topic Re: Understanding agencies that buy your loans once defaulted in General Credit Topics

Understanding agencies that buy your loans once defaulted

audia4 — Fri, 09 Nov 2012 18:03:15 GMT

How does this all work? If you have a creditor that you stopped paying and they closed the account and wrote it off as uncollectable (I can't think of what the actual term is called at the moment) I know that it's reported on your credit report and then falls off 7 years later.

But, what happens when years down the line a collection company buys the account from them and starts pursing the collection and puts it on your credit? Does the 7 years start over for it to fall off again since they are a different collector?

If so, one account could go on FOREVER if they keep selling your account off to different collection agencies. Correct?

Just looking for some imput on how this all works and what are the rules to this.

Re: Understanding agencies that buy your loans once defaulted

Shogun — Fri, 09 Nov 2012 18:08:03 GMT

When you go bad on your payments, this makes your first delinquincy. This is called the DOFD or Date of first delinquincy. This date never changes, unless the account is brought back up to current and then goes delinquint again. Anyway, when an account is charged off, they take that DOFD and it sets the CRTP and the SOL clock. The account can be sold back and forth between 100 CAs, but this DOFD that was set by the OC does not change.

Re: Understanding agencies that buy your loans once defaulted

audia4 — Fri, 09 Nov 2012 18:13:19 GMT

Shogun wrote:
When you go bad on your payments, this makes your first delinquincy. This is called the DOFD or Date of first delinquincy. This date never changes, unless the account is brought back up to current and then goes delinquint again. Anyway, when an account is charged off, they take that DOFD and it sets the CRTP and the SOL clock. The account can be sold back and forth between 100 CAs, but this DOFD that was set by the OC does not change.

Sorry, I'm new around here and don't know the lingo of all the abbreviations. I understand the DOFD and that is when it takes 7 years from THAT date for it to fall off? Or is it from the date that they charge it off starts the 7 years?

I don't know what the CRTP or SOL clock means? is CA mean credit agency?

My question is when the account is sold off and a new agency has reported it on your credit, does that restart THEIR 7 years?

For instance:

1st Loan= stopped paying in 2000. By 2007 it should have fallen off.

In 2005, another collection agency aquires the unpaid loan. They are now reporting. No payments ever made. So now THEIR report won't fall off until 2012?

Then if another agencies buys out #2 and starts reporting in 2010, you now have another 7 years from them for that one to fall off?

(Meanwhile the 1st and original loan is already off and gone).

Hopefully that makes more sense of what I'm trying to ask.

Re: Understanding agencies that buy your loans once defaulted

princechristian — Fri, 09 Nov 2012 18:37:08 GMT

audia4 wrote:
Shogun wrote:
When you go bad on your payments, this makes your first delinquincy. This is called the DOFD or Date of first delinquincy. This date never changes, unless the account is brought back up to current and then goes delinquint again. Anyway, when an account is charged off, they take that DOFD and it sets the CRTP and the SOL clock. The account can be sold back and forth between 100 CAs, but this DOFD that was set by the OC does not change.
Sorry, I'm new around here and don't know the lingo of all the abbreviations. I understand the DOFD and that is when it takes 7 years from THAT date for it to fall off? Or is it from the date that they charge it off starts the 7 years?

I don't know what the CRTP (credit reporting time period) or SOL (statue of limitations)clock means? is CA mean credit agency? YES

My question is when the account is sold off and a new agency has reported it on your credit, does that restart THEIR 7 years? NO

For instance:
1st Loan= stopped paying in 2000. By 2007 it should have fallen off. YES

In 2005, another collection agency aquires the unpaid loan. They are now reporting. No payments ever made. So now THEIR report won't fall off until 2012? NO, 2007

Then if another agencies buys out #2 and starts reporting in 2010, you now have another 7 years from them for that one to fall off? NO, 2007

(Meanwhile the 1st and original loan is already off and gone).

Hopefully that makes more sense of what I'm trying to ask.

Re: Understanding agencies that buy your loans once defaulted

audia4 — Fri, 09 Nov 2012 18:51:55 GMT

Ok awesome.

So what if the 3rd collection agency decides to push it and take it to court and win? Will a judgement go on your credit now even though they were not the original creditor and the time has expired for the 7 years? Is there anything at all they can do at this point as far as your credit report?

Re: Understanding agencies that buy your loans once defaulted

Shogun — Sat, 10 Nov 2012 04:04:31 GMT

If they take you to court you would go to court and use the SOL as a legal defense. Do you still have any documentation of the account proving when the DOFD was. Do you have any old CRs? If you do, then you could also make a copy of it and a copy of the new one and send them in with a dispute to the CRAs. Have you sent a DV to them? This is actually where I would start the process.

Re: Understanding agencies that buy your loans once defaulted

AndySoCal — Sat, 10 Nov 2012 04:30:41 GMT

Collection agency can get a debt to collect on in one of two ways. The original creditor can assign your account to a collection agency. The original creditor still owns the debt. The collection agency receives a fee for colleting on the account. The other method is the original creditor sells the debt to collection agency at a discount. A collection agency of this type is called a factoring company. In either case all the FCRA and Fair debt collection practices act still apply..

Re: Understanding agencies that buy your loans once defaulted

audia4 — Sat, 10 Nov 2012 05:12:39 GMT

AndySoCal wrote:
Collection agency can get a debt to collect on in one of two ways. The original creditor can assign your account to a collection agency. The original creditor still owns the debt. The collection agency receives a fee for colleting on the account. The other method is the original creditor sells the debt to collection agency at a discount. A collection agency of this type is called a factoring company. In either case all the FCRA and Fair debt collection practices act still apply..

Thanks. Good to know in case I run in to a problem. (The account was sold to an agency).

Re: Understanding agencies that buy your loans once defaulted

audia4 — Sat, 10 Nov 2012 05:23:12 GMT

Shogun wrote:
If they take you to court you would go to court and use the SOL as a legal defense. Do you still have any documentation of the account proving when the DOFD was. Do you have any old CRs? If you do, then you could also make a copy of it and a copy of the new one and send them in with a dispute to the CRAs. Have you sent a DV to them? This is actually where I would start the process.

Trust me, I have EVERY credit report since 1984 and keep ALL records.

I don't have a problem yet, but I'm just trying to anticipate these guys.

I don't remember the EXACT dates and would have to look everything up. But there was a cc in mine and my ex's name. During our divorce, my ex was ordered to pay for it. Well of course, he didn't pay for anything. YEARS later after they closed the acct, a collection agency bought it and tried to collect. It showed up on my credit report (making 2 different negatives on there at the time). Then YEARS later, they sold it to another agency who located me and sent me the "pay this reduced amount now to settle your acct". Well of course I didn't, it's not my bill as far as I'm concerned. So, then I received court papers. I sent the appeal letters in several times and they set up a court date. We went for mediation. They tried threatening me with everything. At the time I went to court, I had just had a baby, wasn't working, didn't have anything they could get or garnish. I told them to go after my ex and they said they couldn't find him so they were coming after me. I told them good luck with that b/c I have no money or job right now.

In the end, we made an "arrangement" for a payment plan for X amount of dollars, but not starting until 3 months later (which is how long I would be off on maternity leave) and for $X in total at a "reduced" price. A month later I received paperwork and EVERYTHING was wrong on it....the payment amount, the reduced amount (they had the full amount) and the start date (which they made it for that month). I told them that was not the agreement I signed and until they sent me the correct paperwork with the right info, they wouldn't get anything from me. They never did.

I ended up moving and they never found me again.

So about a year later, they went back to court and they were "awarded" X amount of dollars for it. However, I'm not sure what happened to it because it doesn't say a judgement or anything and it's NOT on my credit report at all.

I just checked the records and just LAST MONTH they went back to court (this is 2 years after the other court date) and they put in a request to have my name changed on my record (b/c I got married).

I'm just wondering what to expect next and if it's going to show up on my credit. These people just don't give up. Can they legally still come after me? It's been over 7 years since my DOFD.

Re: Understanding agencies that buy your loans once defaulted

Shogun — Sat, 10 Nov 2012 11:19:45 GMT

This however could be a problem. you signed papers, you agreed to the debt. This has potential of restarting the clock. Is there a judgement? A judgement is also different and would procede past the 7 year mark.

Re: Understanding agencies that buy your loans once defaulted

Shogun — Sat, 10 Nov 2012 11:24:45 GMT

AndySoCal wrote:
Collection agency can get a debt to collect on in one of two ways. The original creditor can assign your account to a collection agency. The original creditor still owns the debt. The collection agency receives a fee for colleting on the account. The other method is the original creditor sells the debt to collection agency at a discount. A collection agency of this type is called a factoring company. In either case all the FCRA and Fair debt collection practices act still apply..

A collection agency is someone who buys debt for the purpose of collection. By definition a factoring company buys accounts that are not in arrears in an effort to boost cash flow for the OC. The whole factoring company thing is an exploit the CAs have found in the posting to the CRAs that enable them to bypass certain aspects of the CRAs and allows them to appear as the OC. They are not a factoring company, they are a collection agency. We know it, they know it, and even the CRAs know it.

Re: Understanding agencies that buy your loans once defaulted

Cadillac-XTS — Sat, 10 Nov 2012 13:40:07 GMT

Re: Understanding agencies that buy your loans once defaulted

audia4 — Sat, 10 Nov 2012 17:20:49 GMT

Shogun wrote:

This however could be a problem. you signed papers, you agreed to the debt. This has potential of restarting the clock. Is there a judgement? A judgement is also different and would procede past the 7 year mark.

I don't know if it is suppose to be a judgement or not. They granted the money owed (the courts), but it has never showed up on any of my 3 credit reports ever. How would I find out if it was a judgement?

Re: Understanding agencies that buy your loans once defaulted

audia4 — Sat, 10 Nov 2012 17:28:51 GMT

It looks like they started this with the courts in 2007. We went to informal court for mediation around April 2008. In Sept 2008 they reopened the case with the courts.

Mid 2009 they went back to court and it says: "GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT THE COURT FINDS THAT PLAINTIFF'S MOTION IS WELL TAKEN AND IS GRANTED. JUDGMENT IS GRANTED IN FAVOR OF THE PLAINTIFF"

So I guess this IS a judgement? But yet it never shows up on my credit report.

Then last month they posted "MOTION TO CORRECT PLAINTIFF'S NAME"

All of this information is still in my old name before getting remarried. (Which so is my credit report).

I believe these people actually aquired this back in maybe 2006. Of course I have never made a payment on it. So even if they did push it, wouldn't it be from that aquired date and it would be 7 years next year anyhow?

Re: Understanding agencies that buy your loans once defaulted

AndySoCal — Fri, 16 Nov 2012 00:40:10 GMT

Shogun,

The point is the debt can be bought a collection agency or the debt can be assigned to a collection by the OC. I worked in a business where a colleciton agency that used collection agency. The accounts would be sent to the collection agency . As needed the business could recall the account for the collection agency. Not all debt is sold to a collection agency. A factoring company is a debt buyer it is there debt because they bought the debt.. Either the collection agency or the factoring company still falls under the Fair Debt Collection Practices Act.

Re: Understanding agencies that buy your loans once defaulted

Shogun — Fri, 16 Nov 2012 04:27:15 GMT

Yes but these are not factoring companies. These are collection agencies that are filing a glitch to the CRAs in order to bypass some of the posting restrictions of CAs. I agree that there are factoring companies, however purchasing those in arrears in not by definition a factoring company, they are a CA.

Re: Understanding agencies that buy your loans once defaulted

RobertEG — Fri, 16 Nov 2012 20:05:24 GMT

The tool d'jour being used by some debt collectors to confuse the system, and unknowlegeable consumers!

A "factoring company" is a company that buys "accounts receivable" assets from a business seeking immediate cash, and then collects on those receivables from the consumers who owe the debt. Technically, a factored account is supposed to be an account that is NOT past due...the business just wants their money faster than the length of time normally allowed (30-90 days).

If a creditor has charged-off a debt, then they have already moved the receivable asset from their accounts receivable ledger. That is what a CO is. They thus have no account receivable to sell to a factor.

The distinction arises in credit reporting based on case law which considers a party who buys debt that is already delinquent as a “debt collector,” and thus subject to all of the provisions and requirements of the FDCPA. Some want to avoid being subject to the FDCPA, so report as a "factor," implying that they are not subject to the FDCPA.

Thus, an apparently growing tactic that some CAs are using is to send info to the credit agencies that they are now a factoring company, and also a “creditor” based on purchase of the debt. Some even go so far as to assert they have become an original creditor.

If delinquent at the time of purchase, however, they are not considered a creditor under the FDCPA, but rather a debt collector.

Re: Understanding agencies that buy your loans once defaulted

AndySoCal — Sat, 17 Nov 2012 04:05:04 GMT

I would disagree. with the distinction if it is in delinquent or not. Factoring company owns the debt the difference is how they acquire the debt.

@RobertEG

The charge off of the account is the accounting transaction that says they think they will be paid the moeny owed. This adjusts the total accounts recievable to what creditor thinks they will recieve payment for. The usual booking enty is something like credit accounts receivable for $$ and deebit the uncollectible accounts expense. What happnes to these acocunts after they written off they will continue to try to collect on the account or they will sell the debit at a discount.

Re: Understanding agencies that buy your loans once defaulted

Shogun — Sat, 17 Nov 2012 04:36:15 GMT

You can put lipstick on a pig, but it's still a pig. Yes, it does make a difference if it's delinquint or not. So if I have an account that's been CO'd for 5 years and is purchased by a CA, they can just list themselves as a "Factoring Company", start adding 120 day lates to it, change the terms and the DOFD? Well then let's just take this whole FDCPA thing and throw it out the window. I say this because I've dealt with it first hand.

Yes, there are "Factoring Companies". But they are not these CAs. It is an exploit, and they will continue to use it until they get called out on it by someone that has some authority over it. If this was the norm, why hasn't it been that way from the beginning? It's because one found it, found it useful and now the rest are following suit. I can assure you that Portfolio, Midland, LVNV, et al. are not out buying out accounts that are in good standing, they are out buying collections.

Re: Understanding agencies that buy your loans once defaulted

RobertEG — Sat, 17 Nov 2012 08:43:51 GMT

The distinction I was making did not relate to whether they are a factor, but rather whether they are subject to the FDCPA, regardless of whether they are of call themselves a factor.

Case law has clearly established that parties who purchase debt that is delinquent become subject in their collection activities to the provisions of the FDCPA.

So debt status is relevant to our concerns vis-a-vis dealing with them.