Disputing a collection on an account that is current, but the collection agency wants the original debt amount

Question

I have a surgery bill (Original Balance: $2,757) that I have been paying off for the past 2 years with auto-drafted monthly payments. Every month on the 1st a payment was auto-drafted from my checking account. I had the bill almost paid off (Current Balance ~$600.) I made every payment on time (auto-draft), and have a receipt from the doctor's office for every month. I got a new debit card, and called to ensure the payments on the account would continue. I was informed the surgery center had been sold to a larger health system, and my account was sent to collection. I asked why if my payments were made on time, but was told there is nothing they can do because the company doesn't exist anymore. I was also informed that all existing accounts were either sent to collection, or to a 3rd party billing company to collect.

I was not sent any information that I need to pay a different company. I was given the collection agency phone number and case number. I called the collection agency, and they informed me I owe the full ORIGINAL BALANCE ($2,757). I asked when it went to collection and they said 08-03-2020. I explained I didn't understand because the payments have been auto-drafted for years, and the balance is almost paid off. They didn't care. They said I could either pay the original balance in full ($2,757), or dispute it.

I filed a dispute on Credit Karma, and called TransUnion. I told them I have bank statements of the auto-drafts, and months of receipts from the doctor's office. It is currently in review.

Is there anything else I can do?

Thank you in advance for any advice.

Answer 1

File a complaint with the Consumer Financial Protection Bureau. Do not pay any more money on this bill until this collection company sends you verification of the debt. I think you are likely to be taken advantage of by this collection company because they are already telling you that you owe the full amount, which is not correct as you stated you have been paying on this bill for months. Aside from the fact that this debt collector has not followed correct procedures under the Federal Debt Collection Protection Act (FDCPA), like not sending you an initial contact letter within 5 days of their initial contact with you when you called them, they have also misrepresented the amount of the debt owed-RED FLAGS. They have already started taking advantage of you and my advice is to read up on your rights in the debt collection process before you do anything else.

Go to the CFPB website and head over to the Consumer Education tab. You will find beneficial information there as well as how to go about filing a complaint with them about this company and CFPB will assist you in this matter. Good luck.

Answer 2

OK. It is unclear who you called. I will presume you called your Creditor to change the periodic debit details - as they pull from your debit card.

In fact unless you have changed banks, your bank may have been able to alias this for you to ease the transition to a new card, but this is a red herring.

So they had been pulling the payments, even after the debt has been on-sold. That means it is going into an account that is still active. They may be in receivership, the company does therefore exist, it just may not be trading. Yes it was wrong to sell your debt, and yes it was negligent to sell the full invoice value. Possibly fraudulent, as the value of the debt has been buffed for sale.

Talk to your bank and get the $600 pushed through. You have not told us if payments have been interrupted yet or for how long. Once the $600 is pushed through, and if you have not breached your repayment agreement (which you should revisit in detail) you are paid up. Beware of any penalties you may be liable for.

You also have not told us if you received regular statements, or had online access to your outstanding balance, both of which should be a given in this day and age. Your agreement makes them a credit provider. You may not see interest but it will be factored in to the invoice.

Which brings me to another point. Your creditor may have been in difficulty. one of the options available to them to provide cash flow is a lending product known as "Invoice Discounting" (or sometimes "Factoring") where the invoice is immediately sold at a (factored) discount to a lender. Close to the end, if they are really circling the drain, the lender steps in as a silent partner and in-sources the entire accounts receivable operation, including collections, which as a financial institution they perform in the ordinary course of their business. They may still sell the paper on, it is a business decision, and they may fumble it. It happens with mortgages, hey.

This type of lending is similar to Percentage of Completion borrowing on projects or even Groupon where you sell coupons to the lender.

In any case - if the account is still active and your agreement is active, pay that $600. Collections is like the tax person, most of the time they rely on you having not kept records or losing the evidence.

Oh, and do respond that the debt is paid when you have done that.

Answer 3

Do not mess with old debts that are near the 7 year SOL and are getting ready to fall off. Even those that may be a year and a half from being removed from your report. You may start the clock all over again if you send any payment or if you even communicate about making a payment or payment arrangements. Your credit is going to drop at least 30 to 50 points when you pay a collections account and it will still be on your credit report. And depending on the situation, you may be setting yourself up to have the account continue to be reported after it would have originally been removed.

And you should always file disputes via certified mail, return receipt requested. You always want a paper trail to tell where you've been or where you might need to go should things get sticky. I mean, we are talking about debt collection and it's not like it's a conspiracy theory that this industry hasn't and isn't always on their best behavior.