The Fair Debt Collection Practices Act, Fair Credit Reporting Act, and the Truth in Lending Act are typically violated by junk debt buyers as part off their business models. Here are things to watch for when being contacted by junk debt buyers,.
1. Re-aging Accounts: Junk debt buyers attempt to force settlement on “time barred” or “Expired Statute of Limitations” accounts. The actual date that the debt becomes delinquent is supposed to be reported to credit reporting agencies under FCRA/FACTA within 90 days of the delinquency. Zombie debt collectors may attempt to tell credit bureaus that an old debt is a new one which extends the seven-year limit on reporting negative items and puts the debtor under even more duress, pressuring him or her to pay
Debt reporting re-aging is the practice of reporting a bad debt account as more recent than it really is. Re-aging causes the FICO score to drop dramatically since the scoring model interprets the re-age as a more recent default.
WARNING! It does not improve a credit score to settle an old debt unless the item is completely deleted (not just reported as “paid in full”). Settling a debt with a junk debt buyer makes your credit score worse because the delinquency or charge-off will now be reported as more recent!
2. Misreporting the legal status (e.g., an open charge-off that was actually discharged in bankruptcy) and also misreporting the “open date” and “date of last activity” on an account are two favorite “illegal tactics”!
WARNING! Junk debt buyers purchase debts that are outside the statue of limitations for lawsuit (legal enforcement of the debt) but not outside the statute of limitations for reporting the debt on your credit report! They like to report this debt as a revolving account, which is illegal.
3. Multiple Listings of the Same Debt: Junk debt buyers are often responsible for multiple reporting of the same debt as these change hands among buyers and sellers. Usually, these same debts are reported by the original creditor as well. Thus you could have the same debt reported multiple times! Increase your credit score by properly disputing your credit reports – Click Here!
WARNING! Agreeing to pay a zombie debt is also no guarantee that the debt will come off your credit report as the original owner can still report it no matter what you agree to with the collector.
4. Suing or threatening to take a debtor to court over debts even though the statute of limitations has long expired. Junk Debt Buyers press for payment of some amount to bring the debt back under the statute of limitations after which they can sue you and have a chance of winning.
WARNING! Payment can revive the statute of limitations, which was up prior to this activity, and lead to a lawsuit. The unpaid debt could once again be sold to another company that might renew collection activity. It is important to note that State statute of limitations (SoL) for collections are different from FCRA/FACTA statutes of limitations for reporting the debt on your credit report.
5. Collectors Pretending to be Lawyers and Various Other Code Violations: (e.g. consumers not being notified that their calls are being monitored or recorded) are also likely violations in almost all fifty states.
What to do if you are contacted by someone claiming to own one of your past debts
Don’t assume you are wrong – assume instead that your rights are being violated, and even if you get the collector to promise something in writing, you have to be willing to go to court if the agency reneged.
Keep all letters, account statements, and court records (even from 15 years ago)
Do not provide the collection agency or junk debt buyer with updated personal information
Never acknowledge a debt with a collector or agree to any payment until the collection agency “validates” the debt (past billing statements are not considered proof)
Never accept credit card “offers” that come with an offer to settle a debt or that request payment in any other way
Monitor your credit reports Get your free annual credit report!
If the statute of limitations hasn’t expired, you may want to negotiate a settlement rather than risk a lawsuit, contact a Fair Debt Collection Lawyer today for a free consultation.
If the collector persists in its deception, you can demand that the collector produce a copy of the documentation that created the debt, such as the credit card agreement you originally signed, along with an account history. Chances are the collector won’t have this documentation, and continuing to report the account without providing proof that you owe the money is a violation of several laws.