sharbear1978

What is a factoring company account?

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I have a CA posting an old credit card account as a factoring company account. What does this mean? I'm in PA and they are taking me to court...the 4 year SOL should have expired, last payment was in January of 2003. What are they trying to pull with the factoring account?

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In the business world, a "factor" is someone who buys GOOD receivables from a company for like 90%, and then collects on them. The idea is that the original company gets their cash immediately, and the factor collects when the debtor pays.

One of the major software packages that CAs use to report to CRAs treats all purchased debt as factored. Although there is no law that stipulates this, the understanding is the business world is that a "factored account" is collectible.

When a JDB buys a defaulted debt, it doesn't really fit the "factored account" definition.

Is this a violation of the FCRA (misreprenting the true nature of the debt)? Don't know. I'd suggest you treat it as just another junk debt buyer...

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In the business world, a "factor" is someone who buys GOOD receivables from a company for like 90%, and then collects on them. The idea is that the original company gets their cash immediately, and the factor collects when the debtor pays.

One of the major software packages that CAs use to report to CRAs treats all purchased debt as factored. Although there is no law that stipulates this, the understanding is the business world is that a "factored account" is collectible.

When a JDB buys a defaulted debt, it doesn't really fit the "factored account" definition.

Is this a violation of the FCRA (misreprenting the true nature of the debt)? Don't know. I'd suggest you treat it as just another junk debt buyer...

Willing is right on and when I see this, I take it as a violation! However, that doesn't help you. What is the SOL for written accounts in your area? It's very likely that the credit will win the case of it being a written contract since the business is based on written instruments (everytime you make a purchase, you sign).

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SOL in Pennsylvania on a written contract is 4 years. I see this JDB actually owns two accounts on my credit report. Both are Visa cards...one they are reporting as LOAN TYPE: Collection Agency Attorney and the other (which is the one they are taking me into court for) is listed as LOAN TYPE: Factoring Company Account. I just thought that maybe it being listed as that, they would have some kind of advantage.:rolleyes:

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Often, a factored account is not even technically sold.

Company "A" needs cash now. So company "B" gives them cash, a percentage of their accounts receivable, using those accounts as collateral with a little profit, when they are paid on.

But charged off accounts that are outright purchased are NOT factored accounts. Factored accounts are open accounts.

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This makes me raise another question. Looking at my credit report there are a lot of defaulted accounts (OC and CA) defaulted in 2003 (divorce year) that still say they are an open account, some say revolving account. So, what should these actually say?:confused:

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Alrighty then, a Type = Open account is correct. That means it is (or was) a credit card type account as opposed to a Type = installment, where they lend you a fixed amount of money (say, to buy a TV). Just to confuse things, some CC do report as Type = installment. In some states, because of the way the SOL laws are written, there are some advantages to the creditor to pick one or the other. "Store" CC's (like Nieman Marcus) are usually considered "installment"...plain old Visa/MC are "open".

One of the problems for us poor debtors is the credit industry uses the same words to mean different things in different contexts. A Status = Open account can indeed be a "factored account"...the account is still in good standing. A Status = Closed or Type = Collections account technically should not be a factored account.

My advice is not to get hung up on the wording and instead concentrate on the accuracy of the dates...and names, addresses, etc.

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