I had an account go deliquent without my knowledge. Long story short I owe $59 and its been deliquent for several months. It is the only negative thing on my credit report. I talked to the CA and they told me if I paid it would no longer be deliquent but the history will still be there. However, I remember people saying to get in writing that the CA will "remove" the negative from the CR. My question is, what does "removing" the negative entail? If I pay I simply just want this ding to go away as much as possible. Am I missing something here? Thanks
Why did the account go delinquent? Did the OC send you bills in a timely fashion before sending the account to a CA?
It was for a gym, I cancelled but they sat on my cancellation letter until the contract expired (a month or so). So I disputed it with VISA, not realizing at the time that I should have expected them to trash my credit report when I won the dispute. The account has been deliquent for months now, simply because I chose to ignore it and not pay out of principle since I knew they were just trying to screw me. Now I just want to pay and clean up my report as much as possible in the process.
Also, As of May 2005 my Fico was 660. At this point I was 120+ days deliquent. I'm looking to possibly be purchasing investment property in a year or two. Any help is greatly appreciated!!!
Did the contract allow for early cancelation? You know when you sent it. You know they got it. Their failure to cancel was documented by your dispute thru VISA at the time. If they ignored it, and the contract allowed for cancellation, you have a breach of contract on top of erroneous reporting.
Does this gym have a record of failing to follow the cancellation terms of their contracts? BBB reports, AG complaints, consumer web site complaints?
If your cancellation was in accordance with the contract, you should also file a consumer fraud complaint with your local DA.
You might also get results from a complaint to a local TV or newpaper consumer reporter. Bad advertising hurts sales.
Yes the contract allowed for early cancellation based on the fact that I move a certain distance from any locations. I did so and then requested cancellation. It took them 3-4 weeks to review the cancellation letter, coincidentally...just in time to bill me for my last month. So the reply I got from them (no I don't have it) stated "thanks for your lettter but your contract obligations have already been fulfilled as of yesterday". Perfect timing huh? Day 0: I send in proof and cancellation request Day ~25: They bill me anyway Day ~28: I get a response to my letter saying that my obligation has been fulfilled (since they billed me that last time) I disputed with VISA and won. Day ~80: National Credit Corporation calls and informs me I owe them $39. I told them I cancelled with the OC and I don't owe them anything. The conversation went for a few minutes but I definitely said I don't owe anyone money since I canceled. Today is 9 months later. I'm starting to regret not paying since it was only $40 and now its a big ding on my CR.
and the gym is Fitness USA. From the limited research I have done, yes, they seem to have a record of making it very difficult to cancel your contract.
the basic gist of the conversation I had with the CA guy: _______________ A-hole: You had a loan/mortgage (not sure which term he used, either way it struck me odd) that you have not fulfilled. The amount remaining is $39. Me: I cancelled it, they billed me a month later, I disputed it, VISA agreed, I got my money back. Talk to them about it. A-hole: We don't talk to anyone about it but you because you owe us $39. Send us the letter from them accepting your cancellation. Me: I didn't get one, I told you they sent me that other letter and billed me anyway. They convieniently held it til the last payment posted. A-hole: They don't read the letter in one day. Me: I don't expect them to. But less then 4 weeks sounds reasonable. A-hole: Well you still owe us $39. Me: Well too bad, because you're not getting $39, at least from me. A-hole: Then we'll just leave it on your credit report. Me: Fine. Bye!
Yes, it is common for health clubs to do things in a manner that prevents customers from actually cancelling under their cancellation clauses. They have set up your monthly membership payments as a payment of your full membership, coupled to a loan for that full amount that is paid off monthly, which is then immediately sold to a "lender", who claims they just loaned you the money, as it said in the contract, and any other contract issues are between you and the club. Neat. Most consumers faced with this situation will pay them, even up to the whole year, whether or not they get any benefit, and even if they actually met the cancellation terms of the contract. The club and the lender know for this amount of money its not worth litigating, and they have enough "plausible deniability" to claim they are not deliberately breaching the contract. Besides, they are trashing your credit reports, so they have that leverage too. The level of complaints for this exact behavior tells a different story. This is part of their business model from the beginning, planned into the manner in which they have written their contracts, and the manner in which they have gone to the trouble of setting it up as a membership coupled to a loan. Note that their reply to you was after there was any money left on the table. Also note that the lender's CA was already ready to handle your claim that you had cancelled. This is not news to them, since they are part of it. It is a common complaint across multiple health clubs, in multiple states. They know that they will get a bunch of new "members" every year (New Year's resolutions are a popular advertising tie-in), and that many will want to drop out later. These are one time customers, so they don't need to keep them happy. They just need to keep their money.
Fitness USA claims to be a BBB member. Have you filed a complaint against them and the CA? http://www.fitnessusa.com/About_Us.htm Receipt of your cancellation letter within 5 days of sending, and acting on it to cancel under the terms of the contract, based on the date of receipt, is reasonable. Sitting on it for 4 weeks is little different from sitting on a mortgage payment for 4 weeks to collect the "late" fee. Treat it as such. Some states have specific state laws governing health club memberships, requirements to honor cancellations both in the contracts and as required by law, providing copies of contracts, etc. In addition, some state AGs have reached settlements with specific health club chains regarding these issues.
"They don't read the letter in one day." They were all ready with that one. As long as we don't look at it, you didn't really cancel.
ontrack Thanks for all your help. I will file a BBB complaint, that is a good idea. It seems as though from the advice you are giving me that I have no choice but to fight this tooth and nail. Is that really the only way to get this off my CR? All I want is a clean report...I really don't care about the $59 at this point. I understand its the principle but this is one of those things where "choosing your battles" comes into play. So is that really my only choice? TIA.
Their "principle" is that they are set up to collect money from shmucks that cancel. They really want to get it from those who are stuck after the initial contract cancellation period ends, when they get a whole year's payments for nothing. Ordinarily, a legitimate business wouldn't be quibbling over $39 after a written cancellation received timely. Your use of the facilities stopped at the same time. Your little final rejected charge just puts you on the same skids they have already greased for the bucks that matter. That is what shows you the machine is already in place. Ordinarily, when a company factors its receivables, it pays a significant discount to get its money early, because it can't borrow cheaper than with its receivables as security. If this is a sale of a physical product, the costs are incurred up front, so they need the revenue shortly thereafter. For a straightforward membership based income stream, why would a company want to sell the account, at the cost of discounting? The consumer opens the account, pays for the months used, and closes the account. The variable costs match the user's use, and the membership payment stream. Why finance, and give up profit margin? The membership stream, set up as a "loan", is worth more in this form because: 1) it helps guarantee the complete contract period payment to the club. 2) it puts a barrier in the way of cancellation by the consumer, even when the contract specifically allows for cancellation. Hence, this practice is worth doing. Various states, and their AGs, are evidently aware of this common tactic, as you can see by a few searches of their web sites for information on settlements, state laws on health club licensing and cancellation clauses, and consumer warnings about sending cancellations CRRR.
They solicited your business based on the terms represented and expressed in the contract you signed, that allowed for cancellation on moving. If they had intended to honor their terms (they wrote the contract, not you, so a court would interpret it in your favor where ambiguous), they would have done so.
What they don't want is for these cases to be visible. That would be bad for business, and might call attention to how many times they do this. Possible fines, etc. They want the usual consumer to fold out of frustration and ignorance. BBB, DA, local reporter involvement would likely lead to folding by them, as the bucks are in the volume and it's not worth the risk.
Although they might remove for payment, why would you expect to depend on it? They are already set up to collect payments even when you have cancelled. Every consumer's payment legitimizes their tactic. Removing from CRs is potentially an admission that the amount was not actually "due".
