Penguin - bill bauer here

Thanks for the tip! I think the administrator zapped the "reply" bug at least 'cuz now it's working.

Anyways, my question was (and I've asked this before but never got a clear answer) whether or not both the original creditor AND the collection agency can report to the credit bureaus on one debt. What's legal and what isn't?

 

Depends On The Situation

Penguin:
The answer to your concern depends on the given situation, such as whether or not the debt was sold to the collection agent. For the sake of conversation, however, Iâ??ll presume youâ??re referring to a collection agent that has purchased the debt (so you may want to take this into consideration).

If the original creditor reported a debt then sold the account, it could not then go back and report any other item(s). Since a culled (sold) account would entail relinquishing all rights to that obligation, including the right to report any issue other than the sale. Reporting ancillary material would be inappropriate, and frankly, a waste of the original creditorâ??s time.

Correspondingly, it would do one little good to refuse cooperation with the collection agent â?? thereby going back to the original creditor to workout a settlement. That is because if the collection agent acquired the debt through purchase, it would have full right and control over all issues.

More directly, the original creditor AND collection agent could not legitimately report simultaneously. But in the event the debt were only assigned to the collection agent (meaning the CA didnâ??t â??ownâ? the account by purchase or otherwise), then both could report issues concerning their dealings.

Keep The Faith,
Anthony Villaseñor,
CreditDefenses.com

 

Re: Depends On The Situation

Anthony,

I have a specific question regarding this issue.

On my reports, Discover is reporting that my charge-off with them has been sold to Midland Credit Management. Midland Credit Management also is reporting this tradeline, under a different account number. This is the same exact account. Who has the "right" to report this debt? Discover? MCM? or both?

 

Distinctions

Erica:
Keep in mind that when weâ??re talking about reporting rights here, I mean in the context of a sold debt (as stated in my prior post). I mention this because it gets sticky from here, as the distinctions are important to make clear. Because while (in your case) Discover has a right to report the account as being sold to Midland, THATâ??S where its rights technically end!

Midland could also assign the account itâ??s own (internal) number and report that for reference, and is within compliance to do so. Now donâ??t worry about other creditors confusing the issue, and thinking you have two (2) poor accounts â?? when factually only one exists. Most (if not all) credit managers and underwriters can tell this is a slight file variation, and NOT two (2) separate trade-lines.

So in essence, yes both could report but Discover could not report additional material after it culled (sold) the account to Midland, because it no longer has a legitimate reporting purposeâ?¦ So the distinction lies in the sale factor, not assignment â?? two differing concepts.

Keep The Faith,
Anthony Villaseñor,
CreditDefenses.com

 

I Have No Clue

Bill:
I havenâ??t the foggiest notion what you could be referring to, and certainly wouldnâ??t take your comments (as stated) as an attack or provocation. Nonetheless, I sense you may feel there is some contradiction in what Iâ??ve advised, and if so please be specific in any reply. Albeit, before doing so you may want to glance over my post to Erica? Any confusion should be cleared up there as to reporting rights and appropriateness.

Keep The Faith,
Anthony Villaseñor,
CreditDefenses.com

 

Crdt dfns

Crdt Dfns,
I understand your distinction between the technicalities of sold accounts to collection agencies. Thanks for the information. However, you say that most credit granters will be able to see that these two listings are one in the same--what about our credit rating? If, in fact, both entities have the right to report that one debt separately, wouldn't each listing effectively bring down the credit score (a double whammy)? Do you think the credit bureaus took the time to program their scoring device to weed out these listings? I'm doubtful that it can differentiate them.

Can anyone point me to the section in the FCRA which details this right?

 

The Double Whammy

Penguin:
Yes, unfortunately, IF the collection agent who purchased the debt reallocated a new account number; for whatever reasons including internal ones. Then the CRAâ??s systems wouldnâ??t necessarily pick-up on the distinctions, and correspondingly report so as to favorably affect oneâ??s score.

One redress for this instance could be to bring the matter to the CRA(s) attention, and demand a deletion of the old account (from the original creditor). That is, only in the event one could sustain that one of the trades in fact harms an overall score; and is prepared to litigate to prove the pointâ?¦ I say â?prepared to litigateâ? because a threat under any other circumstance is a roll of the dice, as the CRA(s) could call the consumerâ??s bluff.

Since CRAâ??s are required under FCRA to report only factual information, one could argue that the first trade adversely (and falsely) affects the scoring model. From here we get into some pretty heady arguments, oneâ??s better suited for review with counsel. Thus, if you find yourself in this situation, obtaining a lawyerâ??s opinion would be well worth the effort. Because, here again, one should never risk their opposition calling a bluff, unless they have the guns (proof) to back it up.

Keep The Faith,
Anthony Villaseñor,
www.CreditDefenses.com

 

Knowing The Angles

Bill:
On balance using leverage in a methodical, amicable, manner gains far more effective results. So I agree with your statements and base my comments on many many years (more than I care to mention) in the collection biz, recovery consulting, asset management, and debt resolutions (ADR methods). Which is to say, my experience dictates that by tactically maneuvering the situation (CA/creditor mistakes or outright negligence) in the proper way; a consumer can achieve more profound results. Iâ??ve seen it happen time and again.

Without question, often times (CA/creditor) mistakes like those you suggested are more negligent than anything else. Collectors (whether working for an original creditor or agency) only think tactically to the degree such acquires them money, and seldom further. So the probable odds are always with the educated and savvy consumer, providing such knowledge is used appropriately.

Besidesâ?¦ Nothing ticks a collector/creditor off more than when a consumer out-guns at their own game, generally speaking of course. And therein rests the fun (if any is to be had) in contending troubled credit situations, out maneuvering oneâ??s opposition. Whereas an old saying rings true in this regard: â??â?¦the best defense is a strong offense!â? Especially when used strategically.

Begin to see why our website project is called, â??Credit Defenses?â?

 

Re: Knowing The Angles

Anthony,

Thank you for your useful comments.

I have a question regarding your information.

If the account is sold to the collection agency (after the original creditor charges it off), then there is no way to remove the charge off (original creditor) if one negotiates with the collection agency for a deletion? That is unless you dispute it? If this is the case, what motivation would we have for paying a settlement?

 

Motivations

CYA:
I believe one answer to your question stems toward the consumerâ??s particular credit goals. If one is seeking to refinance or pull equity from a home, for instance, then FICO becomes more of an issue. For a major (credit related) purchase, on the other hand, such as a car or home then a lowered FICO may not be such a big deal â?? generally speaking of course.

As in the case of wanting to refi a home, it would be tactically more suitable to dispute the original creditor hit first. Doing otherwise would be risky if payment to the collection agent is involved (and it generally would be), without assurance that the related (original creditor) hit will be removed. So in this sense one would have little motivation for paying the collection agent, while not having dealt with the original creditor first.

Other major (credit) purchases, such as homes and cars, arenâ??t always so FICO sensitive. Which is to say one may have a motivation to negotiate with the collection agent, nonetheless. If that item were updated to reflect a paid-status, then it would be obvious to a lender or underwriter that the accounts are one in the same â?? irrespective FICO. But of course weâ??re talking about the human factor, which is far too often overlooked in discussions on this and other credit card related boards.

So as you can see, objectives SHOULD dictate tactics and bear upon oneâ??s motivations.

 

Anthony

A good point was made: why pay the collector if the listing of the original debt can't be removed by the collection agency? If my goal is to clean up my credit reports, what do you suggest is the best method? If the collection agency bought the debt, does it mean that the cease and desist letter is ineffective, since the debt won't be reverted to the original creditor? I hope this question makes sense!

After reading your thoughts on the legality of double listing, I'm left a little bit discouraged. The process seems impossible! Maybe riding out the 7 years is the best bet. I screwed up when I was young...

 

Suggestions

Penguin:
If your objective is simply to clear your CBRâ??s just for the halibut (excuse the play on words), then Iâ??d suggest attacking the original creditor trade first. Since the debt was sold and the creditor really hasnâ??t any active interest, your chances of obtaining a deletion are that much better.

Not at all, you see, itâ??s a general misconception that issuance of a C&D automatically reverts the debt back to the original creditor; when in reality (in the real-world of collections) thatâ??s not the deal at all â?? especially in the case of a purchase. Sending a C&D where a purchase is concerned MAY only provoke the agent to take more aggrieve action, depending on the dollar amount.

Personally, I donâ??t recommend sending a C&D letter unless there is a tactical motive behind it. For example, if a collector were to threaten legal action on a stale dated (out of statute) account, and one aims to call their bluff. Or if some agreement had been reached directly with the original creditor (under assignment to the collection agency), then stemming contact using this method would be wholly appropriate. In short, C&Dâ??s should be used cautiously and only as a strategic tool.

Well please take heart, because issues are seldom that cut & dry or bleak. Unless youâ??ve applied all other avenues, cheer up! There are plenty of folks on this board (and many others) that have won the fight, so donâ??t throw in the towel just yet. Besides, Iâ??ve only given you the technical aspects and probabilities based on my experience. Your dealings could be much different, as not every credit redress case is alike.

Here again. You may want to consider attacking the original creditor hit first, which leaves you more negotiating leverage (room to operate) when dealing with the acquisition creditor (the agency that bought the debt). Once the original creditor trade is out of the way (think positive now), youâ??ve that much more to gain by cutting a deal with the purchasing CA.