My husband’s credit report had a negative account on it which turned out to be the work of a shady local business (they’re under investigation now by the LA Sheriff’s dept. for what they did to him - the story is long and convoluted). He disputed the charge through all three credit bureaus and all three of them deleted the account. My question is, what is the alleged original debtor’s next move? Can they sell the debt to another collection agency? Do they have any recourse at all?
Getting the debt removed from the credit report doesn’t erase it. The shady local business (“slb”) could still sue him on the debt. If it did, he’d need to respond to the lawsuit. **pravnik ** has some great links on zombie debts that I don’t have time to hunt for right now, but that’s another issue. The slb could sell the debt or send it off to a collection agency. It could wind up back on the credit report, which would require an additional round of disputes to remove it again.
Depending on the circumstances, any or all of these activities might give your husband a right to sue the offending party.
Hi, Gfactor IM’d me. Basically what GFactor said. They could do nothing, or attempt to sue you on the debt, or turn it over to a collection agency, or sell it to a third party who buys “zombie debts” by the thousands for pennies on the dollar and attempts to sue people on them long after the statute of limitations has run. Save any and all documentation you have disputing the debt or regarding the shady local business, including their run-ins with the law, and I mean really save it, long term. If you’re harassed by a collection agency, see an attorney experienced in consumer debt law, as they may be in violation of the federal Fair Debt Collection Practices Act or your state’s debt collection law. If you’re ever served with a lawsuit, see such an attorney pronto. Many people attempt to answer the suit themselves, end up messing up something crucial, and getting a default judgment on them.
Sleazy new debt-collector tactics
Not meant to be constued as legal advice. I’m not you’re attorney, you’re not my client. For legal advice, consult an attorney in your jurisdiction.
pravnik, Gfactor, thank you both. We were thinking of getting an attorney anyways but now I believe we will *definitely *be getting an attorney.
One minor but possibly important detail that I neglected to mention: the business had actually already sold the debt to a collection agency before the dispute (that is, we disputed the collection account put on by the CA rather than the shady company, although we attempted to resolve things with the slb directly). Can they sell the debt to a CA more than once?
Thanks again.
NM, I read the article you linked - it looks like they can.
Yes.
not to hijack the thread, but let’s say that a person stopped paying on a debt in June, 2004. The debt was assigned to a law firm in April, 2006.
Should TWO separate entries appear on the report for the same debt? Should the 7 year period start from 2004 or 2006?
http://www4.law.cornell.edu/uscode/15/usc_sec_15_00001681---c000-.html
In the case you describe, there should be just one entry (there are other cases where two might appear). As you can see from the statute, the 7 years begins to run 180 days after the commencement of the delinquency, so actually November or December 2004 is the right timeframe for the 7 years to begin running. Transferring the debt does not restart the clock, although unscrupulous collection agencies will try this trick, which is called “re-aging.” The provision I quoted was adopted to make re-aging illegal.
http://www.ftc.gov/opa/2004/05/ncogroup.shtm
http://creditboards.com/forums/index.php?autocom=faq&CODE=02&qid=37
Of course if the law firm sues you and gets a judgment, that’s covered by a different provision of the FCRA, will show up as a separate entry on the credit report in the public records section, and will remain there for at least seven years:
Thanks, once again. Which entry should NOT be listed? Is it the original one, or the one assigned to the law firm?
I’m not sure it matters which “one” as much as it matters that there not be two. If they’ve merely retained a law firm to collect the debt, that hardly merits a second tradeline. So it’s possible the referral would be documented on the credit report as part of the first tradeline. If the debt is sold, that usually shows up as a separate tradeline with related amendments to the original.
Of course, under the section I cited before, if the law firm files a lawsuit, the filiing of the case can be reported as a civil suit in the public records section of the credit report. I’ve never seen a pending lawsuit reported, but it’s a possibility.
Right, re-aging is more common than you’d think and is one reason why you have to watch your credit reports carefully.