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Unbeknownst to me, some apartment debt I paid had already been sold to a collections agency before I actually paid it. Now the collections agency still thinks I owe, (according to my TransUnion report) even though the apartments have been paid in full.

Here's the timeline of how this happened:

  • (Sept 2013) I moved out of an apartment (1), and into a new apartment (2), thought everything was ok.
  • (Oct 2013) The apartment said I still owed money, and sent it to collections, (but I didn't find out until 2016.)
  • (Oct 2014) I was denied a new apartment (3) because they said I still owe money to the old apartment (1).
  • (Oct 2014) I contacted the old apartment, paid the debt to them with a bank check, and got the manager to sign a receipt saying I paid, so that I could prove to the apartment that denied me that I paid it (so they would lease to me.)
  • (Feb 2016) I pull my credit report and realize that there is a collection on it from this debt. The debt is "Placed for: 10/28/2013" (a month after I moved out) and the last updated date was "07/06/2014" (some months before I actually paid the debt.)

Questions:

  1. Is the collections agency going to still expect me to pay them?
  2. If no, then how can I get them to update it to show that it's a paid collection and not an open one? If yes, then what recourse do I have to get my money back from the apartment complex (who evidently already sold the debt for profit, and got paid twice)
  3. Should I even bother to fix this "inaccuracy" in the report? I have read numerous places that having a paid collection is just as bad as having an unpaid collection on your report. If I pay it, it will get updated and stay on there until 2023, but at this rate, it will disappear by year 2020. I don't think there is any chance of me getting sued over it, as I did actually pay it (and can prove it with bank records.)

Here is what the item looks like on my TransUnion report: what the item looks like on my TransUnion report

Edit: I didn't get this text in the screenshot. It also says:

Remarks: >PLACED FOR COLLECTION< Estimated month and year that this item will be removed: 07/2020

Edit2: I had some success with Equifax! 3 weeks ago, I disputed this using the online dispute process, and sent my (scanned) "final account statement" to show that I paid the apartment complex. Yesterday I received an email confirmation that it is deleted.

I am still waiting on TransUnion to send me something by mail (good or bad). Their online dispute process bugged out and didn't accept my upload, so they will have to contact the apartment complex (who said they will confirm I'm paid.) I will update when something happens.

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    Placed for collection one month after you moved out and with apparently no attempt to contact you? I don't remember for sure but I don't think that's proper. – Loren Pechtel Feb 20 '16 at 3:12
  • You're allowed to post an answer to your own question. I suggest you put these most recent edits in an answer so the resolution stands apart from the question. – user32479 Mar 10 '16 at 20:23
14

You are making an assumption that may not be true:

Unbeknownst to me, some apartment debt I paid had already been sold to a collections agency before I actually paid it.

Typically debts are sold to a Debt Buyer, whereas a Collection Agency works on commission to collect debts on behalf of the creditor.

If your debt was actually sold, you should have been notified in writing of this fact, and who the new creditor was. I suspect your debt was not sold, because if it was the apartment complex would not have been legally allowed to cash your check when you finally paid them. Therefore, it is most likely that the collection agency was working on commission, and the apartment complex never informed them that you had settled your debt.

As for what to do about it, here are 3 options, ordered by likelihood of success:

  1. Contact all 3 credit bureaus (or just those that it appears on) and dispute the derogatory mark. Explain that you have no outstanding debts with the original creditor and that you would like that item removed. Tell them you can provide proof of payment if they require it (assuming you still have it).
  2. Contact the collection agency, explain the situation, and provide proof if you have it. They might contact the credit bureaus to remove the account.
  3. Contact the apartment complex and explain the situation. They might contact the collection agency, who in turn might contact the credit bureaus.

Good luck, and if you don't mind, please update us later on what you did and what the result was. Your experience will be helpful for others having this issue in the future.

  • Do you think the credit bureaus will remove/delete this collection from my report entirely, or would it become a paid collection? This collection will disappear from my report by 2020, but if I pay it, and they update it, it's another 7 years from the date paid, right? I might be misunderstanding how all of that works. – Eric Seastrand Feb 20 '16 at 12:58
  • Good question. I am not a credit expert, but I believe the bureaus will remove it rather than update it. I don't think they can modify an account based on information you provide, but they can remove it completely. (I think they can only modify based on what is reported to them.) That being said, I have updated the first suggestion just in case. – TTT Feb 20 '16 at 14:22
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    Idea #1 (disputing it with proof) seems to have worked, at least with Equifax. I updated my question with more info. – Eric Seastrand Mar 10 '16 at 18:23
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Following @Brick's advice, I am posting this as an answer so it "stands apart from the question", but all the credit goes to @TTT, whose instructions I followed.

I was able to get this collection completely deleted/removed from the 2 bureaus that were reporting it, using only the online dispute process.

Of course, your mileage may vary, but here's some more details, that may be helpful to others.

Equifax: Success! 3 weeks after disputing the collection using the online dispute process, and uploading my (scanned) "final account statement" to show that I paid the apartment complex, I received an email confirmation that it is deleted. (I had to go to a webpage to get the actual result.)

TransUnion: Success! Although I never heard back from TU, my CreditKarma account now shows that the collection is no longer on my TU report either. I am not sure if this is because Equifax deleted it and TU just followed suit, or if TU did their own investigation (ideas, comments? could help others). Their online dispute process bugged out and didn't accept my upload, so they would have had to contact the apartment complex, so I was supposed to receive something by mail. I still haven't, but it's definitely gone from my report.

Experian: It didn't show up on this report, so I can't give any feedback.

I suppose it's also worth noting that I did not ever have any contact with the Collections Agency. I did visit the apartment office, in person, in order to get a copy of my final statement. While there, I spoke with the (new) manager, who said she would try to reach up the chain of command to figure something out. I'm not sure how much difference, if any, this may have made, as the complex is now owned by an entirely different company. In fact, the new manager had no idea who the old management company was, much less which collections agency they used.

Also worth noting: Removing the collection made my score rise from 623 to 701! I know because, after getting the collection removed from my report, I re-applied for the auto loan I had been denied 3 weeks prior, and they gave me my Equifax score both times.

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    Was there any indication from Equifax or Transunion, during the dispute process, that the account would definitely be deleted rather than updated as paid? Sounds like Equifax did a delete. I hope Transunion will do the same, but I'm curious if it was mentioned anywhere during the process. – TTT Mar 11 '16 at 13:35
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Unfortunately, you still owe the collection agency the money. Once they bought your debt, they became the ones that you needed to pay. Nothing that you do or pay to the apartment complex has any bearing on their right to collect that debt. As far as the agency is concerned you gave the apartment complex a gift.

As to whether you can get the complex to refund that payment, you will need to speak to a lawyer. And it may hinge on what obligation the complex had of reminding/informing you that your debt had been sold to a collection agency.

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    I'm sorry, I simply don't believe this is true. The debt was incurred with the apartment. That debt was paid, and the OP has legal proof of this. That the apartment has made a separate agreement with an unrelated third party is not relevant, except insofar as it is affecting the credit report. Now, getting the credit report cleaned up may be a problem and may require legal action, but the debt is unambiguously paid. – ChrisInEdmonton Feb 20 '16 at 14:03
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    @ChrisInEdmonton the issue comes down to whether or not the apartment complex sold the debt. If they did (the basis of my answer), then they no longer own it nor do they have the legal right to collect it. The OP should ask the collection agency for proof that the agency owns the debt. If that transaction history shows the apartment complex having sold the debt before he paid it then the apartment complex did not have a legal claim to the money he paid them. If they did not actually sell the debt to the collection agency then my answer does not apply. – Eric Johnson Feb 20 '16 at 14:33
  • I have added a screenshot of what the item looks like on my report, in hopes that this might help @ChrisInEdmonton to know if his assumption is correct. – Eric Seastrand Feb 20 '16 at 15:11

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