What do you do with a debt collector on your credit report?
We have previously discussed that debt collectors are not permitted to make any false or misleading statements. One of the ways that a debt collector can make a false or misleading statement is on a credit report.
A debt collector is not permitted to threaten or communicate false information, including the failure to identify that the debt is disputed. Title 15 U.S.C. section 1692e subsection (8).
This means that any time a debt collector reports to a credit reporting agency, they must identify that the debt is at least disputed, and if they know or have a reason to know that the debt is not valid, they are not permitted to report it at all. Further, if you dispute the debt, they are required to show that the debt is disputed.
Quite instructional, is the case Brady v. Credit Recovery Co, 160 F.3d 64 (1st Cir, 1998). In the Brady case, the Mr. Brady never signed the lease in question. When Credit Recovery sent him a collections letter, he called them, and told them he never signed. He also did not send them a dispute letter (a mistake on his behalf, but not fatal). Then, time went by. Mr. Brady decided to buy a house. He applied for a mortgage, and the lender saw that Credit Recovery was there, and not even bothering to report that the debt was disputed. The 1st Circuit held that once the consumer disputed the debt, the debt collector had to at least identify the account as disputed, and their failure to do so violated the FDCPA.
But the key here, is a factor of proof. You have to be able to prove that the debt collector reported the debt to the credit bureaus after you disputed. So how do you ensure that this is in fact what happened?
You send a dispute letter under the FCRA to the credit bureaus.
This is important. The reason this is important, is that by doing the dispute, you force the debt collector to respond to the dispute. What should you put in the dispute letter to the credit bureaus? That depends on the facts. If the debt is not yours, you should explain that it is not your debt. If it is a debt that is beyond the statute of limitations, you should tell them that. If the debt is simply disputed, you should tell them that. Each of these, forces the debt collector to do an investigation, and report back to the credit bureaus. Once they do so, their failure to report correctly can result in a FDCPA violation, and in the right circumstance, a FCRA violation.
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