Can a debt collection agency attempt to collect money they say is still owed to the original owner?

Question

My husband and I purchased a vehicle in 2004. We couldn't afford the paymets, so we returned the vehicle to the bank. They sold the vehicle for less than what was owed. Now three years later, a collection agency is trying to get us to pay what is owed. Our credit report as of 3/2007 shows the original owner reporting that the debt is written/charged off and we have a $0 balance as of 10/2004. Do we still owe this money?

Answer 1

I guess some of the other posters explained "why" you still owe the debt >
When the original creditor sells the repo, they almost always sell it for less than what the debtor owed on the original contract. That would leave a deficiency balance.
The debtor is still liable for the deficiency balance.

As for the reporting part of your question >
With the original creditor showing a $0 balance on the charge off, they are actually reporting correctly.
You are lucky they have not placed a deficiency trade line on your reports - so far.

A repo voids the original contract.
Because of that, while they legally can continue to report the charge off, they cannot legally show a dollar amount on the charge off.

They can also legally place another trade line on showing the deficiency balance.

If they sell/assign the debt (deficiency balance) to a collection agency, that agency also has a right to place a trade line on your reports.

So to boil it down - with a repo, a person may be able to expect three (or more) seperate trade lines concerning the vehicle debt.
The original account that has gone to charge off ($0 bal)
The deficiency amount reported by the original creditor
The deficiency amount reported by a collection agency.

The "or more" that I mentioned would be if a suit is filed for the deficiency and they get a judgment. If that happens, the judgment could also report

Answer 2

When they charge off a debt, it means that they have got given up seeking to gather it. But if they sold the debt, then the collection company that they offered it to will proceed to take a look at and acquire it. As soon as they've hit a brick wall or the statute of barriers runs out for them, wager what, they sell the debt to one more agency and the collections procedure starts offevolved far and wide again! What occurred with the car is a common follow, similar to with houses. A mortgage is taken out and the property goes to the person making the repayments. In the event that they default, whether or not by way of now not paying or through returning the property, the property is repossessed. (even if you flip it in, it can be still considered a repossession.) Then the long-established maker of the mortgage sells the property often for the rest price of the loan, however most times for the best possible quantity they may be able to get. In the event that they get the whole loan price (which they hardly ever ever do), then you definately owe them nothing, but if they get less than the remainder price, you owe the difference. And when you consider that they may be able to hold promoting the debt again and again, you would be better off just seeking to both make a agreement present with the company or pay it in full. One other thing: the myth of collections. Most people feel that after a debt runs for 7 years (or the statute of barriers) that it automatically drops off. No longer genuine! What occurs is, the normal maker of the loan sells it to a collection agency. When that collection company has executed all it could, it turns around and sells the debt to an additional one. Etc. Each and every and at any time when that debt is offered, the statute starts over. So the 7 12 months thing handiest applies to the normal maker of the mortgage. After that, it could keep for your credit score eternally, given that the debt would continue to be bought, and with each and every new collection agency comes a new negative mark towards your credit score for non-payment. Each and every of those marks will take 7 years to drop off, however the current collections endeavor will keep. Which is why they sell the debt; you may now not pay them, however they proceed to destroy your credit score each time you don't.

Answer 3

When they charge off a debt, it means that they have given up trying to collect it. But if they sold the debt, then the collection agency that they sold it to will continue to try and collect it. Once they have hit a brick wall or the statute of limitations runs out for them, guess what, they sell the debt to another agency and the collections process begins all over again!

What happened with the car is a common practice, just like with houses. A loan is taken out and the property goes to the person making the payments. If they default, whether by not paying or by returning the property, the property is repossessed. (Even if you turn it in, it's still considered a repossession.) Then the original maker of the loan sells the property sometimes for the remaining value of the loan, but most times for the highest amount they can get. If they get the full loan value (which they rarely ever do), then you owe them nothing, but if they get less than the remaining value, you owe the difference. And since they can keep selling the debt over and over, you'd be better off just trying to either make a settlement offer with the agency or pay it in full.

One more thing: The Myth of collections.
Most people believe that once a debt runs for 7 years (or the statute of limitations) that it automatically drops off. NOT true! What happens is, the original maker of the loan sells it to a collection agency. When that collection agency has done all it can, it turns around and sells the debt to another one. And so on. Each and every time that debt is sold, the statute starts over. So the 7 year thing only applies to the original maker of the loan. After that, it could stay on your credit forever, because the debt could continue to be sold, and with each new collection agency comes a new negative mark against your credit for non-payment. Each of these marks will take 7 years to drop off, but the current collections activity will stay. Which is why they sell the debt; you may not pay them, but they continue to ruin your credit each time you don't.

Answer 4

If you financed the car and let it "go back" to the bank. They are forced to recapture the loss. You did not fulfill your end of the contract terms by repaying the debt in full. Surrendering the vehicle does not release you from the obligation. The bank is forced to sell the vehicle to the individual who submits the highest bid. Unfortunately, if that winning bid is not equal to the amount left on your loan, you are still responsible for repaying that remaining balance. The bank is suffering a loss with the remaining balance. Even though it says "Charged off" they have suffered a loss equal to the amount charged off. The original bank can send those "charged off" accounts to a collection agency to collect the debt. The bad news is, Yes, they can still come after you for the remaining balance. The good news is, they are probably willing to make some sort of settlement arrangement for that remaining balance where you and the bank can agree on a lesser amount to pay and the bank will then report it as a PAID Chargeoff. GET ANY AGREEMENT ARRANGEMENTS IN WRITING. Or wait 7 years from the date it was listed as a charge off and it'll fall off your credit. =)

Answer 5

They are trying to collect the defiency on the loan. You should have received a statement showing what the vehicle value was, the amount it sold for at auction, and the balance owed.

I am surprised that it has taken so long for collections to start on this amount owed.

You are responsible for the money and basically have 2 options.
- Offer a payment for deletion. All correspondence should be sent certified return receipt to create a paper trail. If they agree, get it in writing. If it is not in writing, it is not enforceable.
- Leave the debt alone. It will fall off 7 years from the date it was reported.

Good luck

Answer 6

Yes you do still owe the money.

What your original lender did was write off the debt as noncollectable but this doe's not mean that you don't still owe it. They sold your debt to a collection company and now they are coming after you for it. All perfectly legal.

Answer 7

Yes, unfortunately it looks like they have sold the debt to a collections agency, if you are being threatened by bailiffs, do youself a favour and have a goosey gander at this page:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10034289

As far as I can make out, the law is pretty much the same in the US (which I assume is where you hail from, as you specify $)

Answer 8

Sounds like they are violating the FDCPA (Fair Debt Collection Practices Act), you should tell them to sod off or you will contact a lawyer. Once you returned the vehicle back to the bank that is the end of it. If they charged it off they can tell you you still owe on the debt, but you don't have to pay.

Answer 9

I wouldn't think you owe this. Present this to the collection agency as proof...if not accepted, contact an attorney. Though it may cost you a little bit to go through this, it is much better than your credit being ruined over it, which lasts much longer.

Answer 10

My feeling, no. But to be sure, contact a local agency that offers free credit counseling. They normally handle folks who are deeply in debt and want debt consolidation. but they should be willing to answer your question. And they shouldn't charge you anything.