Falsely turned in to Collections (HELP)

So far you have been very reasonable with them and I understand that it can be very frustrating to solve this kind of problem. The important part is to remember that persistence with pay off.

Step One: Have the collection company send you a complete account summary that should include any fees and/or interest that they may have charged to you. The point is, the collection company must establish how they came up with the dollar amount that they are charging and reporting. This will help you see how they determined what the original amount was, what was credited, and what is still owed. Audit this report for accuracy.

The $30.00 is probably from interest and/or fees associated with Jan, Feb, and Mar. Even though it is their mistake, because you did not get a confirmation number it will probably be easier to pay the ransom.

KEY POINT. One of the other factors to consider, any time that any person, pays an old collection is, once the payment is made, the date that is used to calculate the 7 year period, for the collection account to stay on your credit report is updated. This is not a lot of time for you, 30-60 days, but you should ask them to set the date to start the 7 year calculation as 12-31-2009. All they can say is no.

The older the collection account, the more damage your score will have, once you pay the balance. While it would seem logical for your score to improve when you pay off an old collection, the result is just the opposite. The credit scoring calculations give more weight or consideration the newer the date of last activity. So what happens when a person pays a collection that has a date of last activity is six years old, that collection asccount is effecting the score very little, but when you pay off the debt, the six year old account now becomes a recent collection and can significantly lower your score, as well as stay on your report for 7 more years.

While this is very minor with your situation, it is always a good idea to ask for the creditor to completely remove the collection account once paid. As a fall back you can ask for the date of last activity to remain old and get a date certain they will remove the account from your report.

Always get a settlement offer and removal date in writing, along with a receipt for your payment.

Remember, all the collection company really wants is the money, but once you pay them, they will more than likely ignore you or any request. Your payment is your leverage to negotiate. The collection company may tell you that they are obligated by law to report the collection. The truth is, they can chose to report it or not, there is no law or regulation that orders them to report.

P.S. I'm sure that you have learned to always get a confirmation.

 

Good stuff, but this:

....is incorrect. The reporting period is determined by the DOFD. What DOES get affected by paying an old collection account is the SOL on the debt.

 

Correct. And in some states I think a payment might not reset SOL, but I'm not sure of that.

 

This is also not true. The only thing they are required to send you is the name of the original creditor and the amount. Now, in a lawsuit you can ask for more information in discovery, but what must be furnished as validation is pretty minimal. There is no requirement for an account history.

These are the type of things found on letters circulating on the web. They are totally useless and the creditor is not required to respond.

 

People, this is not about being right or wrong it is about effectiveness.

Not sure what you mean by DOFD, but the law requires them to use "COTD"
Commencement of the Delinquency. This is defined by the FTC

(Link goes here, but new so won't let me post is so e-mail me and I will provide the FTC Ruling).

Unfortunately the debt collection companies hardly ever follow the law. They almost always update the date and keep it on for seven more years. You will literally have to sue them to get it fixed. Just my opinion, so what they should do and what they actually do are usually two different things.

So, ALWAYS get the agreement in writing and have them use dates, then you can provide that letter to the credit bureau and have it fixed easilyif nessisary.

Next, Please review the alert issued by Hunton & Williams (a large law firm that represents large collection agencies).

(Link to the alert goes here, e-mail for production)

There is now a court ruling that even requires debt validation to include the account application or instrument that created the debt, let alone an account history.

Again what they are required by law to do, and what they do, are usually two different things. The money you owe is the leverage, and if you get the agreement in writing prior to settlement, then you are protected. It is very expensive to sue and without doing that, my experience has been that collection companies will do as they chose and damn the law.

 

Hedwig,

There is a huge difference between things circulating on the web and Rulings by the Fourth Circuit Court of the United States of America.

New ruling about debt validation.

15 U.S.C 1681 et seq.

There is also the Commercial Code of the United States of America UCC.

UCC Code that applies is to numerous to provide.

But letâ??s make it simple, you loan me $500.00 and I agree to pay it back. I don't and you finally sue me in small claims. The Judge asks you to explain, and you tell him that you loaned me $500.00 and I will not pay it back. He asks for your proof, you say it was a verbal agreement. I say you never loaned me any money, the judge says dismissed and councils you to always put agreements in writing.

So just because someone claims that you owe them a certain amount of money, does not make it so. This is a country where you are innocent until proven guilty.

The amount reported is an accusation and until it is substantiated it is just that, an unsubstantiated accusation put into the credit system. The collection company has the burden of proof. So ruled the Forth Circuit Court.

Furthermore without the original instrument that created the debt, is usually impossible to calculate the proper balanced owed. The written agreement will usually have all the rules to the game i.e how much interest if not paid on time, late fee charges etc.

Again what they are suppose to do and what they do are two different things. I think people should pay their bill and debts and not look to weasel out. But I also think that the debt collection industry has a very bad track record and they need to follow the law as well.

 

Squidzilla,

Yes the collection companies are suppose to use "COTD" to calculate the 7 year drop off date. The reality is the credit report does not have this column. The most relevant credit report is the tri-merge report that is used inside of the mortgage origination system. The mortgage industry uses "AUS automated underwriting systems. The credit report that is used in this process does not have a "COTD", it only has a date of last activity.

So the reality is that they creditors update the date of last activity and the scoring formula then uses that date as the starting point to calculate the seven year drop off date.

Is it screwed up, yup, but it is what it is. So look to be effective not right as right is rarely used by the collectors and the credit bureaus.