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3rd party collection loophole?

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Valued Member

3rd party collection loophole?

So this is my issue: I have a charge off car loan that charged off in 2014. When it charged off the bank sent it to another department with a whole new account number. Since doing that the charge off shows twice on my credit report. I have since made an agreement with the bank to pay for delete. The collection manager told me there was no way to send a letter stating it would be deleted. But I informed him the call was also being recorded on my end as well as his and thus would be sufficient for a bonded verbal contract. Since then I have paid off the account. Now the bank is refusing to delete the 2 accounts on each report they are showing.

So I know the FDCPA regulates this for 3rd party collection agencies. Would they be considered a 3rd party agency since it shows sold on my initial account and a whole new account number when it moved to their collection department. And thus they would be regulated by the FDCPA, or would I make a claim the the FTC if they dont follow through? I know the FDCPA says a debt collector cannot lie, mislead or make any misrepresentation in order to collect a debt. Is there a law that states the original creditor isn't allowed to do these things? And again, which law would these guys fall under since they changed the account the way they did.

Sorry for being long winded, but this is a tough one for me and I've searched everywhere for answers but haven't found any yet. Any input would be greatly appreciated.

Message 1 of 10
9 REPLIES 9
Legendary Contributor

Re: 3rd party collection loophole?

An original creditor is still considered to be a debt collector under the FDCPA is they choose to use a name in connection with their internal collection acitivities that is different from the name they use as the original creditor, thus suggesting they are a third party.

See FDCPA 803(6).

 

It is common and proper for both the original creditor account and a collection to simultaneously be included in a consumer's credit report.

The reporting by the creditor reflects your history and information on the credit account, and the reporting by the debt collector reflects the fact that collection of the delinquent debt was continued by them, either as the owner or an assigned agent.

 

If you consider any information reported under either the creditor account or the collection to be inaccurate, you must first file a dispute with the CRA, thus formally raising the issue, providing them the opportunity to investigate, and to either verify, correct, or delete the contested reporting.  No basis exists for any liability regarding inaccurate reporting until the consumer as first disputed and received an investigation that verifies the accuracy of the information.

A dispute based only on both simultaneously being included in your report is not a disputable inaccuracy.

 

FDCPA 803(6) states, in pertinent part, 

"Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term ("debt collector") includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts."

Message 2 of 10
Valued Member

Re: 3rd party collection loophole?

Thank you for clarifying, but this is reporting the collection company is the same name as the original creditor. Just different account number since the account was charged off and "sold: to their collection department.

Also I'm not necessarily looking to dispute with the CRA because in my agreement with them they agreed to delete if I paid the account. I have since paid the account, but they are saying they will not delete it.

Tbh I dont know why they are fighting it. The account is 6 since 1st delinquency. Itll fall off in a year anyway. They have their money, I dont understand why they would be so adamant on tarnishing an otherwise beautiful credit profile!
Message 3 of 10
Community Leader
Mega Contributor

Re: 3rd party collection loophole?

The "tarnish" is the result of you not paying as agreed. It's nothing personal against you. 

Like you said, it will fall off next year. If you're brave enough, you can ask for EE when the time comes. It's usually 6 months before scheduled removal for TU, 3 for EX and EQ is best left alone till it falls off. 

Message 4 of 10
Valued Member

Re: 3rd party collection loophole?

I'm not saying they didnt have a right to report it as such. However they deliberately are reporting it twice on each credit report under their same name only 2 account numbers making it look like I have 2 different charged off accounts with them. Then after agreeing to delete for pay they should at least honor that agreement.

I don't think it's fair to dismiss their lack of morals just because you think it deserves to be there. The only reason I even had a rough spot is because i was in a hit and run due to drunk driver. Left me on the road to die and I was hospitalized for quite a while. Otherwise my entire credit history is flawless. So this being on there has no bearing on my character. So I think it's pretty fair for me to want to get it removed as promised.

Thanks for your reply
Message 5 of 10
Regular Contributor

Re: 3rd party collection loophole?

Is one being reported as a charge off and one reported as a collection account?

Message 6 of 10
Valued Member

Re: 3rd party collection loophole?

No, both being reported as a charge off accounts. The original does say 0 balance as being sold. The second has a balance (despite being paid off) and shows as a charged off account. I had a bank tell me I have 2 repo's on my credit report (never had one because they never came to get the car) but I guess a charge off and a repo is essentially the same thing. I was able to sell the car and pay money on top to finally pay the loan off, but nothing is being reported correctly and they refuse to do anything about it.

I guess my next step is to file complaints and go from there.
Message 7 of 10
Community Leader
Mega Contributor

Re: 3rd party collection loophole?

Dispute the second one as it should be showing $0.00 balance 

ideally, you'd do direct dispute first, if that does not work, dispute with CRAs via certified mail (enclose proof you paid it) and if they fail to do reasonable investigation, file a complaint (again, attach all supporting evidence that you actually paid). 

 

Good luck 

Message 8 of 10
Regular Contributor

Re: 3rd party collection loophole?

The charge off should only be reported once is my understanding.  And if you paid the amount due, then the creditor is required to show this amount as $0 or paid.  Since it sounds like there are discrepancies in your credit report.  I would open a dispute with the CRAs explaining the situation.  The original creditor can only list the account as 'charged off' once.  Even if they changed the account number (which I don't know why they would have done this), they can only list it once as it is still the same account.  Are you sure there wasn't another account that you were not aware of???  Could someone have potentially opened a fraudulent account under your name?

Message 9 of 10
Valued Member

Re: 3rd party collection loophole?

It is definitely the same account. Same amount financed and same open date. I've disputed it for a year now with no luck.
Message 10 of 10
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