! My biggest suggesion would be to read as much as you can.

  9. #9
    Greg Guest

    RE: Michael's letters

    With regards to assignments: "Case law tells us that even though a creditor can legally assign an account to a collector, it is not enforceable unless the debtor agrees to the assignment. The collector has no standing to collect without your consent. The agreement can be established by making a payment to the collector. This is called "consideration."
    The problem that I see with this statement is when you enter an agreement with a credit card company, etc., your cardholder agreement specifically states that your account can be assigned for collections. You agree to this when you sign the back of the card and use it.

  10. #10
    Join Date
    Mar 2000

    RE: contract law: assignment

    Obligations to pay money are assignable without the consent of the debtor. This is a routine commercial practice. That's why your associates card turns into a citibank card although you never consented to it. Collection agencies have the right to enforce debts assigned to them. They frequently sue in their own name on a debt that was owed to someone else. There are businesses that buy uncollected judgments and enforce them in their own name. I think on this point, Marie's post is incorrect.


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