Question about reselling of non-validated debts

[mandolin.peach]

My understanding about debt validation is that once you dispute and request validation, DCs can either validate or stop collection activity. The fact that they routinely (and increasingly, I've heard) sell the debt is frustrating.

Are there any effective methods, including wording in DV letters or other correspondence, to reduce the likelihood that they will sell the debt?

I've heard that selling it constitutes "continued collection activity" but once the debt is sold, my primary interest is with DVing the new DC and not with the previous one.

Thanks for any input.

[divemedic]

Florida law-

If the debt is sold or reassigned, the new holder must notify you that the debt has been sold within 30 days of the sale or reassignment. 559.715

It is also illegal for anyone in Florida to disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made prior to such reasonable dispute having been asserted and written notice is received from the debtor that any part of the debt is disputed and if such dispute is reasonable, the person who made the original disclosure shall reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days. 559.72(6)

Since the new CA is aware of the debt, they must also cease activity until such time as they have validated. I would use that. I have, actually.

[mandolin.peach]

Thanks! I had to read that a few times to get it --so let me make sure I understand.

If I make a request to the previous creditor (not DC, I assume) who sold the debt, they are required to disclose the nature of the dispute to the new owner within 30 days? --and I guess I would want them to notify me that they have done so? Could I send a copy of my request to the new owner to make sure they are aware?

Also, I could add a paragraph to my DV letter to the new owner that if the account is sold again, a similar demand for disclosure will be made, referencing the FL statute.

One last thing, how do I know if the purchaser has made notification within 30 days. The letters I've received say "purchased from XXXX" but not when.

[divemedic]

The dispute has to be made before you are aware that the debt has been reassigned or sold in order for them to have to notify, I believe. This law is so that any dispute you file with a furnisher has to be noted on your credit file.

Any DV letter you send should include a warning about transsferring the debt without notice of the dispute.

They must notify you within 30 days. If they claim that they bought the account last year and this is the first letter sent, they are in violation. You can get proof (if needed) when and if you go to court.

[mandolin.peach]

OK--I get it. This is the law that requires them to report that the debt is disputed if they report to the CRAs.

In the past three years or so, since we started this process, we have not had anyone other than OCs report info to CRAs. So, we haven't had to use that.

Thanks for your input.

Anyone else have any suggestions?

[Methuss]

Selling the debt isn't just a violation of a State law, although Florida is quite specific on the subject. It does violate the FDCPA on a federal level as well. There are two parts in the FDCPA that define this:

Section 807(2) The false representation of --

(A) the character, amount, or legal status of any debt;

and;

Section 807(8 ) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed;

When a debt collector sells an account after receiving a validation notice fromt he consumer instead of responding to the validation letter they violate both provisions above..

The first by misrepresenting the debt. No other collector would pick up a debt knowing that there is nothing to back it up and the consumer is aware of their rights. The only way they could sell it to another bottom-feeder is by concealing the fact that it was disputed in order to unload it.

The second ties into the first in that they fail to communicate the fact that it was disputed to the buyer. This gives further rise to more severe fraud claims governed under the Hobbs Act since their intent in selling it is to continue the harrassment over it and they receive payment for their illegal actions.

[mandolin.peach]

thanks methuss.

Under the state law (provided by divemedic), it looks like unless I request disclosure within 90 days, I'm out of luck there. But I could use the FDCPA 807(2) if it has been less than one year.

I'm also not sure how a dispute like this on my part would affect future efforts with the new owner/CA. We have two accounts that were sold by OCs (Providian and Discover). Would a dispute or a federal FDCPA filing against the OC cause them to be any more proactive in providing documentation to the new owner? How could I use it as a means to stop further activity?--it's not like the OC is going to "take the debt back" or stop the new owner from making efforts to collect.

I guess to them it's no big deal--they sell it off for $500-800 or whatever, and only in a rare case, someone files a complaint and they pay $1000 fine. Since it still doesn't stop the new owner, I guess this is why all of us doing debt validation simply continue to DV each new 30-day letter that comes in and go from there.

Anyone out there successfully disputed the sale of a debt?

Is this something a consumer attorney would take?

[katsr]

I'm trying to get a consumer attorney to take mine right now. I have 4 different accounts that have been sold without validating/reporting as being disputed and other violations. He was quite interested until I clarified that the debts were indeed mine, but treated illegally by the CAs.

[divemedic]

I have never had to dispute the actual sale, as the other paperwork was in such poor shape I didn't have to.

[LadynRed]

The first by misrepresenting the debt. No other collector would pick up a debt knowing that there is nothing to back it up and the consumer is aware of their rights. The only way they could sell it to another bottom-feeder is by concealing the fact that it was disputed in order to unload it.

Show me case law or something that supports this. I have disagreed about this before and I will continue to do so.

IF they do what is required and DO report the debt as disputed, but sell it anyway, they have NOT violated the law. The 'character' of the debt hasn't changed just because you disputed it, unless its been paid or discharged in bankruptcy, even a disputed debt is still legally collectable unless its fraudulent and we all know how they treat ID theft victims.

To say that no CA would buy a disputed debt is bull. These scumbag CA's buy DISCHARGED debts every damn day. Those are TOTALLY UNCOLLECTABLE but they buy and sell them anyway as if they WERE collectable !! You can't prevent them from selling a debt, that would be restraint of trade.

The second ties into the first in that they fail to communicate the fact that it was disputed to the buyer.

How do you know that ?? Just because they're selling it rather than go thru the hassles of validation doesn't mean they're concealing anything. Granted, they probably do fail to disclose, but they buy and sell portfolios of thousands of accounts at a time. The law doesn't say they can't sell the debt. Most of these CA's want a FAST turnaround. Whether the debt is valid or not, most don't want to go thru the hassles and expense of validation with an informed consumer - they want the fast kill, not an argument, so they wash their hands of it and move on. I can't see how any court would rule that that is illegal. I don't think the FDCPA was drafted to prevent collection agencies from buying and selling accounts or to hobble their business of debt collection - which it would do if it made it illegal for them to sell disputed accounts.

Sorry Methuss, I think you're stretching the FDCPA this time, unless you can show me otherwise

[katsr]

The problem is that some of those bottom feeders reports to the CRAs without so much as a letter saying "you have 30 days" and it's hell getting them to get it off. I'm on the fourth CA on two of the same accounts. You can take them to court and they will still send it on to another bottom feeder. Suing isn't always the answer. Not all of us have an extra $250 for a filing fee every time one of these scumbags decides to test another consumer. And we're not talking about alot of debt here either. One of these that's on the fourth CA is for $116!

Sorry, just had to vent a little.

[divemedic]

You do not need the $250 every time. Don't settle or drop the case unless you at least get expenses.

[Methuss]

Show me case law or something that supports this. I have disagreed about this before and I will continue to do so.

Unifund CCR Partners Inc. v. Magrin

As we've all gone over before, this is an upublished case, but the case was a win for the consumer. The reason why the consumer won was because the intent in selling the account is that collections shall continue without having to provide validation. That violates the intent of the law that the consumer be protected from continued collections until validation is provided.

By the way the Supreme Court apparently refused to hear an appeal on this case and let the lower court ruling stand.

[LadynRed]

The problem is that some of those bottom feeders reports to the CRAs without so much as a letter saying "you have 30 days"

They don't HAVE to notify you of anything before they report to the bureaus. There is no restriction anywhere that says they can't report before they send you a dunning letter with the 30-day notice on it. I've had enough CA's do the same to me and the FCRA, nor the FDCPA, prohibits it. All the FCRA says is that IF they report, it must be accurate, complete and verifiable. Now, we all know that is often NOT the case, but the burden is on the consumer to challenge it once its there.

Methuss -- thanks.. I'll look it up if its available. Unfortunately, with an unpublished case, you can't use it for anything

While the intent may be to continue collections because its deliberately sold to another CA, if the CA who was DV'd STOPPED collections then THEY would not be breaking the law - they quit, they just dumped it. I'll read the case.

[katsr]

I see. Somehow I was misinterpreting §805( as far as communication was concerned. Still, I could swear I read somewhere on these boards that reporting to a CRA as initial contact is illegal. Here's one of the interesting threads on this:

http://www.debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=34479&highlight=initial+contact

Then again, if they don't have to prove they sent you anything even after the fact, we're still screwed.

[Methuss]

Well the FCRA does specifically say communication directly or indirectly with the consumer. Reporting to the CRAs could be indirect communication if the consumer becomes aware of the reporting. But so long as they send the dunning letter within 5 days they aren't creating a violation.

The FTC has weighed in on the matter of reporting. First, the FTC's opinion is that any reporting after receiving a consumer dispute constitutes continued collections. Also, the FTC has opined that they must update an existing tradeline to disputed if it was created before the dunning letter and that they must remove the tradeline if they do not validate within 30 days. They cannot perpetually leave it on your report as "in dispute" once they get your letter. They must do an investigation and certify accuracy to the CRA within 30 days or delete.