Question Re Charge Off - Settled for less than owed

[needtodobetter]

Back in 2010, I attended a few courses at University of Phoenix.  I stopped attending because my daughter had a major medical emergency that led to some ongoing issues.  Anyway, appoximately a month later, UoP calls and says that I owe them approximately $850ish  because they had to return a portion of my student loans back to the lender due to my withdrawal.  I asked for proof that the funds were returned and an accounting ledger.  I did not feel that the balance due was accurate at all.  Also, at that time, my student loan issuer did not show that any funds were returned.  I did not hear from them again.  To be honest, with everything going on with my daughter, I forgot about it.

In November 2014, I received a ltr from their collection agency.  They said that UoP had authorized them to accept a settlement of approximately $300.  I immediately agreed.  That was the first I had heard anything from anyone since 2010.  I did have to set it up for monthly payments over a 6 month period - which they offered.  So I made my last payment earlier this month.  The CA has not showed up on my credit report.  Last month, I look at my CR and I see that UoP has the account listed as a C/O and has been updating monthly as a C/O since June 2010.  Not sure if they backdated it or if it was just on one report previously that I did not used to check.

I know they have hundreds of complaints with the BBB with respect to billing/payment/charge off issues, and they frequently will delete with and without any type of payment.  Anyway, since the last payment was paid, I sent a GW ltr (email) to UoP and explained what occurred at the time of my enrollment and told them I understood they were not under any obligation to delete but I would appreciate it if they would.  I received a response today that confirmed the payments I made to the CA but UoP still says they are owed the balance left after the settlement amount and that my account would remain with the CA until the entire amount was collected.  Of course, she refused to delete, even if paid in full.  She stated that they would update it as a paid charge off if they receive payment in full.  I am disappointed.  Quite honestly, I really had my hopes up seeing how often they were deleting the TL with the BBB complaints.

So, my question, I know they can leave it as a charge off.  Since I made an agreement with their CA and took their settlement offer, does UoP have to stop updating every month?  Do they have to note it paid - settled for less owed (or something like that) - they can't just leave it as open, correct?  What is the correct balance that should be showing?  $0 since it is settled, the original charge, or the difference between the actual charge and what I paid?  Her email suggests that they will leave it as open and reporting monthly.  Please tell me they can't do that.  The only reason I agreed to the amount is because I was told it would resolve the balance in full with UoP.  

Thanks for your help!

[Anonymous]

IMO

If theit collection agency settled the same account then they should not be able to report anything owed. It should be marked as paid. With or without a note.

That seems odd because you would think the CA would be the one reporting it.

If the debt was sold to the CA and you settled it you should be able to dispute it as settled. And they should not be able to post it to your reports because they no longer own the debt.

[Anonymous]

If the ca was collecting the debt for them and they still own the debt then it should be marked as paid because you paid as a settlement of the full balance. No balance should be owed.

[needtodobetter]

Thanks for the quick response.  Those were my thoughts as well.  The CA was acting on their behalf.  UoP states they still own the debt.  I am grateful that the CA is not reporting....that's my silver lining.  Hopefully, they won't now out of the blue, especially since it is paid per our agreement.  

I am a just a tad frustrated and disappointed.  I was on a roll with some PFD for medical collections, and this would have been the cherry on the top ;-)

I also want to make sure they end up reporting it correctly.  I was not sure what balance should be showing and I was under the impression they could not update it monthly any longer after it was paid/settled.  What a mess :-(

Thanks again for your help!!  I truly appreciate it.

[Anonymous]

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@needtodobetter wrote:

Thanks for the quick response.  Those were my thoughts as well.  The CA was acting on their behalf.  UoP states they still own the debt.  I am grateful that the CA is not reporting....that's my silver lining.  Hopefully, they won't now out of the blue, especially since it is paid per our agreement.  

I am a just a tad frustrated and disappointed.  I was on a roll with some PFD for medical collections, and this would have been the cherry on the top ;-)

I also want to make sure they end up reporting it correctly.  I was not sure what balance should be showing and I was under the impression they could not update it monthly any longer after it was paid/settled.  What a mess :-(

Thanks again for your help!!  I truly appreciate it.

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"Settled" by definition means there is no longer a debt, hence the reported balance should be ZERO. Tell them they have a choice of either reporting a zero balance and discontinuing updating the reports, or they can meet you in court to explain to a judge why they are not abiding by a written settlement agreement.

[needtodobetter]

Thanks for the info, Norman.  I always appreciate your posts.

Another thought / question - I just got home and pulled out the letter from the CA. It states: Our client, University of Phoenix, has authorized us to accept a 70% discount off your $897.10 outstanding balance to settle the account in full.

Thoughts on whether that impacts if they can report it as paid -settled for less than owed?

Thanks again!

[RobertEG]

The statutory basis for their required updating is FCRA 623(a)(2), which requires any party who has reported information to a CRA to promplty update the information as necessary to maintain its current accuracy.  If they argue the issue, refer them to the statutory requirement of section 623(a)(2).

As for continued reporting, the FCRA does not include any provisions requiring them to cease updated reporting.

The "requirment" stems from their credit reporting agreement with the CRAs.  The CRA credit reporing manual specifically instructs creditors to cease updated reporting after an account has been closed and no longer has a debt.

[needtodobetter]

I don't know what I would do without all of you! Thank you!!