Past Due Tuition Reporting as Unsecured Loan

[Anonymous]

In 2004 I had to withdraw from a semester of college because my financial aid did not go through properly. Unfortunately, it was past the withdraw deadline so I was still charged full tuition. I couldn't pay.

In 2005 that account went into collection status (internal collection department for the university, not a 3rd party CA).

Since it's a tuition debt and was under contract, I knew they'd be after me eventually. In 2007 they called and asked if I would be willing to pay off the debt before they sent it over to their legal department. I was in a much better position financially, but could not afford to pay off the entire amount. They agreed to do a payment plan.

This is where things get odd. Once I signed the payment plan agreement, they sent the account to ECSI for payment (ECSI handles all of their loan payments) and ECSI began reporting the debt to the credit agencies as an unsecured loan whose balance is due each month. So, even though I pay the agreed amount every month for the payment plan, it shows up as a 120+ day late payment every single month on my credit report.

So, two questions:

1. Is this correct reporting on their part?

2. Is this better for me than having it as a collections account?

I want to pay this debt off in full sometime within the next 30 days, but I'd like to square away the reporting aspect before doing so. I talked to a supervisor at ECSI who wasn't all that keen on helping me (he has no incentive, they aren't a collection agency so he's not specifically getting paid to collect this debt) but he did agree to call the university to ask them how they were reporting it before ECSI took over. I'm not sure if it's better for me to have them nix the current reporting and revert it back to a collections account which I will pay off, or if the current way they're reporting is better for me if I just pay it off and the account closes with the tradeline there.

This is the only real blemish on my credit (save for 2 defaulted student loans that I rehabilitated, evne though AES still has the defaults on there. That's another can of worms, though.), but since it is still open it's having a huge impact on my ability to get credit. I want to buy a house within the next 12 months and I won't be able to until I resolve this. Any insight or help as to which direction I should take in resolving this would be greatly appreciated.

[RobertEG]

Regarding reporting of a collection, it appears to be correct.  The term "debt collector" is defined in FDCPA 803(6), and is not limited to third parties.

The term debt collector includes any creditor who is attemting to collect his own debt, as long as communicationsx from them dont imply that the collection is being made under the exact same name as the OC, thus leading to confusion as to status as a separate, internal department within the company.  It is apparently clear to you that the debt collector is an internal collection department of the creditor, and thus I see no issue with them being a debt collector, and thus reporting a CA to your credit report.

I do, however, have a problem with their payment plan admistration agent, ESCI, reporting anything to your credit report, let alone an unsecured "loan."

The OC is still the owner of the debt, not ESCI. ESCI is not a "creditor"

Only creditors and debt collectors may report their actions to a CRA.  ESCI is neither.  They are an internal contractor of the OC/CA.

I think the answer to this question is clearly and succintly set forth in FDCPA 803(4), as follows:

   "The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not

    include any person to the extent that he receives a transfer or assignment of a debt in default solely for the purpose of

    facilitating collection of a debt for another."

I would file a direct dispute with ESCI under FCRA 623(a)(8), and get this out of your CR.

[Anonymous]

Are you suggesting that I can dispute this entry entirely based on that alone?

I was unaware of that provision. Is it possible that I may have signed something which would have invalidated this? I did sign a re-payment agreemnt, but I do not recall the specific provisions. I know it said nothing about a loan, though! When I read it, it was pretty basic, the gist being that if I was 60 days past due for the repayment plan that it would be null and void and the full amount due immediately, etc. I need to dig it up.

[Anonymous]

Oh, your last line was lost to me. So you *are* suggesting that I dispute based on this alone.

Thank you so much for the information. This is unbelievably helpful!

[RobertEG]

Yes, I am definately suggesting a dispute.  I urge you NOT to use the dispute process through any of the CRAs. Send a direct dispute  directly to ECSI

“This is a Notice of Direct Dispute with you, under the provisions of FCRA §623(a)(8)(D), of the accuracy of information you have reported to my credit file.

 “This is a direct dispute of credit reporting. This is not a request for debt validation/verification  under FDCPA §809(b).”.
  “In compliance with FCRA §623(a)(8)(D), and enacting regulations published at  16 CFR § 660.4, this Notice of Direct dispute includes my:

 “Identification of the specific information being disputed:
           (specify the account number of their (ECSI's)reporting,and its reporting as a "loan" to you; also include the related OC account number and the CA

            account number, and if not included elsewhere, your name and address)

“Basis for the dispute:

            (what was laid out in my prior post; asserting that they are neither a creditor of yours nor a debt collecto,

             and thus lacked authority to report an account with the credit reporting agencies.)

“Supporting documentation:

            (all documents that support your dispute; in your case, I suggest a copy or your signed payment plan agreement with them,

              or if you dont have it, reference to it, which they must have in their internal records;  reference to FDCPA 809(a) with

              concurrent statement that they never sent you a collection notice, and have never asserted to be a debt collector; 

              citation of FDCPA 803(4) as basis for them not being a credtior of yours;

               citation of FDCPA 803(6) as basis for them not being a "debt collector" under the statute;

             finally as part of your documentation, be sure to include a copy of the portion only of your

             recent credit report showing that they did, in fact, make such reporting to your credit file)

“Under the provisions of FCRA §623(a)(8)(E) and 16 CFR §660.4,, you have the duty to review all of the information I have provided to you,  to complete your investigation of this Direct Dispute within 30-days of my Notice of Direct Dispute,  and report back to me the results of your investigation within 5-days of your completion of your investigation.” 

“Should you find the disputed information to be inaccurate or incomplete, or you cannot verify the accuracy or completeness of the disputed information, you are additionally required, under FCRA §623(b)(1)(E), to promptly notify the credit reporting agencies of correction of this information, or what I belive to be warranted based on the facts of this dispute,  of its deletion from my credit file.”

[Anonymous]

On my credit report, the entry shows up as being from my university. I only know that it's ECSI that is actually doing the reporting because the folks at the university confirmed it (I had originally called them about the issue) and the supervisor at ECSI acknolwedged it. Will this make any difference since it's not showing up as if ECSI is the creditor?

[RobertEG]

Wow! What a mess!

You are at the fringe of needing legal counsel.

The OC (Univeristy) is the creditor.  That clearly seems to be the case.

ECSI cannot independently report a new installment loan with them, for reasons I have stated. They are not a legal creditor or debt collector.

So they are apparently reporting updates under the OC account and not their separate reporting account?????

Was the change in your credit reporting done by the the OC (university) as a new intallment loan, or by ECSI?

Very different implications.

The terms of your "payment agreement" may in fact have  been a separte loan agreement with the OC to apply those payments against the separate debt on the OC account.

I strongly suggest you secure an attorney.  I offer only credit scoring advice, not legal advice.  I think the key is what you agreed to in your payment agreement with ECSI. That is a legal contract that requires legal review.

Not having seen that agreement, I cant offer advice on how to deal with it.

[Anonymous]

There are two entries on my credit report.

One is the original collection account with the original account number. The second is still listed under the university's name, but a different account number.

The original collection account has a "Debt purchased" note, stating it was transferred to another lender. This is not the case, unless it is within another department within the university itself. This account is closed.

The second one is open and has the tradeline.

Thanks for all of your help. I'm going to try to dig up the repayment agreement or request a copy from the university to see if it has any clues. 

[AndySoCal]

Based on your last response  ECSI is the creditor now because the OC transferred/sold the account to them.   To dispute this would  not work. This could mean the "university" is no longer handle tuition payments etc and has subcontracted this iut to third party.

[Anonymous]

If ECSI is the creditor, then wouldn't it show up under ECSI on my credit report rather than my university?

Talking to ECSI, I'm given the impression that they are most definitely not the creditor, but rather simply collecting on behalf of the university. I'm guessing that the "sold to another lender" statement is actually bogus and just a way for them to let ECSI open a second tradeline or something for their own internal tracking. The debt may have switched departments within the university, maybe?

I'm having trouble finding an attorney for this type of thing in my area. What should I look for? Every result I find via Google seems like a bunch of attorneys pushing bankrupcys.