The Kentucky Court of Appeals ruled in favor of Kentucky consumers in the recent, to-be-published case of Harrell v. Unifund CCR Partners. Harrell holds quite reasonably that a debt collector cannot assess, accrue, and collect interest on a debt for time period before it acquires the debt. The was my case.
Surprisingly, it does make a difference. The most important thing you need to know is that using a debit card does cannot help improve your credit score. This is because, with a debit card, you are not borrowing money like you would with a credit card. Unlike with a credit card, you don’t get a bill at the end of the month for your debit card, just an itemized statement. As explained in recent article from Money Magazine:
Debit and credit transactions are processed differently: Here’s how MasterCard explained it in an emailed statement to Credit.com: When you use a debit card and your PIN (personal identification number), the transaction is completed in real time, also known as an online transaction — you authorize the purchase with your PIN and the money is immediately transferred from your bank account to the merchant. With a credit card, or using a debit card as credit, it’s an offline transaction.
GLA Collection Co., Inc. is a Louisville, Kentucky based collection company that focuses on the collection of medical debt. Medical debt is one of the most common types of debt on consumer credit reports. A recent study found that “43 million Americans have overdue medical debt on their credit reports.” And medical debt is the leading causes of bankruptcy according to another study. So if GLA is on your credit report, you are not alone.
GLA may be adding interest to your debt that it has no right to recover. GLA may also be incorrectly reporting your spouse’s debt on your credit report. If you suspect that GLA information on your credit report is in error, please call (502) 473-6525 or email firstname.lastname@example.org me for a free consultation.
I have a client who was recently contacted by an outfit identifying itself as O’Connell Greenman & Associates. This debt collector made a number of dubious claims on a recorded message that appear to be false, including threatening to sue the client. The debt collector ended in the call with an ominous, “Good luck in Court.” I called the number left on the message.
The call was answered with “Arbitration Department.” (What is about the word “arbitration” that debt collectors think is so scary?). I simply asked the name of the company. The person answering the phone could not fulfill this simple request. I was transferred to a “supervisor” who informed me that O’Connell Greenman & Associates was a “mediation” firm based out of Tacoma Washington. I could find no such firm registered on the Washington Secretary of State website or on the Kentucky SOS website.
Other consumers seem to be having similar problems as can be seen on this complaint board. If you are contacted by these people BE CAREFUL. You should insist on proof of any debt and proof of O’Connell Greenman & Associates legal existence before taking any steps toward payment, if you decide to make any steps at all.
The Consumer Financial Protection Bureau recently published a study concerning the reporting of medical and non-medical debt on consumer credit reports.
Some of the pertinent highlights of the study are:
- Information from recent studies of credit report accuracy and from other sources raise particular concerns about the accuracy and interpretation of collections tradelines, the vast majority of which are furnished by debt collection agencies and debt buyers.
- [C]ollections tradelines appear on the credit reports of almost one third (31.6 percent) of consumers.
- There are no objective or enforceable standards that determine when a debt can or should be reported as a collections tradeline.
- Medical debts comprise roughly half (52 percent) of the collections tradelines that appear on consumer credit reports. Medical debts occur and are collected through unique circumstances and practices that amplify concerns raised about collections tradelines generally. In particular, the complexity of medical billing and the third-party reimbursement processes faced by most patients and their families is a potential source of confusion or misunderstanding between patient, medical provider, and insurer. That complexity could lead some consumers to be unaware of when, to whom, or for what amount they owe a medical bill or even whether payment was the responsibility of the consumer rather than an insurance company.
- Almost one out of every four consumers (24.5 percent) has one or more non-medical collections tradelines.
- Industry interviews have suggested that some collectors employ a strategy of “passive collections” that involves reporting a debt in collections to the NCRAs and simply waiting for the consumer to discover the tradeline (rather than actively seeking to collect from the consumer). A collector may be most likely to resort to this tactic when the amount owed on a collections account is small. Small dollar accounts are most often observed for telecommunications, utility, and medical accounts. Attempts to make direct contact with the consumer via mail or telephone to collect may not be cost efficient based on the odds of recovery and the amounts recovered.
Debt validation is a specific right you have under the FDCPA. 15 U.S.C. § 1692g(b). Writing effective debt validation and verification letters is key to exercising this right. Within 30 days of a debt collector’s “initial communication” with a consumer, you the consumer have the right to send a letter to the debt collector disputing the debt or requesting the name and address of the original creditor. If you send a timely validation letter, the debt collector must cease all collection activity against you until the debt collector sends you verification of the debt or the name and address of the original creditor.
What is Verification of the Debt?
“Verification of the debt” is not defined in the FDCPA except in the case where the debt collector is attempting to collect on judgment. In that case, verification requires the debt collector to obtain a copy of the judgment and send a copy to the consumer. As to other debts, it appears that verification requires a debt collector to obtain some sort of documentation from the original creditor and to send copies of the documentation to the consumer.
Why is it Called a Debt-Validation Letter?
The letter is called a “debt-validation letter” because the applicable statute is titled “Validation of Debts.” But the actual text of the statute never uses the word “validation.” Rather, the statute speaks of disputing debts and the debt collector’s duty of “verification of the debt.”
What if you don’t Send a Debt-Validation Letter within 30 Days of the Initial Communication?
The case law is clear that if a consumer does not send the debt collector a validation-letter within 30 days from the date of the debt collector’s initial communication. (To be safe, the validation letter she be mailed within the 30 days of the date on the debt collector’s dunning letter when the initial communication is in writing.). But if you’ve missed the 30-day window, there are still good reasons to send a dispute letter to a debt collector.
A debt collector violates the FDCPA if it reports credit information that it knows is false. This includes failure to report that a debt is disputed. 15 U.S.C. § 1692e(8). Sending a dispute letter to a debt collector may be very helpful in proving that a debt collector knows or should have known that negative information it sends to a credit reporting agency is false. Also, actively disputed debts will not negatively affect your credit score.
What to Put in a Validation or Dispute Letter
If you don’t believe you owe the debt, if you believe that the amount of the debt is wrong, or the dates are wrong, expressly say so in the letter. Use the word “dispute.” Dispute that you owe the debt, the amount of the debt, the date the debt went delinquent, etc. in the letter. If you don’t want a debt collector to contact you, put that in the letter. See 15 U.S.C. § 1692(c). Request that the debt collector cease all communications with you. If you want a debt collector to only communicate with you in writing, put that in the letter. If your employer does not allow you to receive phone calls at work, put that in the letter. 15 U.S.C. § 1692c(a)(3). You can request that a debt collector supply you certain documents or types of documents as part of its duty of verification. The debt collector might not comply, but it’s good practice in terms of notice. If you don’t want a debt collector contacting your friend and family, expressly state in your letter that the debt collector does not have your consent to communicate with anyone else but you in connection with the debt. See 15 U.S.C. § 1692(c)(b).
Medical debt on consumer credit reports is huge problem in this country. As reported by the International Business Times:
According to a study by the Commonwealth Fund, 22 percent of adults—approximately 41 million consumers—were contacted by a collection agency over unpaid medical bills in 2012. Another study, by Ernst & Young in 2012, found that medical debts made up more than half (52.2 percent) of the debt that collection agencies go after—even more than credit card and other financial debt (20 percent).
America’s medical billing system is utterly dysfunctional and rife with errors. Consequently, there’s a good chance that a medical bill is hurting your credit.
Gerri Detweiler, the Director of Consumer Education at Credit.com has done some good work in educating the public on the issue of medical debt. In her article, “4 Medical Bill Myths That Can Cost You Dearly” she provides the following you should be aware of:
- Myth 1: As long as I am making payments on a medical bill, it can’t be sent to collections.
- Myth 2: I have to be notified before a medical bill is turned over for collections.
- Myth 3: Medical collection accounts are treated differently than other types of collection accounts when credit scores are calculated.
- Myth 4: To clean up my credit, I need to pay off medical collection accounts
There’s a saying that “bad decisions make good stories.” But when it comes to credit, bad decisions just leads to bad or worse credit. Taking out your frustrations on the bank that issued you a credit card in connection with a beef you have with a creditor does not end well. Read more here: http://www.huffingtonpost.com/creditsesamecom/what-not-to-do-with-your-credit_b_6115048.html
Fulk v. LVNV Funding LLC, 2014 U.S. Dist. LEXIS 150220 (E.D. Ky. Oct. 21, 2014):
Fulk holds that statutory prejudgment interest can only be awarded by a trial court. The debt collector violated the FDCPA by adding extra-judicially accrued interest to the amount of a debt it reported to consumer reporting agencies.
Grace v. LVNV Funding, Inc., 2014 U.S. Dist. LEXIS 71012 (W.D. Ky. May 23, 2014):
Grace holds that debt collector violated Kentucky usury law and the FDCPA by attempting to disguise 18% interest as a “service charge.”
Lawson @ Law, PLLC is a "debt relief agency" pursuant to Federal Law 524 of Title 11 of the US Code.
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