First off, I realize this isn’t the place to get legal advice from etc. etc. (I know YANAL for the most part) but I’m just looking for a starting point for information here.
A few weeks ago I got my quarterly credit report from my credit agency and on there it showed an adverse account for a $406 medical bill. This was complete news to me. In fact, I didn’t even think it was mine so I disputed it through True Credit (Transunion’s consumer credit site) since I assumed it was one of my parents since they often attend the hospital. Skip ahead a few days and they just confirm that it’s mine. I now remember it was for some stomach work I had done in 2005 and that it was what insurance didn’t cover.
Now, I’m seriously pissed off that they’ve gone and added adverse and seemingly derogatory information to my credit account without ever contacting me. Is this legal? I have never, ever gotten any bill or phone call from either the hospital or the collection agency until I saw this on my credit report. My parents were the ones responsible for the bill at the time and I never signed anything agreeing to pay for services. Why did this appear on my credit report in the first place? Also, my mother is also saying it’s appearing on hers as well.
Like I said, is this even legal under current fair credit regulations? I’m living in Indiana now but my parents (and the hospital I went to) are in Texas. What should my next step probably be? I assume writing letters to the credit agencies but I’m not sure I could provide any proof of anything, especially since I have never seen any medical bill or statement saying I owe anything.
PS I considered just offering to give them a few hundred of the bill but honestly I don’t care since even if I pay the debt it’s going to remain on my credit report for 7 years.
You’ll want to google “Fair Debt Collection Practices Act”.
It governs collection agencies, thought not the actual folks you originally owned money.
Those folks are covered by the “Fair Credit and Billing Act”.
Your best bet would be negotiating with the collection agency or, if they still own it, the original creditor, to delete this information from your credit record in exchange for payment of the debt. Collection agencies don’t like doing that, but they do want your money.
Get everything in writing before making payment. Don’t cop to the validity of the debt. Don’t talk to debt collectors on the phone, EVER.
If you are compelled to pay this debt without arranging deletion, you have the right to dispute the debt. A non-specific dispute via letter to the credit reporting agencies will sometimes get it deleted from your file, regardless of the validity of the debt. The folks who answer those letters get, I think, 7 minutes per letter to investigate them, and will occasionally delete 100% legitimate debts.
If the collections agency doesn’t respond to the credit reporting agency regarding the dispute of the debt, it automatically comes off. Once the debt is paid, the collections agency will frequently lose your file or interest in validating the tradeline.
There are some other tactics I’ve glossed over, on the basis of my assumption that you don’t want to sue the collections agency in small claims court. It is trivially easy to perform a series of actions that will frequently cause a CA to violate federal law, granting you a right of private action against them.
While everything Mr. Slant has said is correct, I think that before any of that, you would send them a letter demanding that they prove that you owe the debt.
That letter, in fact, has a special status within the context of the FDCPA.
It plays a pivotal role if you’re approaching this whole situation with a litigious mindset, as the timing of that letter is crucial to one of the gambits in the dance you get into with a collection agency.
Incidentally, the formal title for what you’re describing is a ‘demand for validation’ letter. [1]
Perhaps 1/3 of the time this will cause a halt in any activity on the part of the collection agency for 90 days, as many are too disorganized to respond properly in a more timely fashion.
Another 1/3 of the time they will decide your account is not going to be profitable and either return the debt to the original creditor or sell the debt to another collection agency. (The lower the $ associated, the higher the odds of this are. No one wants to research a validation request and fire it off on a $30 debt. Plus anyone who sends this letter is likely to be a tough nut to get meat from.)
On edit: You may not actually want the debt to be dumped to another collection agency, although it may be in your interest to have it revert to the original creditor. Frequently the original creditor is more flexible in negotiating than the collection agency would be, and also has more friendly staff.