Questions...

[willingtocope]

You guys have probably answered all this before, but can you fill me in on some things?

1. Are OC required by law to "charge off" debts within a certain time period or is that their own policy. Seems like some jump in 3 months and others let it ride.

2. If they do charge off, how can they keep trying to collect? Aren't they acknowledging a bad debt?

Our problems stem from using Credit Cards to keep our company going during the Bush recession...we've have a couple of clients go bankrupt, and we're taking another to court to try to collect what they owe us, but we've been tap dancing with the CA's for awhile now. We'll get our money eventually, and BK is not an option, but I sure would like to keep the CA's off my back so I can concentrate on making money to pay the OC's.

[Swede]

1. Are OC required by law to "charge off" debts within a certain time period or is that their own policy. Seems like some jump in 3 months and others let it ride.

Yes, they are required to charge it off after 180 of non payment for open ended accounts, 120 days for closed ended.

2. If they do charge off, how can they keep trying to collect? Aren't they acknowledging a bad debt?

They can still collect and you still owe the debt, it just means that the OC has deemed the account as uncollectible.

Our problems stem from using Credit Cards to keep our company going during the Bush recession...we've have a couple of clients go bankrupt, and we're taking another to court to try to collect what they owe us, but we've been tap dancing with the CA's for awhile now. We'll get our money eventually, and BK is not an option, but I sure would like to keep the CA's off my back so I can concentrate on making money to pay the OC's.

Are these business debts or personal debts? The FDCPA does not cover business debts.....

[willingtocope]

Some business, some personal. Some of the business debts are "personally guaranteed" which, as I understand it, may fall under the FDCPA if the OC or CA says "may be reflected on your personal credit history". I've been using that line in my DV letters, and most of them have backed off. The bad news is, some, like AMEX, just find another CA to hassle me.

As it happens, most of the strickly business OC's are being reasonable...waiting for us to settle our suit...its the guaranteed and personal ones that are giving us the most trouble.

[mrsmo914]

Some business, some personal. Some of the business debts are "personally guaranteed" which, as I understand it, may fall under the FDCPA if the OC or CA says "may be reflected on your personal credit history". I've been using that line in my DV letters, and most of them have backed off. The bad news is, some, like AMEX, just find another CA to hassle me.

As it happens, most of the strickly business OC's are being reasonable...waiting for us to settle our suit...its the guaranteed and personal ones that are giving us the most trouble.

Where did you get this info about the business debt being personally guaranteed so it falls under the fdcpa? I am having similar issues, and I was under the impression that if it was business debt you were SOL(not statute of limitions either ) I would LOVE to be able to validate a CA that has been harassing my boss, but I did not think it was covered. Looking forward to your answer.

[willingtocope]

There are some sideways references in www.ftc.gov that seem to imply that "personally guaranteed" business debt MAY fall under FDCPA. There are several ftc staff rulings about "the Nusselbaum letter" (not sure I spelled it right) that says while the OC and CA can legally pull your personal credit report, they do not specifically address whether they have to abide by the rest of the FDCPA. Since most CA's are involved with straight personal collections, they also follow FDCPA when confronted about personal guarantees. I've managed to scare a bunch of them away by claiming that "may appear on your personal credit report" in their letter qualifies. Not real sure that it would hold up in court, but it seems to work.

I even got a personal written apology from AMEX when NCO went to far and contacted my neighbor and mentioned "debt collection". Of course, AMEX turned around and handed it to another CA, but it bought me a few months.

[Swede]

There are some sideways references in www.ftc.gov that seem to imply that "personally guaranteed" business debt MAY fall under FDCPA.

You're gonna have to be a bit more specific than that, the www.ftc.gov is a big site....

There are several ftc staff rulings about "the Nusselbaum letter" (not sure I spelled it right) that says while the OC and CA can legally pull your personal credit report, they do not specifically address whether they have to abide by the rest of the FDCPA.

You're confusing the FDCPA and the FCRA and I think you're referring to the Tatelbaum letter that states that FCRA would "permit a lender to obtain a consumer report in connection with a business credit transaction where the consumer in question is or will be personally liable on the loan". However, that has nothing to do with collection agencies responsibilities under the FDCPA, that deals with PP under the FCRA- two different statutes. The FDCPA governs debts that arise for personal or household purposes, read the definition in the first part:

§ 803. Definitions [15 USC 1692a]

As used in this title --

(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

I've managed to scare a bunch of them away by claiming that "may appear on your personal credit report" in their letter qualifies. Not real sure that it would hold up in court, but it seems to work.

In credit repair, there are always tons of different strategies that may or may not work for people. There really isn't a "right way" because what works for one may not work for another. For example, sending OC's a debt validation letter has worked for people in the past, perhaps the OC aren't real familiar with what law applies to them and would rather delete information or perhaps they just don't care to respond to the CRA investigation and the item will be deleted. The problem is however that it would not hold up in court and if it was up to me, I'd create my papertrail around real statutes and case law in case I have to go to court because if you do end up there, you will not win under a statute that is inapplicable.

I even got a personal written apology from AMEX when NCO went to far and contacted my neighbor and mentioned "debt collection". Of course, AMEX turned around and handed it to another CA, but it bought me a few months.

OC's can be held liable for the CA's actions if they knowingly approve their actions. Here's a link for an interview on creditor compliance by Medine and LeFerve of the FTC http://www.resourcemanagement.com/FTC_talks.html

[mrsmo914]

darn, I was getting all excited there for a minute too!

[sisflomi]

I came across this for FL and commercial collection. Thought it might give you an idea of where to look for this under your own state laws.

Legislative Intent In COMMERCIAL Collection

559.542 Legislative intent.--The Legislature finds that commercial collection practices in this state are not governed by the federal and state laws relating to the collection of consumer claims and that current criminal laws are inadequate to deal with certain unlawful and fraudulent activities specifically involving the collection of commercial claims in this state. Under such circumstances, there have been in the past, and will be in the future unless the Legislature acts, persons who succeed in flaunting the criminal laws of this state while engaging in the business of collecting commercial claims. Therefore, the Legislature intends by this part to specifically regulate commercial collection activities, separate and apart from consumer collection activities, to prevent unlawful and fraudulent commercial collection activities that otherwise may go unpenalized. The Legislature seeks to do so by requiring the registration of persons and businesses engaged in soliciting the collection of commercial claims or in collecting commercial claims, by prohibiting collection activities in this state by unregistered persons, and by providing effective mechanisms for enforcement of this part.

Flordia Commercial Collections

[mrsmo914]

Thanks Sis. My state has similar statutes, but the thing that burns me is that there is no validation or cease&desist outs for commercial claims. And there is nothing that we can sue THEM for if they violate the states statutes. We can file a complaint, and they may get fined. But, I can't make them validate the debt--i.e. produce a contract, and I can dispute the amount, but it doesn't mean anything. My boss is a good guy, and they can put this on his credit report because he is a sole proprietor, and he has no recourse. and the part that burns me is that he is still paying the OC, and they are still sending him monthly statements. I figure though, that if they try to get a judgement, we have proof that we asked them to for proof and they denied. We disputed the total and they didn't care, and that he is making payments still--so the judge can see he isn't trying to get out of paying his bill, he just doesn't want to pay $300 more than he owes.

[sisflomi]

What about under the goods and services clauses of UCC code? It should have something in there about billing and such. I would search through that and see what you come up with.

[mrsmo914]

What about under the goods and services clauses of UCC code? It should have something in there about billing and such. I would search through that and see what you come up with.

I looked it up and so far, nothing applies, but I will keep looking, thanks for the new angle

[willingtocope]

Swede is right that FDCPA usually applies to "personal" debt and not to "business debt" BUT

1. If the CA calls you at home, it CAN make it personal. See http://home.olemiss.edu/~llibcoll/ndms/mar98/98D0042P.html

2. Also, if in order to get the business loan, you have to put up a personal guarantee, and the CA isn't real clear in their collection letters if its business or personal, it might be personal.

3. Some states have enacted laws in addition to FDCPA that might make it apply to personally guaranteed business debt.

The point is, CA's aren't real clear on this either, and a DV or C&D may buy you some time. In our case, we intend to pay our debts when we get paid by our client, and we're just tap dancing until we get our money.

[mrsmo914]

Thanks for the extra research, I appreciate it. In this case, they used the business line to call (though the business and home are in the same building and the business line rings in the home also), and the debt is for advertising, so I don't think we could get it as a personal issue. However, we never got anything in writing from them except for a faxed invoice and the CA did say that the ad was guaranteed by my boss personally. Unfortunetly, the CA did not threaten to maul us or maim us, so I guess we cant get him on the abusive stuff Do you have any idea what the outcome of that was?

[willingtocope]

No idea as to how the case turned out.

If its a CA that sent you the invoice and is contacting you, I guess I'd suggest you go ahead and send the a combination C&D/ DV and see where it leads. Here's the one I've been using...

From: <me>

<my home address>

Certified Mail, Return Receipt Requested #xxxx xxxx xxxx xxxx

<date>

<scumbag collection agency>

REF: Your letter, copy attached.

To whom it may concern:

You are hereby notified under provisions of Public Laws 95-109 and 99-361, also known as the Fair Debt Collection Practices Act, that your services are no longer desired. WE REALIZE THAT THIS MAY BE A BUSINESS DEBT, BUT YOUR CLAIM THAT WE ARE PERSONNALLY RESPONSIBLE MAKES IT SUBJECT TO THIS LAW.

You and your organization must CEASE & DESIST all attempts to collect the debt referred to in you letter. Failure to comply with this law will result in our immediately filing a complaint with the Federal Trade Commission and the <state> Attorney General's office. We will pursue all criminal and civil claims against you and your company.

Let this letter also serve as your warning that we may utilize telephone-recording devices in order to document any telephone conversations that we may have in the future.

Furthermore, if any negative information is placed on credit bureau reports by your agency after receipt of this notice, this will cause us to file suit against you and your organization, both personally and corporately, to seek any and all legal remedies available to us by law.

Since it is our policy neither to recognize nor deal with collection agencies, if this is a legitimate debt, we will settle this account with the original creditor. If you feel that your firm has been legally contracted by the original creditor to negotiate on their behalf, please send PROOF THAT THIS DEBT IS INDEED OURS IN THE FORM OF COPIES OF AN ORIGINAL AGREEMENT WITH THE ORGINAL CREDITOR BEARING OUR SIGNATURE AND AN ITEMIZED LIST OF TRANSACTIONS THAT REFLECT THE BALANCE YOU CLAIM AND COPIES OF ANY AGREEMENT BETWEEN YOU AND THE ORGINAL CREDITOR GIVING YOU THE RIGHT TO ATTEMPT TO COLLECT THIS DEBT AND PROOF THAT YOU ARE LEGALLY LICENSED TO OPERATE IN THE STATE OF <state>. Also, be advised that we are aware that there are many unscrupulous organizations attempting to take advantage of the current economic climate and we will be reviewing these documents for evidence of fraud.

Under the Fair Debt Collections Practices Act, you have 30 days to respond, or we will take the appropriate action.

Sincerely,

<me>

[mrsmo914]

That is very good. I likey. Last we heard from them, they were going to advise their client to file a judgement. That was Thursday or Friday. They already ignored the validation letter I sent. Good luck to you.