This website says that third party companies who buy credit card debt are not legally entitled to it because the consumer did not enter into a contract / agreement with the third party. For this reason, it says, the debt doesn't have to be paid to a third party once it's been charged off. Consumers need to be careful about sending a single payment after that point, because the "clock starts ticking again" as far as the debtors being able to hound you.
2006-12-01 13:28:35 · 0 answers · asked by DOOL64 1 in Business & Finance ➔ Credit
Be careful when evaluating the statements of people who say they legally aren't entitled to collect on the debt... this is not true.
Your credit report and a financial obligation are different things. The FDCPA Fair Debt and Collections Practices Act, outlines a collection agencies ability to contact you and attempt to recover on a debt. Because the original creditor writes a debt off on their corporate taxes does not release a person from the contractual obligation to pay on the debt - it is how the bank that you borrowed funds from maintains their books. They are not forgiving you of the debt by charging it off.
The logic that you no longer owe anyone after the debt is charged off is false and people that perpetuate that are misleading you.
You have to look at the debt in 2 levels
1. Credit Reporting Purposes
2. Financial Obligations
1. For credit reporting purposes there is a 7 year windows since the date of last activity on the account... this is somewhat nebulous - because it means that if you last made a payment 6 years ago and then update your address and make a small payment with collection agency viola- it is re listed on your credit file with the date of last activity being recent.
2. When you borrow money you are required to pay it back... now, that doesn't always happen and in most cases there is a statute of limitations on how long an organization has to collect on the debt (roughly - 7 years). When you obtain a credit card there is massive legal text on the application regarding collection of funds and payment. It describes that funds due that are not paid are subject to collection efforts... this is all that needs to be said for a collection agency to have the legal right to collect on the debt.
Don't get me wrong I am not siding with collection agencies- in many cases they use scare tactics and deceit to get people to pay as much as possible as quickly as possible. And there have been many legal battles because agencies try to collect on debts that are years out of the collections statute of limitations.
The big misconception comes from people thinking that because the bank wrote it off as a loss that they no longer owe the bank. This write off is for accountability to shareholders and for future profits forecasting... If they never charged the bad accounts off then there would be millions of dollars of expected revenue calculated into the books that would never be coming in... on top of that they would be paying taxes on all the profits they have even though there are losses to counter some of the profits.
The bank has the legal right to collect the debt but gives up and goes for the quick fix of a write off... they then sell the legal right to collect to a collection agency. It doesn't matter that you didn't sign a contract with the collection agency - your contract with the bank says that if you don't pay - they will do what they need to.
hope that helps
2006-12-01 20:01:44 · answer #1 · answered by E-Rock 3 · 1⤊ 0⤋
This Site Might Help You.
RE:
Has anyone heard of Bud Hibbs' website regarding debt?
This website says that third party companies who buy credit card debt are not legally entitled to it because the consumer did not enter into a contract / agreement with the third party. For this reason, it says, the debt doesn't have to be paid to a third party once it's been charged off. ...
2015-09-06 01:31:04 · answer #2 · answered by ? 1 · 0⤊ 0⤋
Bud Hibbs
2016-11-15 00:15:59 · answer #3 · answered by ? 4 · 0⤊ 0⤋
Yes, there are a lot of people paying old debts right now that they don't have to pay! Simply because they don't know their rights.
When a debt is charged off, it is written off the books of the company. They consider it a loss. They may assign it or sell it to a third party. The third party may try to collect by placing it on your credit report, but even if you pay it, it will not remove the mark and usually no money will go to the original creditor (OC). So in essence, it does you no good to pay charged off debts, especially old ones. And as you mentioned, the company may not even have a right to collect in the first place.
2006-12-01 13:39:14 · answer #4 · answered by Kevin K 3 · 1⤊ 1⤋