Hello again Faithful Followers, Cheryl Calvin of S&C Financial Credit Resolutions Group here with another insightful Credit Education and Resolutions Tip. All names are not actual persons. Any names or circumstances similar to a live person is purely coincidental.
Things are going to be presented slightly different in upcoming Articles. Here's why. I want you to identify the Problem, Alternate Scenarios/Resolutions and then Education without having to try to figure it out so from now on, I'll be breaking every Article down in that order. In my opinion any "Credit Expert" should be able to provide you all three steps clearly and concisely to ensure you can apply the literacy should you come across the same or similar issue. Now let's catch that Collection Agency shall we?
Problem: There is a debt showing up on Russel's Credit Report as a collection with ABC Collections for for a light bill from 123 Light Company in the amount of $425. the last phone number Russel had with that company was at an old apartment he lived in back in college in Carbondale IL. He moved back home to Chicago IL in 2001 and doesn't remember being contacted by the phone company about this bill. Now he's trying to apply for a mortgage and needs a few points and thinks this bill may be keeping him from having the score he needs. He contacts the Light Company and finds out there is a balance. He explains to the light company that he had moved from the address and paid what he thought was the last bill. Russel needs some help in deciding what to do.
Scenario 1: They explain they show service though a date that conflicts with the date Russell moved out in the amount of $320, he must deal directly with the collection agency and there is nothing they can do to help him. The collection agency (CA) will agree to a pay off of $350 but won't remove the account from his credit report.
Resolution: Russell pays the bill off even though the payoff is higher then the amount he actually owes. He just wants to get rid of it and this decision earns him about 4 points on his credit score. It will take an additional 6 months for him to recoup about 20points for paying that debt off and he paid about 9% interest. This is not the outcome Russell was hoping for and he is still unable to get his home. Russell later found out several Consumer Rights were violated. Skip to Education if this is you.
Scenario 2: Russell didn't leave a bill. Someone used his name to get light service at a residence he never lived in. Russell advises the light company and the collection company of this and the light company said they'd investigate and he was told by the collection agency that unless he pays the bill they'll continue collection activities and refused to remove it from his credit report.
Resolution: Russell contacted the police and filed a police report for fraud and sent it to the Light Company along with proof he didn't live at the address at the time of service. The light company received the information and said they'd complete their investigation with 30-45 days. Russell checked two month latter and the light company agreed to remove the account from his credit report as a charge off. He contacted his mortgage company and they said the collection was still on his Credit Report. Russell can't get the collection agency to remove the debt so he disputes it with the Credit Bureaus. They have an additional 30-45 days to respond. Now almost 4 months have passed since this thing started and he gets an answer back from the Credit Bureaus regarding his dispute. The decision was that the information was updated to show Consumer Disputes Debt. Meets all Fair Credit Reporting Act Laws. Russell decides to just pay the Collection agency to get rid of it but is still unable to get his home. Russell later found out several Consumer Rights were violated.
Education: 1)In the State of IL a collection agency can't just be licensed to do business but must be specifically licensed as Collection Agency to legally collect on a debt. Go to www.idfpr.com and look them up under Collection Agency. If they are not licensed, advise them of your findings and be sure to "Always" request that they show you proof (the burden of proof is always on the accuser, in this case the CA and not the consumer)they have a right to collect on the debt including any documentation of agreement signed by you as well as the final bill from the original creditor. Always keep proof of correspondence you sent with either a fax confirmation, a return receipt requested receipt from the post office or an express mail receipt. You may need to use this as proof latter should they continue to try to collect, transfer your account to another collection agency or try to sue you in court as all collection activity is supposed to stop until they have provided you this information. 2) In the State of IL a CA can only charge a maximum of 5% interest on the final amount you owed the original creditor. They can not keep billing you at the same interest of the original creditor or tack on more than 5% interest. According to the Collection Agency Act The Department may refuse to issue or renew,or may revoke, suspend, place on probation, reprimand or take
other disciplinary action as the Department may deem proper (Towards a Debt Collector)...for any one or any combination of the following
causes:While there are multiple causes in this case we're going to look at Section 9 line 29: Collecting or attempting to collect any interest or other charge or fee in excess of the actual debt or claim unless such interest or other charge or fee is expressly authorized by the agreement creating the debt or claim unless expressly authorized by law or unless in a commercial transaction such interest or other charge or fee is expressly authorized in a subsequent agreement. The only way this can be proven would be for the CA to provide a copy of a signed original contract between the consumer and the original creditor or a copy of a newly signed agreement between the consumer and them. You must request this in writing. 3) Credit Bureaus (CB's) are paid by the creditor to report information on a credit report for that specific CB. Therefore unless the transaction can be challenged by a law that has been passed (it helps to know Consumer Credit Laws)the CB may (more often then not) render a decision bias to their client and leave the information you challenge on your Credit Report. You are not their client, the Creditor is. A ten year study completed by the Federal Trade Commission (the Federal Agency responsible for overseeing consumer credit laws and rights)and completed in 2007 found the CB's are not putting forth their best effort in ensuring consumer disputes are accurately investigated and resolved. The majority of consumers on the other hand have no clue as to what their right really are. They rarely send documented support to their dispute and even if they do it has been found that in many cases (more than reasonable)CB's don't forward that information to their client as part of the dispute. They often code your dispute and forward limited dispute information to their client making it easier for the outcome to be unfavorable. You must not only follow everything up in writing and keep your documentation of proof (I often recommend faxing over anything else as you can get them to provide their fax number and a fax confirmation and documentation is considered a legal document in a court of law which is why many insurance companies and mortgage companies can transact almost all your transactions via fax and email up to the final signing of the contract). You then must not only forward this information to the CB's but be sure to demand they send a copy of your documentation to their client as well as provide a specific chain of action as to what process they used to make their decision and contact information for who they spoke to for any account they refuse to removes as per your request. Then ask them to forward you an updated complete copy of your credit report when they have completed their investigation and made all updates. 3) If the account is not passed the statute of limitations to collect in your state (it is always 7 years from the original date of delinquency with the original creditor to be shown on your Credit Report however in a court of law the determination is affected by the type of debt which has nothing to do with your credit report. It would do you good to read other articles written by Chery Calvin and look up the Statute of Limitations in your state for yourself). I suggest you consider your rights, pay to either the Original Creditor (preferably) or the Collection Agency depending on how many of your rights were violated before the debt was forwarded to a collection agency and how well you are able to make your argument but still send in your payment with a letter outlining your rights and explain unless they are able to produce full documentation, the collection agency must be removed and in this case the payment must show paid in full as agreed because Russell never received a final bill. If you do not owe it or it is passed the statute of limitations to collect, your request for documentation should be forwarded to the Credit Bureaus and protect you against further collection activities. None of your outcomes including getting the information removed from your credit report can protect you against further collection attempts including trying to sue you in a court of law for a Default Judgment. A consumers true defense to Unfair Debt Collection Practices, Unfair Credit reporting and Unfair and Inaccurate Credit Transactions is knowing and understanding your rights. That doesn't mean you won't be tried, but getting this information will keep you from being taken for a lot of money, time and hardship. Two of the most intriguing comments I've read in response to the Workshop convened by the the Federal Trade Commission in 2007 that resulted in the 10 year Study Report was that Consumers need to educate them selves on their rights and that the law that regulates Collection Agencies needs to be modernized. I couldn't agree with them more.
Oh well, I pray this was both educational and enlightening. Please, for comments, concerns, questions or requests for workshops and appearances contact me at cherylcalvin@sandcgroup.com.
As Always, Walk In Your Blessings,
CC
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