Kim

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Kim,

This is a fairly easy situation , yet still complicated in its’ own way.

Outside of the “closed account” category, the “redeemed repossession” is not that far off from accurate, with respect to reporting.  Technically they repossessed it and you redeemed it.  That being said, 60 days past due seems to be a little fast to be repossessing a car.

However, I believe that your best course of action is to write a stern letter to the furnishers of information on how they are reporting the file inaccurately by showing it as a repossession when you had made the payment 5 days earlier and as you currently have possession of the vehicle and the account is still currently open and paid as agreed.  I would also recommend you to include a copy of the deposit slip with the corresponding date and amount and any recent statements from them indicating the account is still open and active.  Advise them that you want all remarks of a repossession removed and that you want it to show as an open, positive account because building and maintaining your credit history is very important to you.

Kindly remind them that failure to report this tradeline accurately incurs heavy fines per FCRA and you expect to have an answer within the next 15 business days.

I hope this helps,

Brian C. Aber
Senior Account Executive – HTDI Financial
Charter Board Member – National Association of Credit Services Organizations
877-877-4834 x704
brian @ htdifinancial dot com

First, the testimonial. My credit score was doomed until I stumbled upon this site about 10 months ago. I used the abundant advice on this site and have repaired my credit so much so that I’m well within reach of approval for a mortgage to purchase my first home!! The pay for deletes, references to consumer rights using exact verbiage, and the ever helpful green cards, have been a credit-saver. I CANNOT THANK YOU ENOUGH!

Now, for the question. I had a vehicle on my report for about $12,000 that went into default back in February of 2002. It was repossessed, but wasn’t reported as such. Additionally, GMAC reported the debt twice on my report, with 2 different account numbers, for different amounts, AND they were not reporting the payments I was making on the account. It simply read that the account was seriously delinquent. It goes without saying it wasn’t difficult to get it removed from my credit file since even I didn’t know what account was valid, and GMAC couldn’t verify (sounded like a failure on their part records wise). Also, the statute of limitations shown on my credit report showed the debt would be removed in October of 2008 anyway. So, it is gone.

This past week I received a letter from a collection agency for the full amount of this account attempting to settle for less than the amount owed. Up until now I’d never received a letter from any collection agency regarding this account. I’ve scoured BrokenCredit.com for answers on what to do in this case, but I can’t find anything. I’d like to send the collection agency a letter citing what my rights are and their wrongful collection practices (if they’re wrong at all).

Even more on this issue is the IRS. I received a letter from them back in September stating I would have to pay taxes on the full amount of the debt because GMAC has reported it as income to me. So, I am also paying the IRS. I stopped making payments to GMAC once I received this letter. I sent a letter to dispute this with the IRS along with copies of my payments to GMAC (how can I owe taxes for income on a debt that I’m still paying on?), but the IRS still says I owe taxes on the amount. I don’t want to mess with the IRS!

Can the collection agency really collect on this debt? And am I really up against the wall with the IRS on this?

Oh…if I may add…today, while sending off my final letters and proof to the credit reporting agencies, my local post office informed me of a new way of receiving proof of receipt without the need for the green card. The clerk said to send via Certified mail. On the receipt is the tracking number. Within 3 days of mailing check the tracking number on the USPS website and simply print out the signature. I tried this with one of the past letters I mailed and sure enough! There was the address, date and time of delivery, and the printed name and signature of the recipient. She assured me it was just as good as the green card. Saved me about 20 bucks today! This should be enough…right???

Dana

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Hi Dana,

Don’t confuse ‘statute of limitations’ with ‘reporting limits’. Credit reporting limits are generally seven-years (or 7.5 years from the date of first delinquency) and this is federal law.  The statute of limitations on the other hand, has to do with the length of time with which the debtor is at a heightened risk of a lawsuit and that length of time is governed by state law.  The good news is that it is gone from your credit report.  The bad news is that your payments may have restarted the statute of limitations.

Since it’s impossible for me to be an expert on every state’s statute of limitations, I am going to leave that to you to determine.  If the statute of limitations had expired, then a debt collector cease communication would effectively end the new found (creepy) relationship between you and this debt collector; however, for the remainder of this answer I will assume that the statute of limitations has not run.

Well what have we here?  They are a debt collector and as such are subject to the good ole’ FDCPA.  If this was their first communication with you then within five days of that initial communication, they are obligated to send you your validation rights.  The validation rights should inform you that you have thirty-days to request validation.  I would definitely request validation and, of course, send it CMRRR (call me old fashioned, I like the green cards!). 

You have bad records, they have bad records.  Has this thing been paid off?  Questions, questions…  I don’t know the answers.

The debt collector is barred per the FCRA from reporting it to the CRA because debt collectors are required to use the same date of first delinquency as the original creditor.  If they do report it then that means they’ve re-aged it which is actionable, so I wouldn’t worry about that too much.

The bigger concern would be that they might attempt to obtain a deficiency judgment.  This is why it is important to question whether or not the sale of the car was completed in a ‘commercially reasonable’ manner.  If it was not, then the junk debt buyer is barred from obtaining a deficiency judgment.  Further, if the consumer denies that the sale was ‘commercially reasonable’ then the burden of proof is on the debt collector to prove that it was.  This would involve producing required notices to the consumer, evidence the sale was publically advertised, timing of the sale and the actual method of disposition. 

If it were me, I would demand evidence that the sale was ‘commercially reasonable’ in my debt validation request as well as a complete accounting of the payment history and the original promissory note.  Now a debt collector does not have to provide all of that for proper validation, but I’d be building a case file if they should pursue legal action.

As for the second issue of the IRS and taxes – the easiest solution would be if the insolvency exclusion to debt forgiveness applied.  This would involve filing form 982 with the IRS and if you have $12,000 more debts than assets then there would be no taxes owed on the 1099-C.  If you find that you won’t meet the insolvency exclusion then, in addition to fighting it based on what you’ve listed, also add to that the fact that a 1099-C should only include principal forgiveness (and not interest forgiveness).  It sounds like GMAC is having some accounting issues.  Maybe now that they’ve received $14 billion in TARP money they are a little more cheery.  Nah!  Doubt it!

Read: Debt Collection after a 1099-C, Creditor Document Retention & Did You Receive Your ‘UCC’ Compliant Repo Notice?

Thanks for the questions and congratulations on your progress!

Paul

This author is not an attorney or tax advisor.  This information should not be considered legal or tax advice.  Please consult an attorney for legal advice and please consult a qualified tax advisor for tax advice.

We told them that we would be able to make July’s and August’s payment all at once, by the end of August, from the economic stimulus payment we would recieve.  Our payments were $365. So we would owe them $730. Well right before the end of August two men came to repossess our car. 

We called them and they said it hadn’t been paid in three months.  We called Truepay, which removes money from our bank account and places it with the car loan bank account.  They had went out of business!  We had no idea where our payments went.  They sent our account to Speedpay, another middle man.  But they had no idea about the payments either. We told our bank that we would not make payments until it was settled. 

They then told us that our car was repossessed because my husband had told them we weren’t going to make July and August’s payment, when we said we were going to pay in full.  They even said we were late every month because we made our payments on the 5th and 20th and they didn’t accept half payments and even though they said payments were do by the 27th, they told us that the date varied every month!

The guys took our car and it was sold about a month and a half later.  It was sold for half of what we had left on the loan!  Now we can’t get ahold of the bank to make payment arrangements.  Though we can’t afford them since we had to get another vehicle and pay a high interest.  Its not even as good as vehicle as what we had.  We went from 2006 Hundyaii Sonata to a 2003 Chevy Cavalier.

Even though we agreed that payments would stop until the car was sold, the bank still made the new middle man take out the next two payments.  They said we verbally agreed on them taking them out.  We did get those two payments returned and had a stop placed on the bank and on Speedpay.

Can we do anything about the middle man taking out money?  And what about those half payments that were never posted to their bank?  Was the bank with the loan in the wrong? 

I have two children and one on the way.  My husband is getting deployed soon and we need the money. I am afriad that they will garnish his wages.  Or even take our tax return which i need to pay my student loan that has to be paid.  It feels like we were trapped!

Kimberly

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Hi Kimberly,

There’s a lot going on in your post.  You’d have to talk to your bankruptcy attorney.  Did you sign a reaffirmation agreement?  Did the lender follow bankruptcy procedures with a motion to lift stay and repossess the car?  Also, check your local rules of repo.  You also need to talk to an attorney about a breach of contract for the “middle man taking out (your) money”. 

As far as your husband’s deployment, check into the Servicemembers Civil Relief Act.  You may be able to have the interest rate reduced on the 2003 Chevy Cavalier down to 6% (as well as other debts where he was an obligor or cosigner) and additionally there are protections against execution of judgments against servicmembers.

Thanks for the questions and talk to your bankruptcy attorney.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

The notice provided by the lender failed to include a number of requirements found in section 679.614(1)(a) and section 679.613(1), such as whether the sale was public or private, or where or when the sale would be held. The lender argues that if the notice was not in compliance with the UCC, plaintiff had received actual notice of the sale through conversations between her and the director of collections for the lender. The case relied on by the lender to support its argument that the oral notice would remedy any deficiencies in the written notice, Bondurant v. Beard Equipment Co., 345 So. 2d 806 (Fla. 1977), was decided before the legislature enacted the current statutes requiring written notice, and is no longer good law. The court accordingly erred in entering a summary judgment in favor of the lender.

Nor do we agree with the lender’s argument that its unaccepted settlement offer for the full amount of plaintiff’s claim, a practice which is known as “picking off” a class representative, made this case moot. Neither Florida nor the federal courts sanction that practice. Allstate Indem. Co. v. De La Rosa, 800 So. 2d 245 (Fla. 3d DCA 2001); Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004). Reversed.

Jackson v. Southern Auto Finance Company [4D07-3284, Fla 4th DCA, August 20,2008]

I’m in the process of buying a car.  I can afford to pay cash, but have been told taking out a loan and paying it off will increase my score.  But in the short term, it appears taking out a car loan will in fact have the opposite effect. 

Is 6-months long enough for the anticipated increase in credit score to be seen? 

Thanks,
John 

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Hello John,

That’s a terrific means of skyrocketing your credit score and yes, six-months is not a problem because FICO has no memory.  Make sure the auto loan is not obtained through a finance company. 

Thanks for the questions and hope this helps.

Paul

My name is Miguel and I have a question about my credit score…Ive been working to restore my credit the last couple of years due to some negligance on my part when i was younger…my cedit score is a lot better now but i do not want to stop that process…I recently found a car that i just cant live without but wasnt sure if trading in my old car and getting a new auto loan woukd make my score go down…Should I wait until my score is where i want it or would taking on this new loan not affect my credit score…I would also be financing roughly about 10,000.00 more than my old loan…hopfully your answer will help me in obtaining the car of my dreams…but if it doesnt im ok in knowing that ultimiately raising my credit score is the ultimate goal in trying to become a successful person… Thanks for taking the time to read my dillema and hopfully i will hear from you soon… Thanks 

Miguel 

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Hello Miguel,

Taking on a new auto loan will generally lower your credit score in the immediate term.  This should only be a temporary setback and once a payment history has been established for a sufficient period of time on the new loan and all else being equal, your credit score will ultimately sit higher than it does now.

The standards for auto loans have risen dramatically as of recent and it is much more difficult to obtain auto loan financing these days.  With that being said, if you can safely afford the new loan and you qualify, don’t let your temporary credit score drop stand in the way of progress.  Unless, of course, there was another reason you needed to have a higher credit score in the short term.  No matter what anyone’s age, I am reminded of sensible auto loan.

Thanks for the questions and hope this helps.

Paul

I have one quick question for you…My mom has decided to file BK.  She has co-signed on a car loan that I have (she is primary, I am secondary) and is also a co-signer on my brother’s car loan (he is primary and mother is secondary).  When she does file for BK, (in Arkanssas)can she keep both cars? If not, how will her BK effect my credit? Are the lenders able to put it on my credit as a repo or BK?  Any advice would be great!

Amanda

PS:  DEU 15:7 “If there is among you a poor man of your brethren, within any of the gates in your land which the LORD your God is giving you, you shall not harden your heart nor shut your hand from your poor brother, 8 but you shall open your hand wide to him and willingly lend him sufficient for his need, whatever he needs.”

Though, this may speak of giving money, I just wanted to personally thank you for your knowledge and giving freely what God has given to you.  Thank you for being a good steward. 

——————

Hi Amanda,

The bankruptcy is not permitted to show on your credit report.  This used to be a common credit reporting error – one cosigner filed bk and the other did not and both had the bankruptcy notation on their reports.  The new Metro 2 format attempted to address that problem and for the most part, fixed it.

Your mom can keep the cars, but she’ll probably have to pay for them.  The payment history for the car loans will continue to report on your credit bureau and your brothers.   If the cars are repossessed, then your credit reports will be plagued with the repossession.  My recommendation is to make sure the payments are made on time regardless of the bankruptcy filing.

Thank you for the bible verses, Amanda.  I believe the bible is understood in three ways.  The bible is (1) a historical book, (2) a law book, and (3) a spiritual book.  Historians reference the bible and it has been shown to be a trustworthy map through time.  The moral lessons in the bible are also readily apparent.  The part that is most difficult to understand is the spiritual meaning. 

God defines his own terms in the bible, as we are commanded to compare spiritual things with spiritual things [1Cr 2:13].  A parable is an earthly story with a heavenly meaning.  Christ talked in parables [Mat 13:34].  Christ is the Word [Jhn 1:1] from the beginning and is spoken of as a merchant man [Isa 55:1], although what he is selling and what we are giving is the gospel itself.  I believe a ‘poor brother’ in this context is someone who is unsaved [Rev 3:17].

The next verse in Deu 15:9 has to do with the seventh year, which is referred to as “the year of release” and commands that we not withhold from a poor brother because the seventh year is at hand and intuitively if we lent to our brother, we would not get paid back.  So, we are to lend the gospel to our poor brother and expect nothing in return [Luk 17:10]; for ye are our glory and joy [1Th 2:20].

Thanks for the questions and hope this helps.

Paul

Now, when the Mortgage broker pulled his trimerged credit report the auto late payment is still showing on Transunion, how can that be?

The reports that I am pulling are from the Annualcreditreport.com site. Does that have anything to do with this? if any? This is strange since it has never happened to me before in 22 years of practicing credit repair.

Can you give me an idea what is going on??

Thanks,
Evelio

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Hello Evelio,

The mortgage tri-merged report combines the three bureau’s entry into one tradeline.  You won’t necessarily be able to look at the trimerged report and determine that one bureau removed a late payment if it remains on the other two; the payment history is listed as one entry.  The difference would impact the TransUnion score itself, but that could also be counter balanced by the negative affects of the credit inquiries.   

I’ll add to this that the credit reseller’s software may be set to repull from the same batch for a period of thirty-days.  The entry was updated at the bureau level, but the reseller may have reissued an old TU report.  The report itself probably has an invoice amount listed on page one.  Was there a charge for the report?  Is it consistent with the request?

Thanks for the questions and hope this helps.

Paul

Her insurance said it would take 14,600. to fix our chevy avalanche.  We didn’t think that was right since the front end was now about 6 inches long! 

We called our insurance company to send their adjuster and they said it would take 23,600. Totaled.  They said they would write us a check and get the other company to ‘come on board’. The fair market value of our truck is 25635.  pay off is 25365.  Our company said it would take the ‘fmv’ and average it with the price of similar vehicles selling in our area.  I figure we’re screwed! 

Yes! I was upside down and yes! I was throwing money at this truck.I had no intention of trading this vehicle soooo I thought I had time. 

Meantime, credit card companies have been doing the ‘bait and switch’ and interest rates have been skyrocketing, I ‘opted out’ and closed these accounts to keep rates from going higher.  Fico went from 674 to I don’t even want to look. 

We live IN THE MIDDLE OF NOWHERE 26 miles from a very small town, my husband is a ranch foreman, yes folks the real Mccoy cowboy.  So he makes squat.  They just don’t pay for legends. 

I work in town and this business (self-employed) is what pays the bills. A $500 beater is just not going to stay together on 16 miles of dirt road. 

I don’t have big eyes, but it has to be a truck 4×4, low water crossings don’t mix well with low clearance vehicles. 

I don’t want to go upside down with some shady dealer but the fico has me in a head-lock. 

I haven’t gotten the word from the insurance company and am freaking out. 

Any words of advice?

Kayla

——————–

Howdy Kayla,

Look into your existing financing agreement with the truck to determine how the lender deals with the subject of gap coverage.  The insurance company’s settlement may be sufficient to satisfy the loan.

Closing credit card accounts is not normally the right move to make if your goal is to improve your credit score.  You “closed these accounts to keep rates from going higher”, but if those accounts had balances, then just the opposite may have occurred.  Can the accounts be reopened? 

Thanks for the questions and hope this helps.

Paul  

Next we purchased a home that if we budget properly we would be fine. I made more money with a new job.  He became frivilous will all our financial obligations, and 9 months later he walks out leaving me with the home, kids, bills that were supposed to be his part to pay, not taken care of.

I did everything to bring all bills to current, but after months with no financial support from him, I had to start saving money for an attorney, and find a new home for my kids and I. I wrote a letter of forbearance for the home. I paid most of the smaller bills off and now I am hit with a truck note that he doesn’t pay regularly, it has been repossessed, but he has paid to get it back.

I am sure you know where I am going. How do I begin to fix my credit.

I have recently been turned down for a job due to this credit disaster. Because in my line of work I deal with clients credit cards numbers.

Ruth

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Hi Ruth,

Sorry to hear of your troubles, but I welcome you to the Broken Credit Blog and by posting this question, you have already begun your credit repair journey! 

“How do I begin to fix my credit”: you write.

Step One:  Since you were recently denied employment because of your credit, you can take a copy of that denial letter and mail it to each of the three credit reporting agencies to obtain your free credit report.

Step Two: Read the articles categorized by subject in our credit repair library

Thanks for the questions and hope this helps.

Paul