sudman

Collection Agency Interest Question , Please Help

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Hi Everyone!

I was hoping to ask you all for some advice. I lived in an apartment complex in Arizona about 3 years ago. I had to break my lease and was charged $2,300. The debt was turned over to IQ Data International ( a very rude collection agency) . They are currently charging me $2,900 stating that the additional $600 is for interest that they are 'legally allowed to charge'. I have disputed this with the big 3 back in October 2015 for fraud ( because I thought the argument can be made that these charges are fradulent) but apparently the company verified my debt. 

I now live in Chicago and do not know if this changes the interest they can charge me? Also I called the original creditor ( my apartment complex) and as the company managing has changed, they were unable to provide me with a copy of the lease. I also asked the collection agency for a copy of my lease which I was told they currently do not have but will request and send me. 

When I asked if there would be any terms that in the original lease, agreeing to pay interest the person at the collection agency said 'probably not but it is state law to allow it'. 

Here are my questions:

1) If I did not agree to pay interest to this company, can it still be charged if it is not in the lease?

2) Does living in Chicago change the laws that affect me now or does this not apply since the contract was signed in Arizona?

3) Can this company sue me? If so what does this actually mean?

4)  I got Lexington Law to send a debt validation to these people to which they said they will not respond as it is 'frivilous'. Is this true? Can they ignore these letters?

Thank you for your help in advance !!!

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1.) State law says that interest over 10% can only be charged where contractually permitted. I don't know if a landlord/tenant relationship changes that in the landlord's favor. I'm at work and can't check now, but read this to find out:

https://housing.az.gov/sites/default/files/documents/files/AZ%20Residential%20Landlord%20and%20Tenant%20Act%20-%20Revised%20July%203%202015.pdf

2.) You entered the contact in the state of Arizona. It's very unlikely any other state laws apply.

3.) Anyone can sue anyone else. They have to prove their claims in order sue you successfully. No telling at this point of they can or can't. 

4.) If you have disputed this previously and it was verified,  they can call subsequent disputes "frivolous".

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Hi Harry, 

Thank you SO much! I greatly appreciate your advice! Just a few follow up questions:

1) Does this mean that at this point it never makes sense to dispute the item again since they are just going to keep calling it frivolous?

2) What does a suit do?Is it normal for CA's to sue?

3) Does a Paid in Full affect a credit score and cause a positive increase?

Thank you!

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4 hours ago, sudman said:

1) Does this mean that at this point it never makes sense to dispute the item again since they are just going to keep calling it frivolous?

You can dispute any time you have some new information about that debt that you didn't use in previous disputes. 

4 hours ago, sudman said:

2) What does a suit do?Is it normal for CA's to sue?

If they prevail it goes on your credit report as a judgment. Unpaid judgments in Arizona can be renewed every 10 years for an indefinite period of time. 

4 hours ago, sudman said:

3) Does a Paid in Full affect a credit score and cause a positive increase?

There's some debate about this. It seems the collection itself is scored the same whether it's paid or not but paying the balance owed reduces your debt-to-credit limit ratio.  The score may dip at first depending on when the info was last updated, etc but I believe the overall effect will be positive, if only slightly. 

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Thank you so much! Your information is invaluable. 

With regards to your response on questions 3, I was referring to PIF when it is a collection account not after I have got sued. Is the affect on the credit score different when it is a collection account not a judgement?

Thank you!!!!

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1 hour ago, sudman said:

Is it normal for CA's to sue?

It's not normal in the grand scheme of things. I would say it's more likely a debt collector for property management would sue than a debt collector (non-JDB) for a credit card debt. 

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6 minutes ago, sudman said:

With regards to your response on questions 3, I was referring to PIF when it is a collection account not after I have got sued. Is the affect on the credit score different when it is a collection account not a judgement?

We're down to splitting hairs now, but IMO, a PIF would have nearly the same effect either way. If you wait to get sued, however, it's a double whammy - you have the collection account AND judgment on your report. I.e. it's much better to pay before it becomes a judgment, if you can.

In order of preference: 1.) Pay for delete; 2.) PIF showing on your report;  3.) Paid judgment after being sued; and 4.) Unpaid collection with judgment. 

There's a huge gap in desirability between #2 and #3. Much more than any other two scenarios. 

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I didn't find anything in the PDF I linked to about interest so it seems property management debts are subject to A.R.S. 44-1201, which sets a maximum 10% interest they can charge unless you agreed to something else in writing.

http://www.azleg.gov/FormatDocument.asp?inDoc=/ars/44/01201.htm&Title=44&DocType=ARS

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If they claim beach of contract, they have to show evidence of a contract. This doesn't have to be a written contract. They could use payments you made to them, but it would be difficult (impossible) to argue you broke a 12-month lease without showing a lease that says you agreed to stay there 12 months. 

They could just say you trashed the place when you left and show $2300 in damages which would be easier.

I would count on them being able to produce the lease if they sue. 

~$2300 + 10% × ~3 years is closer to $800, so you're actually getting of light on the interest if this is legit. 

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Hey @Harry Seaward ! 

As a follow up! I recently had 3 collections on my account they broke down as follows:

C1- $2,300 ; from 2013; paid for delete

C2- $1015; from 2013 ; paid in full - got a letter from landlord stating ' i do not have any past or future liabilities as my balance is paid in full'.

C3- $687 from 2013 but reporting as 2015 on CK. I am getting this deleted as well.

My questions are: 

1) How much do you all believe my credit score will increase due to all these changes/deletions when the account cycles? Currently it is a EQ568, TU566, Ex540 and all the changes were made 2 days ago.

2) As i have the letter for C2 stating no past and future liability, do you think I will be able to dispute it , use the letter as evidence and get it deleted?

 

Any advice will be greatly appreciated!!

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Predicting credit scores is mostly futile.  Generally speaking, paying debts makes your score go up and not paying them makes your score go down.  Sometimes paying them makes your score go down due to updating a stagnant collection account or the total age of credit drops when an old collection you PFD falls off your report.

FICO says that 35% of your score is payment history, 30% is amounts owed and 15% is length of credit history (includes collection accounts).  'Amounts owed' is how much credit you have available.  If the total credit limit across all of your credit accounts is $10,000 and your total balance owed across all of your accounts is $20,000, you're at 200% utilization.  This will tank a score faster than missing a couple of payments.  The beauty of it, though, is you can pay all of your balances down to 0$ and your score recovers the next reporting cycle (30 days).

http://www.myfico.com/Downloads/Files/myFICO_UYFS_Booklet.pdf

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2) As i have the letter for C2 stating no past and future liability, do you think I will be able to dispute it , use the letter as evidence and get it deleted?

You can try. I would.  There's nothing you can do legally if they refuse to delete it, though.  The letter only means you have paid the debt.  The data furnisher can verify the debt with a $0 owed and that's that.

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