Category: Debt Collection

Debt Collectors Must Provide Debt Validation Notice

Often consumers get calls from debt collectors or collection agencies stating that they owe a sum for a past due bill such as a credit card, medical bill, or other type of debt. In many cases, because of the strong stance taken over the phone by the debt collector, consumers panic and send them payment without knowing whether this company truly owns the account and legally can collect on it.

Debt Collectors

Think about it. Couldn’t anyone who simply knows about an overdue account call people and collect money if they are not forced to validate and verify information about the account and legally collect on it?

Within five days of their initial communication, debt collectors are generally required to send debt validation notices to alert consumers about their right to request proof that a debt is valid or dispute the debt. In other words, they must first, prove they own the account or otherwise can collect on it. And, they must inform the consumer of their right to dispute the debt.

The Consumer Financial Protection Bureau (CFPB) has found that Syndicated Office Systems, LLC, which does business as Central Financial Control, failed to send debt validation notices to more than 10,000 consumers. During this time, the company continued to collect over $2 million from consumers who did not receive the notices. These notices can be an especially important consumer safeguard with regard to medical debt, where issues like insurance reimbursements and medical billing processes are commonly fraught with complexity, confusion, and delay, and can lead to consumers being unsure of how much to pay or even whom to pay. More than 43 million Americans have medical debt adversely affecting their credit reports, and more than half of all overdue debt on consumer credit reports is from medical debt.

Consumers, when contacted by debt collectors, can request validation of the debt. If they do not receive validation in the mail they should not send any payment.

There are companies that call consumers and try to collect money on debt that they do not have the legal right to collect on. Some consumers have made payment to these fraudulent debt collectors and have not received credit and thus lost their money.

Read the full article http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-medical-debt-collector/

For further assistance visit www.ERACreditServices.com

Good News for Credit Consumers – But Just How Good?

Help for consumer credit may be on the way

The 3 large credit reporting agencies (CRA’s), Experian, Equifax & Transunion have collaborated on and announced the creation of the National Consumer Assistance Plan which they say will change the way unpaid and paid medical debt will be reported on a consumer’s credit report. This self imposed plan will also require the CRA’s to gather more and accurate information from creditors when an item is disputed by the consumer. This should help consumer credit.

Consumer Credit

The CRA’s will now wait 180 days before reporting unpaid medical debt allowing more time for the consumer and their insurance company to arrange for payment. In addition, paid medical debts will be removed from consumer reports, which is a change from the current 7 year reporting policy.

Also the CRA’s will hire and train employees to address and respond to consumer disputes. Currently the practice is automated in that over 85% of the disputes are simply sent to the creditor to address the issue.

This is certainly a step in the right direction.

However, it remains to be seen if Experian, Equifax and Transunion are committed to providing accurate information on consumer credit reports or of this is simply a measure to slow down the scrutiny of the federal and some state governments.

No Change as of June 2017

We originally posted this blog in March of 2015 when the report first came out. However, as of June of 2017 there has been no recognizable change to the way paid or unpaid medical debt is being reported. And, certainly no help for consumer credit scores. Since PR News Wire reported this there has been no follow up. We’ll assume that’s because of the difficulty in getting 3 separate $billion companies on the same page. Or, we’ll chalk this up to an attempt by the CRA’s to get good press back in 2015.

For information and advice on your credit score visit www.ERACreditServices.com

Consumer Debt is Still a Big Problem

Even though most recent reports signal a recovery of the U.S. economy from the worst financial crisis in close to 100 years, delinquent consumer debt is still a major drain of individuals and the economy as a whole. Reports indicate that there is a bigger problem in this area than experts previously thought. And, many consumers don’t even realize they owe this delinquent debt.

A report by the Urban Institute from late July, 2014 revealed that about 77 million adults have delinquent debt on their credit report. This excludes mortgage debt and takes only into account unpaid medical bills, credit cards, utility bills and other forms of consumer debt.

consumer debt

Income Level and Consumer Debt

This report also found large differences in the amount of consumer debt owed based on income level. Areas with lower incomes, such as the South, had collection rates as high as 40%. They also found concentrations of past due debt in Texas and Louisiana amongst other regions.

What was also interesting about this report is that creditors don’t seem very active in seeking payment of this debt. Many consumers discover that they have unpaid bills only when they go to purchase or lease a car, rent an apartment, buy a home, or make some other type of purchase that requires a check of their credit report.

Our Advice to You

Based on these findings our advice is to get a copy of your credit report. You can obtain a free copy of your Experian, Equifax or Transunion credit report at www.annualcreditreport.com. If you do have unpaid debt you can either call the creditor and negotiate a payment, or you can call us. Through our industry best credit repair service we can potentially get it removed from your credit reports on all 3 bureaus.

ERA Credit Services
www.eracreditservices.com
619-492-3040
727-222-0120