Brian Phelps

Collection never attempted reported to

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My wife was seriously hurt in an accident on April  2010 in California. There were large medical expenses, most of which were paid by insurance, but significant portions were out of pocket.  The owner of the vehicle at fault had the legal minimum insurance. When our own auto insurance would not pay the $500K limit on our policy, we engaged an attorney. They negotiated with the hospital and the insurer to get what we believed were all of the outstanding debts paid. The attorney paid the hospital out of the proceeds from the insurer.

About 2 or 3 years later, we obtained a copy of our credit report and found a collection account in the amount of about $6,800  from a collection agency.  We don't recall receiving  a bill from the hospital for the outstanding amount. Nor were do we remember being notified by the Grant & Weber collection agency of a pending collection account.  They just recorded us as in default and sent a derogatory report to the credit reporting agencies.

The terms of limitation for collecting the account exceeds four years, but the derogatory notice of the collection account remains on our credit report.

We paid the attorney 27% of the insurance settlement,  an extremely generous amount considering the number of hours I estimate he actually put into the effort to collect from the insurance company.  As our legal agent, he was  responsible for paying all of the hospital bills from the insurer's proceeds, but did not. He told me last year last year to write Grant & Weber and tell them they could not collect the debt and to remove the collection account from our credit report. They refused and instead demanded I pay the amount due immediately and threatened to initiate court action. The attorney has gotten his share of the payout and is not helpful in resolving this left over debt.

Can I require Grant & Weber to show proof that they attempted to collect the debt from us before they put us in default? (Does it matter?)

Do we have any recourse for getting this collection account removed from our credit report? It's scheduled to remain on my wife's credit report through Sept 2017.

Thanks, Brian

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Wait, you have a letter saying that they are going to sure you from a year or 2 ago and they have not? If so, you might have a FDCPA/Rosenthal act violation already (threatening to do something they had no intention of doing). If the collection agency is not bothering you, I would do nothing at this point in regards to them. If they sue you, then simply answer that the debt is time barred and counter sue them for FDCPA and Rosenthal Act violations. That will take care of the collector.

As for the credit report, I would send a demand that you do not owe the debt and request that it be removed from the credit report within 30 days to the credit report agency (not the collector). The collection agency will probably verify. You then send a Method of Validation request to the Credit Reporting Agency demanding that they tell you how they validated and the contact information of the person at the collection agency they validated with (name, address, and phone number). Most credit reporting agencies will drop the tradeline rather than deal with the MOV.

As for reporting, yes, a collection agency can put a tradeline on your report without trying to collect the debt. They do that all of the time.

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@WhoCares1000, thanks for the prompt reply.  I did not receive a letter threatening to sue, only via a phone call.  (I know, I should do everything in writing...) I have written a debt validation letter to the collection agency.  I've previously sent an appeal to the credit reporting agency and asked that they remove the collection account without success.

I received a reply from the attorney earlier today to my email, saying "This was not a bill that was disclosed to our firm previous to settlement especially given the fact we paid St. Josephs their lien.  They have not explained it at anytime to you or our firm."

Once I receive that letter, I'll file an appeal with the credit reporting agency as you suggest and send the attorney's letter with it. Maybe that will do the trick.

Edited by Brian Phelps
clarify
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A debt validation at this time is meaningless.  They are not obligated to ever reply to you.  Their obligation would have been to send a dunning letter to you withing 5 days of initial contact, which would have been the phone call your received from them.  However, seeing as it has been over a year since that time, any FDCPA violations they committed are now out of the statute of limitations.

The only way to legally deal with this issue is to dispute the TL directly with the credit agencies, as @WhoCares1000 suggested.  Even then, the collector will simply "verify" the account.  But you must go through that step first to get to the real way to solve this: The MOV letter.  Once the credit agencies say it was verified, you follow up with a letter asking for the method used to verify AND for the name, address and phone number of the person who verified the account to them.  The credit agencies never properly respond to this.  They are required to provide this information to you within 15 days.  Instead, they only send a generic form letter.  However, if you check your reports again, you will likely find that they have quietly removed the TL from your reports.

This will 98% of the time get results.  Contacting the collector gets nothing but headaches.

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As FistHardCheese has said, I would not bother with the collector at this point. If you want to send the collector something, send them a letter saying that the debt is paid according to your attorney and that you refuse to pay it again. They can try to sue you but since the debt is time barred, you can have a field day with them in court if they try it. I simply would not do that because it does not accomplish your goals and after a year, they have figured out that they did not scare you with their threat. The debt is probably already sold on down the line. It would be a waste of time to deal with the collector.

Your best bet is to follow the process FistHardCheese outlined with the credit reporting agency. It will take a couple of months but more likely than not, they will quietly remove something this old rather than get into a fight with you over it. This is your real goal so this is what you should probably spend your time on.

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This might be a bit off the beaten path, but you might have an issue with this attorney, if he really did not do what he was supposed to do with the money.  I know it's beside the point of the credit report issue, but if this lawyer did not do what he told you was done, then that's an ethics problem, and every state has what's called  'rules of professional conduct' that apply specifically to attorneys.  If an attorney violates those rules, you could bring a formal complaint through the bar association of your state.  Attorneys have been disciplined for things like that, and it happens more often than you may know.  If he kept money that was supposed to go to those bills, for example, and then told you that he paid it from the funds, then you would have yourself a possibility for an interesting complaint.  Lawyers get fined, suspended, ordered to return funds in controversy, even disbarred for things like this.

Wheels up,

Stick

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But Stick, how are you sure that this bill was not paid by the attorney and it still ended up in the hands of some stupid collector (or the hospital sold it on anyways). There are so many ways this can happen where the attorney dealing with the funds is not at fault.

I would question however why the attorney does not want to deal with this since it was their responsibility to take care of these bills in the first place but at this point, it will not be hard to make the tradeline and collector go away as the debt is outside of SOL and almost coming off the report anyways in about 1.75 years, even if the OP does nothing.

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3 hours ago, stick&rudder said:

 

This might be a bit off the beaten path, but you might have an issue with this attorney, if he really did not do what he was supposed to do with the money.  I know it's beside the point of the credit report issue, but if this lawyer did not do what he told you was done, then that's an ethics problem, and every state has what's called  'rules of professional conduct' that apply specifically to attorneys.  If an attorney violates those rules, you could bring a formal complaint through the bar association of your state.  Attorneys have been disciplined for things like that, and it happens more often than you may know.  If he kept money that was supposed to go to those bills, for example, and then told you that he paid it from the funds, then you would have yourself a possibility for an interesting complaint.  Lawyers get fined, suspended, ordered to return funds in controversy, even disbarred for things like this.

Wheels up,

Stick

If I had to guess, I would bank on the collector being in the wrong over an attorney who would would lose his career if he was found to not do what he was supposed to.

I would bet you dollars to donuts (and I can tear up some donuts) that one of the OC medical creditors settled with the attorney for less than the full amount and then stupidly sold the remaining amount left on their books to some low level JDB who routinely buy up medical debts like this. 

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56 minutes ago, WhoCares1000 said:

But Stick, how are you sure that this bill was not paid by the attorney and it still ended up in the hands of some stupid collector (or the hospital sold it on anyways). There are so many ways this can happen where the attorney dealing with the funds is not at fault.

I would question however why the attorney does not want to deal with this since it was their responsibility to take care of these bills in the first place but at this point, it will not be hard to make the tradeline and collector go away as the debt is outside of SOL and almost coming off the report anyways in about 1.75 years, even if the OP does nothing.

Howdy,

I never said I was sure.  In fact, I said "if" several times for just that reason.  I only provided relevant information in case that happens to be the case.  Truth be told, I've seen more than just a few crooked attorneys, so I do not put much stock in the idea that fisthardcheese posted, about how an attorney would not be so likely to risk his career over money.  most of the attorneys that get in trouble in their careers do so because of greed and money.  Just look at all the debt collection attorneys that have gotten in massive trouble, like David J. Stern, Frank Hanna, and others. 

You questioned why the attorney did not want to handle this since it was his deal back when everything happened.  So do I.  That is just one reason why I posted the "what if" that I posted.

Wheels up,

Stick

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Thanks for everyone's input and ideas. I am not happy with the way the attorney has handled the collection amount.  However, he did respond to my very direct email yesterday that mentioned his "fiduciary duty" as our attorney to pay these liens, which he directly negotiated on our behalf and paid out of the insurance proceeds, but did not complete. He replied that he had negotiated and paid what he understood to be all outstanding amounts and that the medical center had not responded with info about this bill. He offered to send me a verification letter I can use with the credit reporting agency to prove the bills were paid.

As @WhoCares1000 and  @fisthardcheese  suggested, I'll be sending a letter to the credit reporting agency and then following up with the MOV letter. I hope that will do the trick. I won't waste time on contacting the collection agency.

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