"Scavenger" Credit Collector's Rights?

[NotSoLegalEase]

I have a situation about which I have been confused for a number of years. I have Googled, searched, and researched. And my confusion continues. I asked about this matter on a message board some time ago -- and the replies only added to my confusion. Please allow me to explain my story in the hope I can get a simple, direct, and correct answer.

1999: My employer closed the department in which I worked. I was unemployed for nearly a year. Unable to pay my credit cards, I considered bankruptcy but, unwisely or otherwise, I simply quit paying on them. After some months of nonpayment, these creditors wrote me off as a bad debt.

I don't recall when they began but I started getting phone calls and an occasional mail from other "collection" companies. These phone calls and mailings continue to this day. (The phone calls - computerized messages - always state 'we have an important business matter to discuss', and the mailings are an offer to accept one-half the "balance" in settlement on the account.)

The companies from which I have received these communications over the years include FBCS (Federal Bonds and Collection Services), Allied Interstate, Inc. (purchased from LVNV Funding LLC), Mercantile Adjustment Bureau (purchased by Pallino Asset Mgmt.), West Asset Mgmt., Advanta, Creditor's Exchange, Bay Area Credit Services LLC, Elite Recovery Services, LTD Financial Services, Bonded Collection Corporation and Capital Management Services. The list seems endless! I have never once replied, either by phone or mail, to any of them. That said, my question is not one of morality but rather of legality: do these "credit collection agencies" have any/every legal right to collect a debt that the original creditor had?

I have never owned real property but am considering buying a condo/house. Do these companies have a legal right to attach any property I may own now or in the future?

Too, via my online research, I am lead to believe these collection companies buy and sell accounts from each other. Thus, by doing so, any "statute of limitations" on a debt (i.e., the 7 or 10 years for a debt to be removed from one's credit report) never applies. If the debt is sold to another company the 7 year period starts all over again - ad infinitum. Is this true?

Thanks for reading. Replies which help clarify the mud are appreciated.

 

[jharris352]

I'm going to try to answer your question piece by piece. You asked a pretty complex multi-part question to be wanting a, "simple, direct, and correct answer." (Jeez people want a lot for free don't they!) :dgrin

Ok here goes my attempt:

That said, my question is not one of morality but rather of legality: do these "credit collection agencies" have any/every legal right to collect a debt that the original creditor had?

First answer is "yes" they bought the debt and it was assigned to them so they have the right to attempt to collect it.

I have never owned real property but am considering buying a condo/house. Do these companies have a legal right to attach any property I may own now or in the future?

No they can not legally attach a lien to property without a valid judgment. They can however sue you when you do have property and then attach it as a judgment holder.

If the debt is sold to another company the 7 year period starts all over again - ad infinitum. Is this true?

No they can not extend the SOL BUT they can make it appear so. The SOL is based on the Date of last activity DOL not when they bought the debt. After the SOL you need to send a response to them every time you receive a new letter. Just make a single response keep the template and plug in the new address. Eventually they will go away.

That having been said, I'm going to share my super secret patented process for cleaning up your credit. (Not really patented, I wish I could).

I do something that exploits a basic weakness in how credit collection companies work. If you send them a letter that includes a check this is what happens. When the letter is opened the check is put in a pile and cashed that night, the letter is put in a different pile and routed to a collection agent. That may seem harmless but let me tell you how to exploit it.

Write a settlement letter to the collection agency (again if there are several write a template and send the same one over and over with the relevant info changed). Say something simple like: Enclosed is a check number for $xxx.xx. Please accept it as full and fair settlement of all outstanding debts between me and (the original creditor). By accepting this check, endorsing and cashing it you acknowledge that you accept this offer of settlement and will reflect a zero balance on my credit report. Sincerely, You.

This part is VERY IMPORTANT. Flip the check over and write on the back in the endorsement section. Endorsement of this check constitutes irrevocable acceptance of the settlement of this debt to a zero balance.

Keep a copy of the letter with a copy of the check and when you can get a copy of the canceled check and keep it together. Send a copy of the letter and the canceled check to the credit bureaus with a letter asking that they permanently correct the balance on this account and any other collect agency trade lines that refer to this account.

If the debt is sold again to another collection agency, send them a copy of the letter and canceled check with a note saying that your debt is settled in full. You will eventually get them all to go away.

Do not listen to them when they whine about how they took your check as a "payment" but they disavow the settlement. The letter and check along with their acceptance of that check constitute a written amendment to your original contract and it will stand up in any court. Further the credit bureau will take it off your credit with that evidence.

Good luck.