Disputing Debt Collections

Have you ever seen those billboards that say something along the lines “Would you take advice from your bowling buddies on how to declare bankruptcy? Probably not. So why would you listen to them when planning your financial future?” Or something along those lines. The point? There is always a lot of chatter between friends, acquaintances, co-workers, neighbors, family members, and your mail man. Some of this chatter is interesting information, some of it is helpful suggestions, and some is just plain bad advice.

Naturally, if it’s a legal issue, you should definitely consult an attorney. Just like if your tooth hurts, you don’t see your grandma about it (unless she’s your dentist).

Do you ask for advice on how to mow your lawn? I wish my neighbors would, their lawn is a disaster.

Do you ask for advice on how to mow your lawn? I wish my neighbors would, their lawn is a disaster.

I’m taking a while to get to the subject of this post: there is a LOT of information out there (both online and offline) about disputing debt collections, and not all of it that great.

Let’s clear the air on disputing debt collections.

First, what does it mean to “dispute” a debt collection?

I think of “disputing” a debt collection in two parts:

(1) The first phone call you receive from the debt collector (“What the $&%* are you talking about and how did you get my phone number??” type of dispute), and

(2) A written document you send to a collection agency after you’ve gotten over your initial shock, rage, embarrassment, and frustration with the phone calls.

When on the phone, try to talk as calmly and matter-of-factly with the caller as possible. Here’s a checklist for phone calls:

  • DO get the collection agency’s name, address, and phone number
  • DON’T provide any additional information to the caller, if they are legit, they should have all the relevant information they need.
  • DO ask for a VALIDATION NOTICE from the collection agency. This is a written notice that the collection agency must provide on request that gives you the amount of the debt they are trying to collect on, the name of the original creditor, and what to do if you don’t think you owe the debt. This is a very important step, don’t forget it when you’re rage-fuming on the phone with the debt collector.

When disputing a debt collection by written document, keep these two things in mind:

  • Be specific about why you don’t think you owe this debt (usually because they’ve tacked on interest and other fees that weren’t part of the original debt).
  • Don’t provide additional personal information than what they already have.

Above all, whether by phone or in writing, DO NOT pay the debt without getting validation that the amount is truly what you owe. There’s no reason not to postpone paying it until you can be sure it really is yours to pay.

Question of the Month – reporting a debt as paid-in-full

In an effort to help and educate as many people as possible, I thought it would be a good idea to occasionally write a blog post addressing common questions I get in consumer law, or debt collection, or similar areas of law. Here’s the question for this month:

Are there any rules for how long a collection agency has to report a debt being paid? I am infuriated after calling this company multiple times. They said it would take 30 days to post. Two months later, someone didn’t do their job and the paid-in-full status was not reported to the credit agencies. Now they give me assurances that they will send out a letter saying that the debt has been paid, in another 30 days. Do I have any legal recourse here?

Short answer: Yes.

Medium length answer: Yes, your legal recourse can be through the Fair Credit Reporting Act.

Long answer: This type of activity is exactly what the Fair Credit Reporting Act is meant to protect people against.

In this situation, the paid debt that’s still showing up as an unpaid debt to credit agencies is called a “derogatory tradeline.” It still shows up as a blip on your record when credit agencies look you up.

 

You can either hire an attorney at this point, or do this on your own. What you would do, or an attorney would do for you, is write a letter requesting an investigation of the derogatory tradeline. Send the letter to the credit reporting agency showing that the debt is unpaid. The credit reporting agency has 30 days to investigate.

 

If the investigation results in the credit reporting agency fixing the problem, you are done and the damage is fixed. If the investigation does not repair the problem, then you may be able to file a lawsuit under the Fair Credit Reporting Act.

 

Bingo bango. Done and done. People usually don’t recognize two simple things about these kinds of violations:

 

  1. You don’t have to put up with these “simple” or “negligent” mistakes by the credit reporting agencies. These kinds of mistakes aren’t meant to be tolerated, and there is legal recourse under the FCRA.
  2. You don’t have to pay an attorney to do a case like this. If the attorney knows what they’re doing, you shouldn’t have to pay an attorney up front to do this type of work. Why? Because the FCRA provides for attorney’s fees to the prevailing party.