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I was contacted several months ago about a debt collection for an incredibly small sum. I asked to be sent something in the mail where I could remit payment for it. The individual told me the debt would be cancelled and immediately hung up on me. However, this debt is still being reported as being in collections from one of the credit reporting bureaus as of a few days ago.

I think this debt is technically valid and would gladly pay it to settle out the account. It's probably related to a lease I had long ago. However, the debt collector will not return my phone calls. What should my next step be?

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    What's your goal? They don't want your money. Paying the debt isn't necessarily going to get it off of your credit report. – Todd Mar 27 '17 at 15:40
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    The goal is to get it off my credit report. This is the only thing I can find that is anyway negative. – Eric Urban Mar 27 '17 at 15:43
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    Have you tried just calling back? Lots of employees are incompetent or unwilling to do their job - I usually wait until at least the second or third person I've dealt with to write off the company as a whole. – BrianH Mar 27 '17 at 17:04
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    Document EVERYTHING. Record full names of people that you spoke with, their title/position and who they work for, date and time of conversation, and a summary of what was said. Even if you never need this info, its a good piece of evidence. It is very hard to document things later so start now and go backward as much as you can. – Criggie Mar 27 '17 at 20:39
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    @EricUrban That's not how it works. The credit report isn't extortion to make you pay. It's a historic record of your creditworthiness. It will be on your report for 7 years since the clock was restarted. What does not restart the clock: Ignoring it; someone buying the debt. What does: Acknowledging in writing; paying anything on it. – Harper Mar 28 '17 at 1:03
108

This may not apply in your particular situation, but I think it's important to mention:

When a debt collector doesn't act like a debt collector, it may be because they aren't actually a debt collector.

It's certainly strange that someone called you to collect money from you, and when you asked for a simple document, they not only got off the phone quickly but they also told you the debt would be cancelled. That just doesn't make sense: Why would they cancel the debt? Why wouldn't they send you the document? My initial impression is that you were possibly being scammed.

The scam can take on many forms:

  1. Call a random person, make up a debt that is possibly believable, and try to get the person to pay it over the phone.
  2. Same as #1 but research the person first.
  3. Illegally obtain someone's credit report (somehow), notice a particular collection, and then contact that person and try to collect that particular debt. This could have a much higher success rate because the person would potentially know about the collection already, so it wouldn't seem "out of the blue".

Whenever you are called by a debt collector (or someone pretending to be one), it's a good idea to verify their identity first. More info here.

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    Not only that, but it was a negligible, easily payable sum. They were likely "fishing" - see who pays without a qualm, then hit them for increasingly large sums. – Dewi Morgan Mar 27 '17 at 19:57
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    This was my first thought as well... when asked to verify the debt, they bailed? Reeks of a scam. The reality is that it's obscenely easy to get inside information on someone's credit lines-- though it's a federal crime (FCRA), any sufficiently motivated (or bored) clerk at a loan office or car dealer can pull anybody's credit report with the click of a button. – Ivan Mar 27 '17 at 20:27
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    @Johnny I agree that's possible and indeed likely. It is also possible the collector knows this group of debts is weak: old, time-barred, or of questionable accuracy. So he isn't investing big dollar in collection, using more of a "lay in wait" strategy: tickle the consumer once, burn the credit, and wait for them to react. – Harper Mar 28 '17 at 15:11
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    I think this is the real answer. Even if this is a legitimate debt, this collector doesn't sound like they are legit. – Joe Mar 28 '17 at 20:15
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    The details provided by OP make #3 the only option here (data provided by the debt collector matches his credit report online, which could not be created by scammers). However, if #3 is the case, then OP has far greater problems than just an old bill in collections. Either way, contacting the credit agency will be the primary means of addressing the issue. – Derek_6424246 Mar 28 '17 at 22:46
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What you are describing here is the opposite of a problem: You're trying to contact a debt-collector to pay them money, but THEY'RE ignoring YOU and won't return your calls! LOL! All joking aside, having 'incidental' charges show up as negative marks on your credit history is an annoyance- thankfully you're not the first to deal with such problems, and there are processes in place to remedy the situation.

Contact the credit bureau(s) on which the debt is listed, and file a petition to have it removed from your history. If everything that you say here is true, then it should be relatively easy.

Edit: See here for Equifax's dispute resolution process- it sounds like you've already completed the first two steps.

  • How do I contact the bureau to go about this ? It's in Equifax's records. – Eric Urban Mar 27 '17 at 15:45
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    Updated with a link to the Equifax FAQ. – Derek_6424246 Mar 27 '17 at 15:51
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    @EricUrban I've also used the app Credit Karma to dispute an item in my credit report, and they made it incredibly easy. I checked a few boxes, and the collection disappeared forever. I had a lot more luck with that than contacting the bureau directly. – Kat Mar 27 '17 at 22:11
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    @Joe What makes a valid debt - a debt that can be validated. If you cannot validate the debt (because the creditor does not respond), then the debt is invalid by definition. TLDR: Just because someone actually incurred a debt doesn't mean when a third party checks, the debt will be shown to be valid. – iheanyi Mar 28 '17 at 22:47
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    You have offered to pay the debt, requesting only the minimum reasonable proof that the debt is valid. The creditor refused to show the debt is valid. Now they are being difficult. Credit reports are not punitive. Seek to make the system work for you. – ChuckCottrill Mar 29 '17 at 2:42
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You say your primary goal is to clean up your credit report, and you're willing to spend some cash to do it. OK. But beware: the law in this area is a funhouse mirror, everything works upside down and backwards.

To start, let's be clear: Credit reports are not extortion to force you into paying. They are a historical record of your creditworthiness, and almost impossible to fix without altering history.

Paying on this debt will affirm the old data was correct, and glue it to your report.

Do NOT pay the debt. Do NOT acknowledge the debt.

Here's how credit reporting works for R-9 (sent to collections) amounts. The data is on your credit report for 7 years. The danger is in this clock being restarted.

What will not restart the clock? Ignoring the debt, talking casusally to collectors, and the debt being sold from one collector to another.

What will restart the clock? Acknowledging the debt formally, court judgment, paying the debt, or paying on the debt (obviously, paying acknowledges the debt.)

Crazy! You could have a debt that's over 7 years old, pay it because you're a decent person, and BOOM! Clock restarts and 7 more years of bad luck. Even worse-- if they write-off or forgive any part of the debt, that's income and you'll need to pay income tax on it. Ugh!

Disavow, but settle

Like I say, the only way to remove a bad mark is to alter history.

Simple fact: The collector doesn't care about your bad credit mark; he wants money. And it costs a lot of money, time and/or stress for both of you to demand they research it, negotiate, play phone-tag, and ultimately go to court. So this works very well (this is just the guts, you have to add all the who, what, where, signature block, formalities etc.):

1 Company and Customer absolutely disagree as to whether Customer owes Company this debt: (explicitly named debt with numbers and amount)

2 But Company and Customer both eagerly agree that the expense, time, and stress of research, negotiation, and litigation is burdensome for both of us. We both strongly desire a quick, final and no-fault solution. Therefore:

3 Parties agree Customer shall pay Company (acceptable fraction here). Payment within 30 days. To be acknowledged in writing by Company.

4 This shall be absolute and final resolution.

5 NO-FAULT. Parties agree this settlement resolves the matter in good faith. Parties agree this settlement is done for practical reasons, this bill has not been established as a valid debt, and any difference between billed and settled amount is not a canceled nor forgiven debt.

6 Neither party nor its assigns will make any adverse statements to third parties relating to this bill or agreement. Parties agree they have a continuous duty to remove adverse statements, and agree to do so within seven days of request.

7 Parties specifically agree no adverse mark nor any mark of any kind shall be placed on Customer's credit report; and in the event such a mark appears, Parties will disavow it continuously. Parties agree that a good credit report has a monetary value and specific impacts on a customer's life.

8 Jurisdiction of law shall be where the effects are felt, and that shall be (place of service) regarding the amounts of the bill proper.

Severable, inseparable, counterparts, witness, signature lines blah blah.

A collector is gonna sign this because it's free money and it's not tricky.

What does this do? 1, 2 and 5 alter history to make the debt never have existed in the first place. To do this, it must formally answer the question of why the heck would you pay a debt that isn't real and you don't owe: out of sheer practicality; it's cheaper than Rogaine. This is your "get out of jail free" card both with the credit bureaus and the IRS.

Of course, 3 gives the creditor motivation to go along with it.

6 says they can't burn your credit. 7 says it again and they're agreeing you can sue for cash money. 8 lets you pick the court. The collector won't get hung up on any of these since he can easily remove the bad mark. (don't be mad that they won't do it "for free", that's what 3 is for.)

The key to getting them to take a settlement is to be reasonable and fair. Make sure the agreement works for them too. 6 says you can't badmouth them on social media. 4 and 5 says it can't be used against them. 8 throws them a bone by letting them sue in their home court for the bill they just settled (a right they already had). If it's medical, add "HIPAA does not apply to this document" to save them a ton of paperwork. Make it easy for them.

You want the collector to take it to his boss and say "this is pretty good. Do it." Don't send the money until their signed copy is in your hands. Then send promptly with an SASE for the receipt. Make it easy for them.

This is on you. As far as "getting them to send you an offer", creditors are reluctant to mail things especially to people they don't think will pay, because it costs them money to write and send. So you may need to be proactive about running them down with your offer. Like I say, it's a funhouse mirror.

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    if they write-off or forgive any part of the debt, that's income and you'll need to pay income tax on it wait, what? many years ago someone in my family had a medical procedure done. they didn't have insurance, so we negotiated an amount with the provider - but they said they were going to bill the whole amount, we should pay the amount we negotiated, then they would write the rest off. which all happened as agreed. are you saying that technically introduced a tax liability on us? – Michael Mar 28 '17 at 16:59
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    @Michael Depends what "Write the rest off" meant in that context. I had a dentist kick me back 10% as a "professional courtesy" to ease my bill, that was a discount not a forgiveness. Actual cost of medical procedures are well established; the crooks in medical have "Reasonable & Customary" pricing with insurance companies (say $100) and outright fantasy "retail" prices for the uninsured (say $500). They would be lucky to get $60 on average (most can't pay) and they hope to settle with you for $150. That's not forgiveness, that's haggling. – Harper Mar 28 '17 at 17:16
  • and of course there also seems to be some disagreement about what is "Reasonable & Customary" between the insurance companies and the service provides... – Michael Mar 28 '17 at 17:17
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    @Michael It is a tax liability if it's done that way. It's also kind of fraudulent for the provider to make agreements in advance whereby customers agree to be billed a large amount and pay only a smaller amount and have the rest "written off". That's because the provider's books will show a lot more profit potential than there really is - an investor could buy their outfit thinking he's going to improve collections efficiency and make a lot of money while the reality is they can't actually make that volume of sales at those prices without under-the-table discounts. – DepressedDaniel Mar 30 '17 at 4:00
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This is somewhat unbelievable. I mean if you had a business of collecting debts, wouldn't you want to collect said debts? Rather than attempting to browbeat people with these delinquent debts into paying, you have someone volunteering to pay. Would you want to service that client? This would not happen in just about any other industry, but such is the lunacy of debt collecting.

The big question is why do you need this cleared off your credit? If it is just for a credit score, it probably is not as important as your more recent entries. I would just wait it out, until 7 years has passed, and you can then write the reporting agencies to remove it from your credit.

If you are attempting to buy a home or similarly large purpose and the mortgage company is insisting that you deal with this, then I would do the following:

  1. Write the company to address the issue. This has to be certified/return receipt requested. If they respond, pay it and insist that it be marked as paid in full on your credit. I would do this with a money order or cashiers check. Done.

  2. Dispute the charge with the credit reporting agencies, providing the documentation of no response. This should remove the item from your credit.

  3. Provide this documentation to the mortgage broker. This should remove any hangup they might have.

  4. Optional: Sue the company in small claims court. This will take a bit of time and money, but it should yield a profit. There was a post on here a few days ago about how to do this. Make part of any settlement to have your name cleared of the debt.

It is counterproductive to fall into the trap of the pursuit of a perfect credit score. A person with a 750 often receives the same rate options as a person with 850. Also your relationship with a particular lender could trump your credit score.

Currently I am "enjoying" the highest credit score of my life, over 820. Do you know how I did it? I got out of debt (including paying off the mortgage) and I have no intentions of ever going into debt for anything. So why does it matter? It is a bit ridiculous.

  • A high credit score lets you buy a lot on your credit card in 1 month. I've been known to spend 2000, and I really want 5000 more buffer just in case unexpected medical bill while out of state. – Joshua Mar 27 '17 at 19:08
  • I'm pretty sure you got a high credit score by repeatedly taking on debt and then paying it off (on time.) It isn't (just) not having debt. It's that you can be trusted to repay it. The reporting agencies have no way of knowing that you never plan to take on more debt. That has nothing to do with it. – JimmyJames Mar 27 '17 at 19:25
  • Unbelievable? The debt collection business owner did not call -- a low wage guy on commission figured his tiny piece of the action was not worth the time of the paperwork. I'm making big assumptions here, obviously, but I can easily believe the OP went through this. – donjuedo Mar 28 '17 at 15:43
  • @donjuedo I concur; it's a numbers game. Collections is a business which is a profit-center, not a customer service desk which is a cost-center. Sending a bulk mailer costs $1/piece; a custom mailer could be $10 of staff resources and time. Margins are too tight in the collections business to waste money like that on a combative no-pay on a bill you paid 3 cents on the dollar to begin with. – Harper Mar 28 '17 at 17:20
4

This doesn't seem to explain the odd behavior of the collector, but I wanted to point out that the debt collector might not actually own the debt. If this is the case then your creditor is still the original institution, and the collector may or may not be allowed to actually collect. Contact the original creditor and ask how you can pay off the debt.

0

Send a well-documented payment to the original creditor. Do it in such a way that you would have the ability to prove that you sent a payment if they reject it. Should they reject it, demonstrate that to the credit reporting bureaus.

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    This isn't how it works. Companies sell the debt to other companies. – Terry Mar 28 '17 at 21:48
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    @Terry, that doesn't necessarily create an obligation on a borrower's part. One only owes that which one has contracted to pay. More often than not debt collectors act as agents of the creditors rather than credit assignees. – grovkin Mar 29 '17 at 1:25
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    More than likely, hidden deep in the legalese of the original account’s terms and conditions, you agree that the original creditor can sell your debt to a collection agency if you do not make your payments, and you agree to pay such a sold debt. – user41025 Mar 29 '17 at 20:28
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    I would argue that it is not always the case that they must notify the debtee that their debt (account) has been assigned to another entity. For example, American Express Cardholder Agreement: “We may sell, transfer or assign this Agreement and your Account. We may do so at any time without notifying you.” In such a case, if you default, it is your responsibility to find out who the new assignee is and how to remit payment. All the OP has to do is contact the address or phone number of the DCA on his credit report. If he finds it impossible, dispute w/ the CRA and it should be deleted. – user41025 Mar 30 '17 at 0:09
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    @H3br3wHamm3r81, carefully think through about all the implications of this and you'll realize that it's unenforceable. There is a lot of contracts which you sign, but which you cannot be held to. If they ever tried this, they would still remain the processor of payments until they, at least, made an effort to give you some executable guidance on how to make payments to a new entity. These clauses are there for M&A situations -- not for collections. – grovkin Mar 30 '17 at 3:56

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