topic Laughable response from Midland Credit! in Rebuilding Your Credit

Laughable response from Midland Credit!

JMCB — Tue, 09 Feb 2016 06:30:34 GMT

I thought you guys needed a laugh. So I sent a Goodwill letter to Midland Credit to remove a collection from my Credit Report that is almost 7 years old and due to fall off in less than 9 months. Here is a laughable excerpt from the bottom of the letter. "Because the age of your debt, we will not sue you for it." Hahaha! Got to love Midland Credit!

Re: Laughable response from Midland Credit!

RobertEG — Thu, 11 Feb 2016 05:53:10 GMT

Some states, such as New York, are now requiring debt collectors, in communications by debt collectors sent when the SOL appears to have expired, to provide such notice to consumers. They are attempting to make sure that consumers are aware that they cannot be sued for time-barred debts.

It is not a requirment under the FCRA, but is slowily becoming a requiment under state debt collection practices statutes and regulations.

It is anticipated that it is one of the regulations that is being considered under the proposed rulemaking current running its cours at theCFPB, so could soon be required across all states.

Re: Laughable response from Midland Credit!

JMCB — Tue, 09 Feb 2016 07:32:59 GMT

I'm not laughing that they put it on there or that it is or isn't a requirement. I just think how they worded it was laughable. "we will not sue you". You think they would have worded it a little more professional IMO.

Re: Laughable response from Midland Credit!

CJ7 — Tue, 09 Feb 2016 16:57:31 GMT

The specific wording is likely mandatory. "Sue you" is more straight forward than "institute litigation proceedings"

I had a similar one recently that had the same first sentence, but the second sentence stated that they would also

*not* be reporting it to CRA's due to the age. I laughed my eyeballs out because the body of the letter was still

asking for money - much like a wolf with no teeth. The presumption being that I'm losing sleep over it...

Re: Laughable response from Midland Credit!

RobertEG — Tue, 09 Feb 2016 18:27:58 GMT

The remaining may now be short and dull, but they are still there.

Expiration of SOL does not discharge the debt, it precludes their ability to obtain a judgment.

CRAs continue collection reminders on such debts, knowing that circumstances may still arise, such as mortgage application processes, wherein the consumer may still be required to pay the debt.

As an aside, for information purposes, below is a copy of the suggested letter, included in the New York State regs, that they suggest debt collectors send when the debt appeared to be outside of SOL:

"(b) The following language satisfies the notice requirement contained in section 1.3(b) of this Part:

“We are required by regulation of the New York State Department of Financial Services to notify you of the following information. This information is NOT legal advice:

Your creditor or debt collector believes that the legal time limit (statute of limitations) for suing you to collect this debt may have expired. It is a violation of the Fair Debt Collection Practices Act, 15 U.S.C.

1692 et seq., to sue to collect on a debt for which the statute of limitations has expired. However, if the creditor sues you to collect on this debt, you may be able to prevent the creditor from obtaining a judgment against you. To do so, you must tell the court that the statute of limitations has expired.

Even if the statute of limitations has expired, you may choose to make payments on the debt. However, be aware: if you make a payment on the debt, admit to owing the debt, promise to pay the debt, or waive the statute of limitations on the debt, the time period in which the debt is enforceable in court may start again.

If you would like to learn more about your legal rights and options, you can consult an attorney or a legal assistance or legal aid organization.”

Re: Laughable response from Midland Credit!

JMCB — Thu, 11 Feb 2016 03:40:23 GMT

@CJ7 - That's exactly it. Same here. What people forget is that when that debt is discharged, they get that as a write off on their taxes, a complete tax deduction. Then when they sell the debt, it's almost like a double collection for them. And then the debt collectors that bought the debt for 10 cents on the dollar are hoping to make a profit on their cheaply purchased investment. It's similar to buying and selling of Life Insurance policies that have already been purchased and are in play. People buy them for pennies on the dollar hoping someone that they don't even know dies across the country so that can make a huge return. So after SOL has passed and the time has passed for it to fall of my credit report, I think it is laughable they continue to try to collect the debt.

@Robert - That letter sounds a lot more professional! I think they could have worded it similar to that letter then what they did at the bottom of my letter. Also, if it has fallen off my credit report and past SOL. There is nothing they can do to get me to pay them. If my mortgage company pulls a "full credit report" and requires me to pay past debt, that's not a company I want to work with and I will simply go to another mortgage company. There are plenty of them out there looking for new customers that don't require old obsolete obligations to be paid, especially when its been discharged and collected through the IRS. That's why you receive a 1099-C and is a taxable income to you. They discharged the debt, received the tax deduction, sent you a 1099, and you must report that as an income. I did that on every discharged debt I received and I then had to pay taxes on it. So plain and simple, thats all in the past! :-)

Re: Laughable response from Midland Credit!

CJ7 — Thu, 11 Feb 2016 04:29:38 GMT

@JMCB wrote:
... If my mortgage company pulls a "full credit report" and requires me to pay past debt...

Is this even possible? I'm fairly certain items marked expired and excluded stay on the CRA's internal report , but

I was under the impression that the only one that could see them are the CRA reps. Someone please correct me

if I'm wrong...

Re: Laughable response from Midland Credit!

Anonymous — Thu, 11 Feb 2016 04:58:03 GMT

@JMCB wrote:
@CJ7 - That's exactly it. Same here. What people forget is that when that debt is discharged, they get that as a write off on their taxes, a complete tax deduction. Then when they sell the debt, it's almost like a double collection for them. And then the debt collectors that bought the debt for 10 cents on the dollar are hoping to make a profit on their cheaply purchased investment. It's similar to buying and selling of Life Insurance policies that have already been purchased and are in play. People buy them for pennies on the dollar hoping someone that they don't even know dies across the country so that can make a huge return. So after SOL has passed and the time has passed for it to fall of my credit report, I think it is laughable they continue to try to collect the debt.

@Anonymous - That letter sounds a lot more professional! I think they could have worded it similar to that letter then what they did at the bottom of my letter. Also, if it has fallen off my credit report and past SOL. There is nothing they can do to get me to pay them. If my mortgage company pulls a "full credit report" and requires me to pay past debt, that's not a company I want to work with and I will simply go to another mortgage company. There are plenty of them out there looking for new customers that don't require old obsolete obligations to be paid, especially when its been discharged and collected through the IRS. That's why you receive a 1099-C and is a taxable income to you. They discharged the debt, received the tax deduction, sent you a 1099, and you must report that as an income. I did that on every discharged debt I received and I then had to pay taxes on it. So plain and simple, thats all in the past! :-)

Not even CLOSE to a "double collection" for the OC. A tax writeoff means they don't pay tax on the amount written off - which means they recoup 39 cents on the dollar - they lose more than half. Delinquent debt sold to Junk Debt Buyers, like Midland and Portfolio, average between 3-7 cents on the dollar. Add that to the 39 cents for the write-off, and they still recoup less than half of their loss.

Now companies like Credit One, that "sell" their bad debts to other subsidiaries of their parent company, Sherman Capital.... Yeah, thats a total racket that should be illegal.

Re: Laughable response from Midland Credit!

Anonymous — Thu, 11 Feb 2016 05:16:31 GMT

@CJ7 wrote:
@JMCB wrote:
... If my mortgage company pulls a "full credit report" and requires me to pay past debt...
Is this even possible? I'm fairly certain items marked expired and excluded stay on the CRA's internal report , but
I was under the impression that the only one that could see them are the CRA reps. Someone please correct me
if I'm wrong...

Its the "white buffalo" of the credit world. Yes it exists, and yet almost no one has ever actually seen one.

Re: Laughable response from Midland Credit!

RobertEG — Thu, 11 Feb 2016 05:53:43 GMT

Credit report exclusion under the FCRA is not absolute.

Congress exempted certain types of credit inquiries from the credit report exemptiion periods that normally apply.

If the amount of credit or insurance being sought is high or the job being sought is above a certain income, then the inquiree can obtain a credit report that shows ALL derogs of record in the consumer's credit file, without any credit report exclusion restrictions.

See FCRA 605(b).

The fact that few creditors may take advantage of the right to obtain a "full factual" credit report does not negate the fact that they can.

It also reinforces the fact that obtaining a PFD is preferable to just permitting items to age off or your normal credit report.

Normal credit report exclusion, as discussed, still subjects the adverse information to possible disclosure.

However, if the furnisher reports a deletion of the adverse information, iit is no longer of record in the consumer's credit file, and thus not obtainable even via a full factual credit report.

It was also asseted in a prior post that a charge-off discharges the debt, and thus that discharge is what makes it taxable to the consumer.

That is not accurate.

A charge-off does NOT discharge the debt, and does NOT mandate any sending if a form 1099c.

A charge-off is a federal banking requiement intended to prevent creditors from overstating their "real" (collectible) assets to their shareholders and other investors.

It removes the debt in their books from the receivable assets column.

The IRS normally excludes $ or assets a consumer obtains from income as long as they have a contractural agreement requriing its repayment.

Howver, if a creditor cancels that obligation, that is what makes the prior debt become income in the eyes of the IRS, and not the fact that the creditor has taken a charge-off.

A credtior does NOT send a form 1099c unless and until they choose to cancel some or all of the debt.

That normally occurs when they agree to a settlement for less than the entire debt. The exclused part of the prior debt is cancelled by the creditor, and that portion is then subject ot a 1099c as cancelled debt.

Re: Laughable response from Midland Credit!

JMCB — Thu, 11 Feb 2016 05:43:30 GMT

I never knew that they could pull a full report or full factial report. But I have learned a lot from these forums. I've also read that NFCU is really bad about it. Those might just be rumors tho. There are people that say they go back and pay off 10 year old + obligations to receive these mortgages...... Ummm... These people are crazy! Just go to a mortgage broker and they will find a long list of people trying to earn your business as long as your credit score is high enough. But I have no experience or actual facts from this. Just what I read on these forums.