Questions on legality

[kyngfish]

In 2006, I got a secured credit card from a bank.  I paid them 300 bucks and then they gave me a card with a 300 USD limit.  I was young and made a number of assumptions.  I got tired of paying the bill, ran up a 290 dollar balance and left the card alone.  I figured they'd take my money and close the card.  Come to find out, they took my money, closed the card, tacked on 300 in late fees, and sold it to a collector who says I owe 800 bucks.  So I show 2 negative items on my report for 1 event.  I've refused to pay it.  I figured I spent no more money than I gave them, they took my security deposit, and in effect have their money, and although I can see paying a hundred bucks or so for being an idiot, the punishment far outstripped the breach in responsibility.

Since then I've created a pretty solid history, I started with a 300 limit Capital One card which now has a 5000 limit, a Barclays with 6400 limit, an Amex Zync with a 500 dollar limit (I hate these people), a car loan, and school loans, all of which I pay as agreed.  I don't usually carry a balance on any of the cards.  I think my score is 727 on Experian, to a low 682 in Equifax, and a 711 on TransUnion.   

I recently added an American Airlines Citi Card (6000 limit), but I had some trouble getting it. I also have issues increasing the limit on my AMEX card, because the collection agency keeps re-initiating the collection date.  When I apply for a card or an increase they keep seeing a "recent" collection on my report, but in fact, this is almost  7 years old.  Barclays, Citi, Capital One, all have a good department for reconsideration, AMEX does not.  

• Will this keep happening past the 7 year mark?
• Do BOTH negative reports fall off 7 years from the date of initial delinquency on the ORIGINAL account?
• I wouldn't mind settling for a reasonable amount IF the data falls off my credit report instantly, but I'm afraid to even talk to the collectors as I have heard this will restart the clock on my debt.  What's my incentive to pay this?
• Do I have any legal recourse in order to dispute the management of this debt?
• Does anyone know how to manage AMEX?

[guiness56]

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@kyngfish wrote:

In 2006, I got a secured credit card from a bank.  I paid them 300 bucks and then they gave me a card with a 300 USD limit.  I was young and made a number of assumptions.  I got tired of paying the bill, ran up a 290 dollar balance and left the card alone.  I figured they'd take my money and close the card.  Come to find out, they took my money, closed the card, tacked on 300 in late fees, and sold it to a collector who says I owe 800 bucks.  So I show 2 negative items on my report for 1 event.  I've refused to pay it.  I figured I spent no more money than I gave them, they took my security deposit, and in effect have their money, and although I can see paying a hundred bucks or so for being an idiot, the punishment far outstripped the breach in responsibility.

Since then I've created a pretty solid history, I started with a 300 limit Capital One card which now has a 5000 limit, a Barclays with 6400 limit, an Amex Zync with a 500 dollar limit (I hate these people), a car loan, and school loans, all of which I pay as agreed.  I don't usually carry a balance on any of the cards.  I think my score is 727 on Experian, to a low 682 in Equifax, and a 711 on TransUnion.   

I recently added an American Airlines Citi Card (6000 limit), but I had some trouble getting it. I also have issues increasing the limit on my AMEX card, because the collection agency keeps re-initiating the collection date.  When I apply for a card or an increase they keep seeing a "recent" collection on my report, but in fact, this is almost  7 years old.  Barclays, Citi, Capital One, all have a good department for reconsideration, AMEX does not.  

• Will this keep happening past the 7 year mark?
• Do BOTH negative reports fall off 7 years from the date of initial delinquency on the ORIGINAL account?
• I wouldn't mind settling for a reasonable amount IF the data falls off my credit report instantly, but I'm afraid to even talk to the collectors as I have heard this will restart the clock on my debt.  What's my incentive to pay this?
• Do I have any legal recourse in order to dispute the management of this debt?
• Does anyone know how to manage AMEX?

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Welcome to the forums.

1.  Will what keep happening?  Nothing should after 7.5 years from the DoFD.

2.  Yes, they are supposed to.

3.  Just talking to a CA doesn't restart anything.  As for settling, it will not be removed.  You would need to negotiate to have that happen.  Your incentive is debt never goes away until it is paid.  Even if it is no longer on your CR it is still a debt and you may have to disclose it one day.

4.  How was it mismanaged?

[RobertEG]

The collection must be excluded from your credit report no later than 7 years plus 180 days from the date you first went delinquent on the OC account, and it therafter remained delinquent until the collection was opened.  No reporting of the debt collector other than an update of the reported DOFD has any effect on exclusion of the collection.

As for the OC account, what derogs were reported by them?

The OC account itself can remain, but any adverse items reported under the account become excluded once past their CR exclusion period.

Payment wont result in deletion of any derogs unless the creditor or debt collector agrees to deletion as a condition of payment.  You can offer them a so-called pay for delete, which if accepted, will result in deletion at this time.

As for legal recourse regarding the amount of the debt, FDCPA 808(1) stipulates that it is a violation for a debt collector to atttempt to collect any amount either not authorized in your account agreement creating the debt, or otherwise permitted by law.  What, specifically, did your original account agreement state were permissible charges, such as continued interest, fees, etc?

[kyngfish]

Thank you all for your responses.  

@guiness56 - I agree with what you're saying broadly, I signed a paper and had an agreement and I'm stuck.  I may have to disclose the debt one day, but it seems to me, that there isn't an incentive to pay it, nor do I feel ethically obligated to considering it was secured.  Without rehashing it, 800 USD does not equal the initial debt or a fair assessment of fees, nor what they paid for the debt.

@RobertEG - Thanks for the input.  Honestly, I was in my early 20s when I signed this, and have no idea of the fees and penalties.  I'm sure they're acting within their legal rights, I just think their legal rights are a bit unreasonable.  I've called the bank and they don't even have record of the initial debt anymore - at least not the department I dealt with.