Charged off account sold to CO but only reported by OC, how do I fix?

[pinkbetty]

I am gradually paying off my charged-off debts (one down, working on the second, two more to go) and working the GW angle after paying as I am not in a position to make full payment for PFD...

On my Equifax and TU  reports, the one that has been fully paid is now showing as a collection with a balance of $0, as it should.

The one I am paying off is showing up as a "bad debt/collection", under the name of the OC (Capital One), with the highest amount I ever owed as the balance.

Only that once, and not under the name of the CO I am paying off,  MCM,  with the current, lower balance.

When I was originally making my payment arrangements, I called Capitol One, they told me they no longer had the account, and sent me to MCM...who have apparently never reported it to the CRAs.

So who do I contact and how do I approach either getting the original charge-off to show a balance of $0 (it's affecting my utilization, and I also need to show that i've paid all past chargeoffs for future mortgage purposes) or having the line removed entirely????

If that means that the MCM collection shows up instead or along with it, that's not great but at least it won't mess with my utilization.

I am not at all disputing that I owe and that MCM is legitimately collecting, especially since Cap One sent me to them, they didn't approach me.

[RobertEG]

The fact that the OC has placed the account with a debt collector does not mean they must update the debt balance on their account to $0.

As long as the OC still owns the debt, they can continue to report a debt balance owed to them, and their debt collector can also report that amount as their assigned collection balance.

If the OC actually sold the debt to the debt collector, then yes, they were required to report a $0 debt balance owed to them.  If so, you could not make any payment to the OC, and deletion of their reported CO would be addressed by a GW letter to them.

Accuracy of current reporting depends upon who currently owns the debt.......

[pinkbetty]

Okey dokey, thank you for explaining it so neatly.

What do you suggest I do? I have a payment arrangement in place with MCM, which is about half way done, and when I originally contacted Cap One about making payment,  they told me the only way to pay was through MCM. 

How do I find out who actually OWNS the debt now? Cap One certainly behaved as if MCM does.

And what happens when I have paid the entire sum off? It doesn't seem right  that Cap One will continue reporting it as a balance owed when I followed their instructions on how , and to whom, to pay it off.

The GOOD thing is that MCM isn't reporting too, at least.

[RobertEG]

Is the OC currently reporting a $0 balance?  If so, they have reported no debt with them.  If not, either they still own the debt, or have failed to update their reporting.

I would call the OC and ask for clarification..... by saying that you must deal only with the debt collector, do they mean that they have sold the debt, or that they simply want all matters handled through them?

[pinkbetty]

The OC (Capital One)  is currently reporting a balance of $1,243 (the original balance), and shows no activity on the account at all since it went delinquent in 2006. 

The CA (MCM) is not reporting at all.

That's the whole crux of the issue.  I'm paying off MCM, at Cap One's instruction.  So far there is only about $600 of the original debt left.

So the payment that I am making is not reflected anywhere, and my fear is that even after I pay the whole thing off, my CR will show an unpaid balance which not only affects my utilization but looks bad in manual underwriting.

[RobertEG]

Technically, if you are paying their agent and the debt is being reduced, the OC is required, under FCRA 623(a)(2)(B), to maintain the accuracy of the reported information.

It is probably the norm for creditors not to continually update debt balance when payments arent coming to them, but the fact remains that the FCRA does require them to do so.  You are entitled to dispute.

[pinkbetty]

Thank you very, very much for your help.

I'll call Capital One tomorrow and if they say they have sold the debt, request that they update the balance to zero.

If they say the debt is merely being serviced by MCM on their behalf, I will request that they update the balance to reflect payments made so far.

If they  refuse to do either, I will dispute.