Problems with collection agency

[augdog74]

Iowa

In 1997 I had a credit card that got away from me. It was my first and only had a $1500 limit. I probably used $1000 of it and couldn't keep up with it so I let it go. They finally turned my debt over to an agency and it turns out they want $4500! I talked the agency and offered them $2500 and they won't budge past 10%. What can I do? There is no way that I can afford $4500. I feel defenseless. How can they charge that much interest? Is there anything I can do from here before I get served papers?

 

[Ladynred]

Yes, send the collection agency a cease and desist letter !! The statute of limitations for credit cards in IA is 5 years. If the last time you paid the original creditor was 1997, the SOL expired last year, the debt is time-barred. That means they cannot legally sue you anymore, and if they're dumb enough to do it you have an affirmative defense to have it thrown out. You also don't HAVE to pay them a penny. This should also drop off your credit report in a year.

Here's a link to a very good expired SOL C&D letter. The statute you need to quote in the letter is on that same site:

http://community-2.webtv.net/Y-Chat/WhyChatsCredit/page3.html

Do NOT talk to them on the phone. Ignore their calls, ignore their illegal threats. Send the letter certified, RRR and keep copies and all receipts.

Just out of curiosity.. who's the collection agency ?

 

[augdog74]

Thanks for your help, Ladynred, but unfortunately my account was started in 1997 and I found payments that I've made back in 2000. Mastercard turned the account over to First Select and now it's in the hands of Vital Recovery Systems, Inc. out of GA.
What's my next move? Do I request a statement from Mastercard showing what I paid and when? Or do I contact an attorney? VRS asked me last night if I refuse to pay it. After failed attempts of trying to negotiate, I told them I refused to pay the whole $4500. Any advice that anyone can give would be greatly appreciated!

 

[kevinss]

When debts get passed from agency to agency (especially at that amount and without a lawsuit) it's an indicator of bad records. Perhaps they don't have the documentation to prove you owe the debt.
You should send them a validation letter (sample at http://www.creditinfocenter.com/forms/sampleletter9.shtml )
Remove the "identity fraud" crud and word the letter to match your situation while at the same time keeping the relevant parts about the actual validation.
If they don't provide you with a signed contract AND a complete accounting record from the time the account was opened until it was closed, you don't have to pay them a dime.
I don't suggest ducking debts, but this one's a little ridiculous (especially in those amounts, if you were honest.)
If the validation doesn't come back, send them a Cease and Desist (http://www.creditinfocenter.com/forms/sampleletter7.shtml )

If the validation DOES come back, start dealing with them by CERTIFIED MAIL... Check out http://www.creditinfocenter.com/forms/ for settlement help. They won't work with you at all unless you do it in writing. They love to threaten on the phone. Just don't answer If you must, tell them to put it in a letter. You can also send a modified Cease and Desist, demanding that phone contact cease, but mail contact continue.

If you have any questions or problems, come on back.. we'll help.

 

[augdog74]

Thank you very much for the advice Kevinss. I would just like to point out that all that extra money that I supposedly owe, was interest accrued from my original creditor. I also want to point out that this company has not called and harrassed me over the phone (yet!)-- They have been polite so far. I just feel that no one deserves to be pounded with 300% interest for an unpaid account. I'm afraid I'll get stuck with the $4500 on account that I'm naive to all the little loopholes in the law! You can bet that I will heed any advice I can get!

 

[kevinss]

We don't advise on loopholes.. just help when consumers are being taken advantage of. Don't get the wrong impression about the forum

 

[augdog74]

Please don't get the wrong impression from me. I didn't mean to ask for advice on any loopholes that would benefit myself. I was merely suggesting that I didn't want to become victim to something they might try to pull on me, hence the reason I am visiting this board. I simply want to know what my rights are and how I can protect myself from any injustice.

 

[Ladynred]

If you want to know what your rights are in dealing with collection agencies, you need to go read and get real cozy with the Fair Debt Collections Practices Act (FDCPA). That is the law that 3rd party collectors must follow - although too many of them break it with abandon as they count on people NOT knowing about the law and the fact that their breaking it.

The FDCPA itself is here:

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

Another good site on the FDCPA:
http://www.pennlawyer.com/fdcpa.htm

You might also want to read the FCRA - Fair Credit Reporting Act, so you know what they can and can not do as far as placing things on your credit reports. You can find it on the FTC site as well.

You can do one of 2 things - or both - start by asking them to validate the debt - make them prove that its yours. I think Kevin gave you a link to validation information and how to do it.

Or you could go straight to settlement negotiations. The key here is to do EVERYTHING in writing only. Don't talk to them on the phone, its pointless - a waste of your time and energy. They are like a broken record and will only keep demanding full payment and laying on the abuse - who wants to hear that ?? You're under NO obligation to talk to them or to return their calls. Put everything on paper, you want a paper trail, and keep copies of everything you send, including receipts, and keep copies of all of their correspondence.

You could start with validation - if they validate - and most of them can't or won't, then you settle. If you just want to get it over and done with, go for negotiations.

 

[augdog74]

I appreciate the help from both of you I will follow your advice and send a letter of validation and keep you posted on their response. Once again, Thank You

 

[augdog74]

By the way, what happens if they won't validate?

 

[kevinss]

If they don't validate, you wait a while.
Give them more than 30 days to validate. If they are moving along with the normal collection activities after recieving your letter (see, return receipts ARE useful), then you send them a very stern letter letting them know that their continued efforts to collect without validating the debt are ILLEGAL. Read the FDCPA. Get friendly with it. Cite sections from it in your letters that are relevant to your situation.
Issue an ultimatum to validate NOW. Wait out the 30 days.
If they still send mail, SAVE ENVELOPES and letters. If they call, record the calls. Iowa is a single-party consent state, so you don't have to tell them you're recording them. Pretend you're scared and ask them what the date is so you can get your records straight. If they won't tell you, tell them what the date is and ask if that's correct. If they won't talk, that's something you can show in your court case against them (that they KNEW they were violating the FDCPA.) If they state the date, well that right there is proof they're violating it. Make sure you record all calls and notate the time of them. If they call (after receiving your validation letter and before they actually validate), you can collect damages from them. Sue.
If they can't validate, send them a cease and desist. If they still continue to call or write, record and save accordingly as mentioned above and sue them.

Chances are they will get your letter and send you the validation materials OR just stop communicating with you (they won't notify you.) They'll then sell the debt to another agency and you can just do the same thing again. Until you have that validation, you aren't paying a penny. By that time, the debt is worthless anyway and you can settle for much less, IF THEY VALIDATE.