I recently recieved a letter from a out of town Collection Agency stating that I owed 19K!!

I do not have the means to pay this debt, that’s why I loss the Property!

I know my credit is ruined but what else can they do to me! “You can’t squeeze blood from a turnip”…or can you???

Thanks for your advise

Scott

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Hello Scott,

A deficiency judgment is obtainable in Tennessee.  If it were me, I would start by answering the letter with a request for validation.

Read: Post-Foreclosure Collection Continues

Thanks for the questions and hope this helps. 

Paul

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

Koster filed law suits in St. Louis against Portfolio Recovery Associates, a public company based in Virginia, and Professional Debt Management located in Kansas City.

Koster said Portfolio buys old and bankruptcy-discharged debt, often from another bad debt buyer, and then tries to collect, sometimes through court action. He said the company often is attempting to collect on accounts that are already paid or have been discharged in bankruptcy; sometimes they try to collect from the wrong consumer or for the wrong amounts. He said the company has threatened to garnish consumers’ social security checks, which they have no authority to do, and has refused to provide consumers with proof that the debt is valid.

Koster said Professional Debt Management uses scare tactics, leaving messages on consumers’ phones that there is an emergency. He said that like Portfolio, they attempt to collect on accounts already paid or from the wrong party.

“The Attorney General’s office intends to take aggressive action to protect Missouri consumers,” Koster said. “I am asking the court to issue a permanent injunction prohibiting these companies from violating consumer protection laws and to order that they provide full restitution to the people they have harmed.”

Koster also is asking that the court impose monetary penalties and require the companies to pay all court costs.

I just found your site, and wish I had found it earlier.  We recently went through a short sale due to needing to relocate to another city for work. 

We had a first mortgage and a 2nd (HELOC, both with Wells Fargo.  The process was arduaous, and Wells Fargo was absolutely terrible to deal with, but the bottom line is it finally closed in October. 

The first mortgage is reported as settled, but the 2nd is listed as a charge-off. In our inexperience and zeal to get this thing to close, I inadvertently let them include language giving them the right to attempt to collect on the deficiency after the sale.  I was somewhat relieved when I heard from them in November stating that they have deemed the deficiency amount “uncollectable” and they would be issuing a 1099. 

Now, the other day, I get a letter from a law firm stating that they are pursueing payment for the short amount.  I called them to ask about the situation, and they said that they will be issuing a 1099, and attempting to collect as well. 

Is this legal?  How long do they have to issue the 1099, until January 31st for this year’s taxes? Once I get the 1099, can thye still attempt to collect or pursue a judgment?  If they do elect to pursue the judgment, do you recommend that I demand to them to validate the debt by providing the original documentation? Your help is greatly appreciated!

Phil

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Hello Phil,

I’d request validation now as well as exercising my rights under Section 6 of the RESPA.

Read: Debt Collection after a 1099-C & Post-foreclosure Anagnorisis

Thanks for the questions and hope this helps.

Paul

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

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.

Craig

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Hello Craig,

The FDCPA requires the debt collector cease collection until providing validation.  They can validate four months later, BUT if your validation request was timely, and they sent you any collection letters or made any collection calls or did not indicate that the debt was disputed to the CRA prior to providing validation, then you have a violation.

The copy of the note would be considered proper validation in your case.  The FDCPA does not require that the debt collector prove that they are permitted to collect in your state; however, if, for example, you determined that they were required to be licensed to collect and did not have a license, then I’m sure the collection would stop and credit reporting entry would be removed as soon as you brought that to their attention.

Thanks for the questions and hope this helps.

Paul

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

“Initially, a debt collector is entitled to rely on the representations of its client with respect to the amount and validity of the debt.  However, upon receipt of the dispute, the debt collector may no longer assume the debt is valid.  The debt collector must obtain additional information to support the validity of the debt.  Further, under section 807(8) of the FDCPA, the dispute of the debt must be reported to any consumer reporting agencies to which the debt has been reported.  This requirement under the FDCPA applies whether or not the dispute was received within the thirty-day validation period.  This section 807(8) requirement also applies whether the dispute was received in writing or verbally.”

There’s a first for everything.  I wonder if David the Debt Collector is listening?  I wonder…

“Since you have failed to remit payment in full we are now left with theoption of summiting this account into the credit burwaus for listing on your credit report as an unpaid past due debt. This will be kept there for at least seven (7) years. Because this adverse credit rating becomes public record information it may result in future denial of credit. When collection investigations reveal your debt is substantioal enough and your assests (employment, bank,cars,property) show that they have a net worth, we will at that time consider sueing you in order to force collection.”

Ok this debt was origanlly 170.75 to a matco tool distributor (Tool Truck). according to a old credit report i have it states Date opened 01/2005 but date placed for collection [11/2001] Estamated date of removal 01/2008 It is not on my credit reports as of last nite from Equifax, Transunion, or Experian. So from reading your post I gathered they cannot repost it to my credit reports if I understand what I read properly. I have looked at expertlaw.com/library/limitations_by_state but im not sure where a Tool Truck debt falls. I live in Washington State.  Pretty sure they are just triing to scare me.

Any suggestions you have and or pointers would be greatly appeciated.

Michael

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Hello Michael,

The FCRA reporting period runs based on the date of first delinquency with the original creditor.  Any subsequent collection agency is also required to notify the CRA of the date the account first became delinquent with the original creditor.  The FCRA is federal law.

The statute of limitations is a separate issue from the above listed credit reporting limits.  Statute of limitations has to do with the period of time for which a debtor can be sued for a debt and is governed by state law. 

If you received their initial dunning letter then it should also contain your validation rights.  You have thirty-days to request validation of the debt per the FDCPA.  Here is how debt collectors view validation of the debt per the FDCPA.  Here are the limitations/restrictions on credit reporting during the validation period.

Also, in your request for validation you may also advise them that federal law permits credit reports to be viewed by parties with a permissible purpose only and the statement: “Because this adverse credit rating becomes public record information..” is patently false and violates Section 1692(e)(10) of the FDCPA on its face.  Some of the other statements they made would also seem circumspect unless they were made by ma and pa collectors.

Thanks for the questions and hope this helps.

Paul

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

I have been an excellent customer of cingular since 96.  I relocated from AR to TN in 2002 when I transferred my service to a TN number and closed the AR numbers.  The best I can remember, we disputed the last bill because two of my phone numbers (I had three seperate phones between myself and my husband)were on an incorrect plan and as a result I accrued unnecessary charges.  We resolved this in 2002 and I was told I did not owe any other charges. They had my new address, I never received any bill to state that I owed an money beyond this conversation.  Six years later, April 14th I am sent a collection notice. 

I at first thought the letter was fraudulant.  Most customer care reps could not help me because they showed the balance to be zero on the account.  After finally getting to the correct accounting office, I explained what I thought had happened and that I did not believe that owed for the amount.  The lady put me on hold to reveiw the account and came back and specifically told me that I was correct and the collection was turned over by mistake.  ATT would then contact the collection agency to resolve the issue which would take a couple of days to reflect.  The lady at ATT also told me that ATT would be contacting me in two days to let me know that the collection agency had been contacted.  She assured me several times of this and I ask her if she could fax me something in writing.  She said that she had reflected this in the notes and that she would give me the case number in which to refer. 

I got no follow up from att and I called them today.  They are now saying that they credited the account but, that my questions need to be directed to the credit agency.  The lady I spoke with today is going to call me back tomorrow after she consults with her supervisor further. 

I have been a 12 year paying customer with this company always in good standing.  I have excellent credit that will be ruined in a matter of weeks if this issue is not resolved.  What do you suggest that I do?????
 
Nicole

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Hi Nicole,

The initial dunning letter from the collection agency should have contained a notice of your validation rights.  You have thirty-days to dispute the alleged debt with the collection agency to be considered timely under 1692g of the FDCPA.  If the debt has not yet been reported to the credit bureau, then don’t worry about “excellent credit that will be ruined in a matter of weeks if this issue is not resolved”; because the debt collector is barred from reporting the debt to the CRA once your validation request has been received.  At that point, the debt collector would have to obtain proper validation to report it to the CRA.  From what you have listed, that would be highly unlikely if not impossible.

“What do you suggest that I do?????” you write.

Send a CMRRR letter to the debt collector requesting validation of the debt.

Thanks for the questions and hope this helps.

Paul

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

Thanks,
Kevin

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Hello Kevin,

The validation of debts provision of 1692g of the FDCPA doesn’t normally apply to original creditors.  You have rights under the FCBA and the FCRA in dealing with the original creditor.

Thanks for the questions and hope this helps.

Paul

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

Upon changing carrier’s and cancelling both policies, the insurance carrier debited amounts I did not owe from my bank account. 

I filed a fraud claim with my bank and the bank gave me the money back. 

Once the billing issue was cleared up with the insurance aganecy and a correct final bill was paid, I later found out (years later) that they had reported an amount owed on my daughter’s credit report. 

To this day, the collection agency refuses to remove it.  My daughter has tried and I have tried to get it reomved but no one will help us. 

Since she was a minor at the time and never signed any docuemnt indicating responsbility for payment, what recourse do we have?

Christina

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Hi Christina,

Paging Kim Jong-il

Thanks for the questions and hope this helps.

Paul