marianneliberte

TX: Suit printed; Collections Attorney Says Representing Bank - Bank says no

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Question: Does it matter if the collections attorney is lying about who they represent if I know they now DO own the debt? Am I right that they own the debt?

Texas resident. . I have two accounts in collections from 2013/14 when I was unemployed. I let my fear and shame rule me, so I did not talk to my creditors at the time, and have since then been at a complete loss as to how to proceed. I am now determined to get ahead of these.

My finances are now back to where I can make payments. I have also applied for a Lending Club loan in order to pay all at once, but I don't think I will be approved for that because one of these two accounts (smaller one, different collector) is showing up as a collections item in my credit report.

I received a letter from Scott & Associates last week that states a Notice of Intent to File Civil Law Suit for the $5000 debt (the larger of the two I owe, each from different credit cards). 

I called the OC bank and they confirmed the amount and that the debt had been charged off and the phone number for the new contact person matches the phone number in the letter.

This is a collections attorney. I called them this morning to feel out where things stand. Status:

  • They say they represent the OC bank, and that all money I pay to the collections firm will go back to the OC.
  • They have added $80 in court fees to the original total, because they have already printed the suit.
  • Next step is that I will be served with a suit. They say I cannot slow this process and they cannot say how much time I have before the suit is processed and signed by a judge.
  • They have offered that I can pay 57% lump settlement pay-off, or a monthly amount towards the total debt.

I called the OC bank to try to clarify. They confirm that the account was charged off to Trak America. The phone number they gave me does match the phone number in the letter. BUT, they are very clear that they do not own the debt, Scott & Associates does not represent them, and that money given to the collections firm will not go back to the OC bank.

Questions:

Are they misrepresenting themselves?

Does it matter?

Note: my top priority is preventing this from going to court. I recognize my debt to the original creditor and want to pay my debt. An affordable lumpsum settlement would be great, but paying off the total in a legit way is fine. As long as it's legit.

Here is the text of the letter:
---
Creditor: [Original creditor, a bank]
Total Amount Owed: $5xxx.xx
Our Account Number: [their own acct # for me]

Dear Mr./Ms [last name],
As you know, this law firm represents [PC] in connection with the Account. We have attempted to contact you regarding a possible resolution: unfortunately, we have either been unable to speak with you or we have spoken with you, but were unable to reach an agreement. As a result, WE HAVE DECIDED TO FILE A LAWSUIT AGAINST YOU. If we do not hear from you, the next correspondence you should expect to receive from us is a copy of the lawsuit.

THIS MATTER CAN BE SETTLED!

PLEASE DO NOT IGNORE THIS MATTER! Contact us to discuss settlement options.
Sincerely,
Scott & Associates, P.C.

This account is issued and administered by [OC], successor in interest to [XXXX Card Services]

* Please be aware that we are a debt collector attempting to collect a debt. Any information which you provide to this firm may be used by us for that purpose.*

---

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3 minutes ago, marianneliberte said:

This account is issued and administered by [OC], successor in interest to [XXXX Card Services]

Is the bank listed as the OC?   Was XXXX Card Services the original OC or the servicer of the account for the OC (bank)?  Just curious.

The problem I have is that you probably spoke to a representative with the OC.   There's no guarantee that a rep knows if the account was sold or not.   He could mistakenly assume that a charge-off means the OC would no longer own the account and receive any funds.

Have you checked your credit report to see if the OC is reporting?

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17 minutes ago, BV80 said:

Is the bank listed as the OC?   Was XXXX Card Services the original OC or the servicer of the account for the OC (bank)?  Just curious.

The problem I have is that you probably spoke to a representative with the OC.   There's no guarantee that a rep knows if the account was sold or not.   He could mistakenly assume that a charge-off means the OC would no longer own the account and receive any funds.

Have you checked your credit report to see if the OC is reporting?

  1. The bank was the OC. I think Card Services was the servicer.
  2. That the phone rep in the collections department of the bank wouldn't know -- OK. If that's possible, then that makes me feel a touch better about the weirdness of this.
  3. The OC reports this as a Charge-Off. This is not listed in the Collections section of the report. It's listed as Status: CHARGE-OFF, with the comment: Charged off account. Account closed by credit grantor.

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7 minutes ago, marianneliberte said:
  1. The bank was the OC. I think Card Services was the servicer.
  2. That the phone rep in the collections department of the bank wouldn't know -- OK. If that's possible, then that makes me feel a touch better about the weirdness of this.
  3. The OC reports this as a Charge-Off. This is not listed in the Collections section of the report. It's listed as Status: CHARGE-OFF, with the comment: Charged off account. Account closed by credit grantor.

Usually (note I said "usually"), a sold account would be reported on a CR as "sold" or "transferred".   Also, the balance will be reported as -0-.  If the entry does not show one of those, it's very possible the OC still owns the account.

Was the account charged off fairly recently?   Does it still show a balance on your CR?

Also, some banks are less likely to sell their debts.  Discover and American Express usually tend to hold on to them.

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4 hours ago, BV80 said:
 

Usually (note I said "usually"), a sold account would be reported on a CR as "sold" or "transferred".   Also, the balance will be reported as -0-.  If the entry does not show one of those, it's very possible the OC still owns the account.

Was the account charged off fairly recently?   Does it still show a balance on your CR?

Also, some banks are less likely to sell their debts.  Discover and American Express usually tend to hold on to them.

Charged off in mid-2015. It does show a balance on my CR, under the OC's name. 

Good to know, thank you!

So my next step is to try to get this resolved before it goes to court. They say they've already printed the suit. I don't know if I have a week to try to get a debt consolidation loan approved in order to accept the lump sum settlement or if I should agree to the monthly option. They're not willing to send me any settlement offers in the mail; only willing to mail a settlement agreement for me to sign.

I've seen consistently in the forums that it's bad to agree to anything by phone with collections agencies, but that it's safer to work via phone with the OC. When it's a collections agency+law firm that is representing the OC, where does that fall on the phone/no-phone scale? 

I don't want to act out of fear; but I am afraid that they'll process the suit while I try to get a settlement or payment plan worked out.

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2 hours ago, BV80 said:

Is the bank listed as the OC?   Was XXXX Card Services the original OC or the servicer of the account for the OC (bank)?  Just curious.

The problem I have is that you probably spoke to a representative with the OC.   There's no guarantee that a rep knows if the account was sold or not.   He could mistakenly assume that a charge-off means the OC would no longer own the account and receive any funds.

Have you checked your credit report to see if the OC is reporting?

The OC was "successor in interest" to XXXX Card Services.  That means that XXXX Card Services was the actual originating party, and the OC in this case possibly bought out XXXX or acquired XXXX through a merger.  Being a successor in interest means that they were assigned the account, like they would have bought it from XXXX for example, but if they are also considered to be the OC, then that's a clue that they simply took over XXXX and its assets.

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OK, so back to your question, does it matter?  Absolutely it does.  It's not permitted for that attorney to misrepresent who the client/plaintiff actually is.  One way you could address that is, once the lawsuit gets filed, request discovery and ask the attorney to produce a valid retainer agreement between himself and the named plaintiff.  It is a violation of the rules of professional conduct for an attorney to intentionally misrepresent who the actual plaintiff is in a lawsuit.  That points to a couple of other options....

1--the attorney could be bluffing.  Attorneys know that if they get caught defrauding the court, it tends to end badly for them.  This attorney debt collector could be trying to scare you into settling to make a quick buck.  You could call his bluff and see if he actually does file the lawsuit.  There's a chance that this is just a scare tactic.  Most people will not do what you have done--that is, call the OC and confirm whether or not this is legit.  You are already a step ahead that way.  It's fraud upon the court as well as a violation of ethics for an attorney to intentionally misrepresent the identity of the plaintiff.  It affects your right to due process directly, because you would prepare a different defense for each party that might be a plaintiff.  Example, if the plaintiff were the original creditor, you would likely not bring a defense of lack of standing, because the OC tends to know if it has standing or if it sold the account in question.  But, against a total stranger, or a JDB you never heard of before, that becomes a real possibility.

2--the attorney could be tossing this out to try to scare you, but then could possibly file the lawsuit with the correct plaintiff named.  Many attorneys, especially in the debt collection business, seem to think it's perfectly acceptable to lie to consumers whenever it might get them paid. 

 

I would see if you could get something in writing from the OC stating that this lawyer does NOT represent them at all, and that they no longer own the account.  If you could get that, it could potentially be leverage if this attorney tries to continue being dishonest.  $5000 is a small victory compared to possible disciplinary action, and that's assuming that the attorney would win--courts have sometimes sanctioned an attorney and tossed his case out the door if he gets caught in too many lies.  It has happened.

 

I do need to ask though, what is the motivation behind not wanting to go to court?  I'm not criticizing, I'm just curious.  If we play our cards right against JDBs, sometimes you have more leverage in court and you can sometimes force THEM to pay YOU if they have violated enough laws.

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13 minutes ago, kraftykrab said:

OK, so back to your question, does it matter?  Absolutely it does.  It's not permitted for that attorney to misrepresent who the client/plaintiff actually is.  One way you could address that is, once the lawsuit gets filed, request discovery and ask the attorney to produce a valid retainer agreement between himself and the named plaintiff. 

@marianneliberte

That would more than likely be considered privileged information between the attorney and client.  

I was going to suggest that @marianneliberte contact the legal department of the OC bank and see if she could get any information.   If the OC is suing, it would probably refer her to the attorney.

In addition, if all else fails and there is a lawsuit, there would have to be an affidavit from the plaintiff.  That affidavit would clear this up.  If the OC is the plaintiff, there's no violations.   However, if a JDB is suing, the letter from the attorney would be enough to counterclaim with FDCPA violations because a JDB would be held liable for the actions of the attorney..

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Contacting the OC's legal department makes sense. I'll give them a call now. 

As for why I'd prefer to not let this go to court if I can help it: I cannot afford an attorney and to pay my debt. My job is too time-intensive to allow me to learn how to defend myself. I want to pay off my debt to the OC if possible and consider that a moral obligation if I have that option available to me still. 

But I don't want to pay the wrong party.

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17 minutes ago, BV80 said:

@marianneliberte

That would more than likely be considered privileged information between the attorney and client.  

I was going to suggest that @marianneliberte contact the legal department of the OC bank and see if she could get any information.   If the OC is suing, it would probably refer her to the attorney.

In addition, if all else fails and there is a lawsuit, there would have to be an affidavit from the plaintiff.  That affidavit would clear this up.  If the OC is the plaintiff, there's no violations.   However, if a JDB is suing, the letter from the attorney would be enough to counterclaim with FDCPA violations because a JDB would be held liable for the actions of the attorney..

Only some states consider the retainer to be protected by privilege.  The retainer is generally discoverable as long as it does not contain anything specifically confidential.  Fee agreements likewise are generally considered discoverable unless they specify confidential information or documentation in them.  While some states might not agree, the 9th Circuit has said that retainers are generally discoverable. 

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I got the core answer I needed this time from the Bank. I wasn't permitted to speak to the legal department, but finally someone in the collections department was able to confirm that the OC still owns the account and that is has been placed with the agency/firm that contacted me stating their intent to file suit.

I feel much more secure in knowing with whom I'm communicating now. Thank you both.

Follow-up question (this should probably be in another forum, but I hesitate to open another thread):

I've seen consistently in the forums that it's bad to agree to anything by phone with collections agencies, but that it's safer to work via phone with the OC. When it's a collections agency+law firm that is representing the OC, where does that fall on the phone/no-phone scale? 

 

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For me, they all fall on the phone, honestly, but I live next door in Louisiana, and it's legal to record any phone conversation as long as one party to that call gives consent.  You do not even have to tell the other parties on the call that you are recording.  I am one party to those calls, and I consent to them being recorded, so that's what I do.  Check your state laws to see if you can record the same way, then if you have a smart phone, just download one of the free recording apps and go to it. 

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