Archive for Category 'collection agencies', page 3

Question: A collection agency  purchased my debt from the bank. This debt is from 1999. I had a Line of Credit and 2 credit cards with them. I fell into bad times and when I tried to get it consolidated to a straight loan with the bank they said no and immediately started to remove my paycheque from my account as soon as my work deposited it. They did this twice until I had my work issue my pay as a cheque. Suffice it to say at the time I did not have a support network. No family or close friends that could help. I therefore just disappeared off the map so to speak. I slowly paid off my smaller debts. In addition at that time if your credit rating was bad a Bank could decline opening a bank account. I spent from 1999 until about 2006 without a bank account. Anyway, my question is what normally does a collection agency pay on the dollar to the bank to buy my debt. I have been told they pay 10 cents on the dollar. If that is the case what are my options when negotiating with this agency?

Thanks,

Hector

Answer: It would be highly unusual for a collection agency to purchase your debt from the bank.   Collection agencies collect debts on behalf of banks, but they don’t use their own money to purchase the debt.  If they manage to collect something, they get a percentage of the amount collected.

You have a number of options for dealing with the collection agency.

First, you can attempt to negotiate payment arrangements.  Since the debt dates back to 1999, the collection agency may be willing to accept payments over a period of time.

Second, you could offer a lump sum settlement.  If you owe $5,000, you could offer to give the collection agency $2,500 in full satisfaction of the debt.  They will often accept this type of settlement.  However, to be able to do this you would need to have $2,500 in cash, which may be difficult to borrow if your credit rating is poor.

Finally, if you cannot reach a settlement with the collection agency yourself, you could get help from other professionals.  A Debt Management Plan filed by a non-profit credit counsellor could be used, or you could file a consumer proposal or personal bankruptcy to deal with your debt. 

Question: After a collection agent has reported you to the credit bureau and you pay them off in full how long should it take them to notify equifax and have your credit file updated?

Answer: Most creditors report to the credit bureau on a monthly basis, so in general it will probably take about two months for your credit file to be updated.  We recommend that you check your credit report in about three months, and if it has not been updated contact both the collection agency and the credit bureau and request that they make the change.

Question: We were contacted by phone regarding an overdue cellular bill. The person they were looking for was in fact not my husband, but another person in the same city as ours with the same name. They had the incorrect address(es), but somehow got our phone number, and his current drivers licence number…and therefore are convinced it is him. We paid the bill to get it off his credit report, now what can we do? We’ve been to the cellular place, first they said they had no record of my husband, so there must be a mistake, now, they are saying no, it is him…..

Answer: It depends how far you want to pursue it.  You could go back to the cellular company and demand that the account be removed from your credit report.  If they don’t, you could consult a lawyer and pursue legal action against them.  That may be very expensive for the amount of money involved.

The other option would be to contact the credit bureau and ask them to put a note on your credit report indicating that the debt is a result of mistaken identity.  With proper proof the credit bureau may even remove it from your credit report.

Question: If an unpaid overdue credit card balance is sent to a collection agency for non payment, does interest still accumulate at the set rate, or is just the balance owing at the time of the transfer to the collections agency apply? One more thing. If I make an informal proposal to a credit card company does the the balance owing stop accumulating interest? I know from reading this blog that it stops when a consumer proposal is submitted by a trustee. I was just wondering if it is the same with an informal proposal. Thank you.

Answer: There are no set rules governing an informal proposal.  In general, interest continues to accumulate, even after the overdue credit card is sent to a collection agency.  However, if you can negotiate an informal proposal or settlement with the collection agency, they will normally waive some or all of the interest.

For example, if you owe $10,000 when the credit card balance is sent to the collection agency, you may get a letter from the collection agency demanding payment of $12,000 ($10,000 plus $2,000 in interest and collection agency fees).  However, you may be able to settle with the collection agency for a smaller amount, say $6,000, so in effect they are writing off some of the interest.

Informal proposals work well if you only owe money to one or two creditors, and if you have a lump sum you can offer them to repay your debts.  However, if you need payment terms (such as payments over a period of more than one year), or if you want the proposal to be legally binding so they can’t change their mind later, or if you need to stop a wage garnishment,  a consumer proposal may be a better option.

Question: I recently settled a debt with a credit card company by offering to settle the debt for 50%. The reason I could no longer continue with the regular payments was because I has an accident and I am now on CPP disability reducing my income by 60%.
I received a small lump sum from my insurance. This was were I got the money to cover the settlement amount.

How can I add a qualifying statement to my credit file to explain the circumstances surrounding the negative information in my file?

Answer: You can contact the credit bureaus directly to update your file.  For example, you can complete the Equifax credit report update form to add additional information to your file.

Question: If an outstanding payment i owe is sent to a collection agency, will this affect my credit rating in any way?

Answer: If your account has been turned over to a collection agency, your credit has already been affected, since accounts generally only get sent to a collection agency if they are in arrears.  Once the payment is made, that will also show on your credit report, so your credit rating will then gradually improve over time.

Question: I received a court order from a supreme court order. It’s a case filed against me by a credit card company. I am very surprised as the amount isn’t even that big. What should I do?

Answer: You have two obvious choices. First, you could do nothing. The credit card company will presumably garnishee your wages until the debt is paid in full. If it’s a small amount, this may not be a problem for you. However, if you have other debts, and if you don’t want your wages to be garnisheed, you should contact a bankruptcy trustee to discuss whether or not a consumer proposal or a personal bankruptcy is the correct solution for your money problems.

Question: I have been repeatedly contacted by a collection agency claiming that someone lives here and owes them money. I have stated to them several times that they have the wrong number, they claim this person’s uncle gave them my number and I have told them they must have made a mistake.
They refuse to let this go and call repeatedly asking for this person. We don’t even share the same name. Is there anything I can do to stop this harassment?

Answer: The short answer is no, there is nothing you can do.  You have told them the person doesn’t live there, but they keep calling, meaning they obviously have a lot of time on their hands that they can waste getting nowhere.

The longer answer is this: when they call again, ask for the full name of the collection agency, and the name of the person who is calling you, and their phone number.  Then call the government agency that regulates collection agencies in your area (in Canada it would be your provincial Ministry of Consumer Affairs, although they go by different names in each province).  You could then report the agency.  An investigation by the government may prompt them to stop calling you, since they can lose their collection agency license for harassment.

Question: My spouse has previous debt from before we were married. I do not show on these debts and i am not responsible for them as they happened prior to our meeting and marrage.
My spouse does not work at the moment, i am the sole contributor to the family. There is a collections agency that has phoned daily for the last couple of days, claiming that she owes on a telephone bill dated back in 2004.
The credit agency told her that she should get into contact with this previous creditor to come to an arrangement. I tried calling this telephone company and they refused to assist me in clearing this up. I did not admit to anything nor did i say we would pay a certain amount…
The collection agency has called again, i am curious if they would have the right to seize what i own in this relationship due to my spouses non existing income, such as my car, bank account and so on…
Is a spouse filing for personal bankruptcy an option, as she does not work at the moment, we are hoping she can find work in a couple of months from now when we have to move.

Answer: The answer is simple: the collection agency cannot seize your assets to pay your spouse’s debt. 

You are only liable for someone else’s debt if you have signed for it; whether or not you are married is not a factor.

As to whether or not your spouse should go bankrupt, that depends on how soon until she expects to be working.  In most cases it is best to wait until you return to work to declare bankruptcy.  There are many other factors to consider, so we suggest you contact a bankruptcy trustee to review your options.

Question: I have an old credit card debt in the amount of $14,000. Early in 2005 I had to stop making the minimum payments because I went on CPP Disability and my income was reduced by 60%. I was getting calls from the collections department of this company daily. I wrote a letter to them asking them not to call anymore and I requested all correspondence in the future to be by mail. I also offered them to settle the debt for 40% of the amount owing. I had about $5000 in equity in my home available to pay this at that time. Shortly after that I received a phone call from them informing me my offer was denied. I also reminded them I requested that all correspondence to be by mail. From that time on I haven’t received another phone call or letter requesting payment of the debt. I looked up the Statute of Limitations act in Ontario.It states that after Jan 01 2004 the Statute of Limitations on debt in Ontario changed from 6 years to two years from the last day the debt was acknowledged. It has been past the two year period now and I still have not heard anything from them. Does this mean now that the debt is cleared, and I don’t owe them any more?

Answer: You are asking a complicated legal question, and if you talked to different lawyers you may get two different answers.  One intepretation is that you are correct.  The other intepretation is that since the debt existed prior to January 2004, the old rules apply.

The real issue is this: regardless of what the Statute of Limitations Act may say, the collectors may still pursue you for the money.  Debts remain listed on your credit report for six years from the date of the last collection activity, so this debt will impact your ability to borrow in the future.

However, if you are receiving a disability pension, you have no wages to garnishee, so it is likely that your creditors will not pursue you vigorously.  For further information, we suggest you consult a credit counsellor or bankruptcy trustee.