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Double Jeopardy on Charged Off Debt

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_SRP
New Member

Double Jeopardy on Charged Off Debt

I had a two accounts with the same company that were charged off 2/2011. They were both resold to a debt collection agency on 11/2012. The agency has placed two separate listing on my credit that are showing opened, 120 days past due, and in collections. This is in addition to the two original accounts that are showing charged off. The new accounts have a balance that is about $600 more than the original debt on each account. My question is, if an account was charged off can the debt be resold and listed as a separate account, AND appear as 'opened'/past due? This is hindering my credit more than the old charged off account and it appears as if I now have 4 accounts that are all in collections/past due. 

 

If this is not legal, how can I go about disputing this and getting the accounts removed? 

Message 1 of 8
7 REPLIES 7
llecs
Moderator Emeritus

Re: Double Jeopardy on Charged Off Debt

Unfortunately they can do that. If you have two accts with the same OC they have to report two different TLs on your CR. They aren't allowed to merge the two debts by my understanding of the Fair Credit Billing Act. When those two accounts went bad, you'd have concurrent 30s, then 60s, then 90s, until they charge both accounts off. This results in two charge-offs reporting with the same creditor.

 

When an account is CO'd, it doesn't mean the debt goes away. The OC can still report a balance and still update monthly. They can do so for as long as they own the debt or up to the point it is paid off. In your example, the creditor sold the debt to the same CA. This resulted in a $0 balance for both TLs reported by the OC and two different balances reported by the CA. Like with the OC, the CA cannot merge the two debts together. As a result, you've ended up with two paid COs and two CAs reporting all of which hurt. If the OCs still report a balance, then let us know and someone will suggest what to do.

 

To tackle this, you'd want to send GW letters to the OCs asking for deletion (assuming you want it deleted...keep the age of the TL in consideration). You'd send a GoodWill letter because they no longer own the debt. For the CA, you'd want to send a DV letter to them and see what they say. Let them verify the debt and don't cite that there are two different debts. If they verify and you agree, then send a PFD letter. In the PFD you'd probably would want to merge both debts together in a lump settlement.

 

The increased balance could likely be due to added interest. Legally interest can be tacked on and in most states they can use the same interest rate you had with your creditor prior to the debt being charged-off. You'd have to do some backwards math to make sure that all $600 was due to the interest. If you disagree with the DV results, then you can ask the CA for an accounting to see how they got to $600 more (most of the times they will answer back) and ask the OC for the last statement copies and reconcile that way. There are some very bad CAs out there that will break the law by adding "collection fees". I had one tack exactly $600 to collect on $600 making the balance $1200 from one month to the next. Then they added interest on that totalling $1800 now. That's illegal. In my case it is past SOL and CRTP so I toss the letters.

 

 

 

Message 2 of 8
_SRP
New Member

Re: Double Jeopardy on Charged Off Debt

Thank you very much for the quick reply and knowledgeable suggestions.

 

The OC is still reporting a balance which is my concern. On my CR it appears that I have 4 seperate accounts that are in collections, with balances due. Would there be another method to follow in this case? Is it possible to have the new creditor remove their accounts from my report?

 

 

Message 3 of 8
llecs
Moderator Emeritus

Re: Double Jeopardy on Charged Off Debt


@_SRP wrote:

Thank you very much for the quick reply and knowledgeable suggestions.

 

The OC is still reporting a balance which is my concern. On my CR it appears that I have 4 seperate accounts that are in collections, with balances due. Would there be another method to follow in this case? Is it possible to have the new creditor remove their accounts from my report? 



How old is the reported date on the OC TL compared to the reported date or open date of the corresponding CA? Sometimes the OC will sell off the debt and forget to update.

 

There is some debate in here as to whether or not an OC and CA report the same balance on a debt at the same time. IMO, they cannot do that though that's based on what I've experienced and examples from many others in here. I'm not sure if there's a law that prohibits that practice. If I had that I personally would proceed with a GW to the OC with a mention that both you (meaning the OC) and the CA both report a balance thereby making it appear I owe more than double and I would ask the OC to delete.

Message 4 of 8
_SRP
New Member

Re: Double Jeopardy on Charged Off Debt

Here is the information on the OC:

 

Status as of – Sep, 2011

Date Opened – Feb, 2010

Last activity – Feb, 2011

Acount Type – Installment

Description – Charged off account

 

Here is the info on the CA:

Status as of Jul, 2013

Date opened – Nov, 2012

Last Activity – May, 2011

Account Type – Open Account

Description – Collection account

 

 

If I proceed to write the OC asking to remove or update their account to show a $0 balance, the new accounts are still being listed as open as if it is a new account that I've recently defaulted on. Is there a way to remove the CA listing instead of the OC? Or is this practice normal and a price I have to pay for not taking care of this? If the GW is the best solution than I will try that.

 

I also wonder if this will affect the 7 year limit that the orignal debt can impact my credit.

 

Message 5 of 8
RobertEG
Legendary Contributor

Re: Double Jeopardy on Charged Off Debt

When an OC reports a balance, it always reflects debt owed to them.

When a debt collector reports a balance, it always reflects the amount of a debt that they have authority to conduct collection upon.

It informs others that the creditor resorted to use of a debt collector.

It is thus not doulbe reporting of the same thing.

 

If the OC still owns the debt, both can show a balance, with the OC reporting reflecting debt owed, and the debt collector balance reflecting collection amount, and not debt ownershiip.  If both timely update, whch they are required to do, but rarely do so, the two should be the same.  If disputed, they can merely update so as to state the current balances.  Usually not worth the effort until the debt has been satisfied.

 

If the OC sells the debt to the debt collector, then the balance reported by the debt collector then becomes BOTH the amount they are authorized to collect, AND the amount of the debt they now own.  The OC must then update their debt balance to report $0 once sold.  The OC is then out of the picture as to being offered or receiving any payment, as there is no debt owned to them.

 

How to then proceed with the owner/debt collector depends upon the individual circumstances.

 

Once could choose to send a DV.  However, if more than 30 days has expired from the date of their dunning notice, the DV would not be timely, and thus would not impose a cease collection bar on them.  They could choose to ignore it, and go on about their collection on the debt.

 

If timely, the DV would impose a cease collection bar on the debt collector, thus precluding any negotiations on payment of the debt other than a simple pay in full.

Any PFD offers would be placed in limbo until such time as they have provided the requested debt verification.

If PFD is the primary goal, then sending a DV may not be the way to go.

 

As for the charge-off, it is merely a reporting by the OC of an accounting measure they chose to take in the past, and subsequent status of the debt, paid or unpaid, or referred or sold to a debt collector, is not affected.  The CO remains as statement of prior activity on their account.  Taking a CO has no effect on the consumer's continued obligation for the entire debt to whomever is the current owner.  Deletion of a CO requires GW deletion by the OC.

 

 

Message 6 of 8
_SRP
New Member

Re: Double Jeopardy on Charged Off Debt

Thank you for that information... it makes a lot more sense to me now. A few things I'm still struggling to understand is... If I choose to pay/ or not pay off the debt to either the OC or the debt agency, will both accounts always remain on my report? They are both listed under different names I am afraid that someone who pulls my credit may think they are all seperate accounts. And lastly, when does the clock start ticking for the 7 year forgiveness on this debt if it is still being updated 2 years after charge off?

Message 7 of 8
RobertEG
Legendary Contributor

Re: Double Jeopardy on Charged Off Debt

Credit report exclusion was provided by Congress, not to "forgive a debt," but simply to exclude adverse items of information from appearing in a consumer's credit report after a certain passage of time, thus making it a bit easier to recover from prior derogs.

 

When an item becomes excluded from a consumer's credit report, it simply shields that bit of information from being viewed by others via a simple pull of their credit report.

Being excluded from one's credit report also means it becomes excluded from credit scoring.

 

However, the bad debt itself remains until discharged, either by payment, bankrunptcy, or creditor cancellation of the bad debt.

There are ways other than a simple pull of a consumer's credit report for creditors to become aware of unpaid, delinquent debt in a consumer's past.

They can simply ask upon application for credit if the consumer has any unpaid, delinquent debt, or they might question the absence in the consumer's report of any inidication that a prior debt has been satisfied.  Upon such manual reviews, if they become aware that old debt has not been satisfied, that alone might be grounds for denial of credit, notwithstanding the consumer's credit score or the fact that it is not shown in the consumer's credit report.

 

Any charge-off or collection becomes excluded after one date-certain, which is 7 years plus 180 days from the DOFD on the OC account that created the debt.

Period.  That exclusion period is not reset by any other actions on the account or collection, including payment or lack of payment of the debt.

When a charge-off becomes excluded from an OC account, other OC accunt information can remain.  CR exclusion of the charge-off does not result in deletion of the account.  However, a collection is, in and of itself, an adverse item, and thus expiration of the exclusion period results in total deletion of the reported collection.

 

Relance on credit report exclusion of a prior reported charge-off or collection as indication of continued unpaid, delinquent debt is done at the consumer's risk that it wont be discovered by other means.  It is thus always beneficial, in my opinion, to have no unpaid, delinquent debt, regardless of whether it is indicated in the consumer's credit report.

 

Message 8 of 8
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