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Mx-52010

After a NON-SUIT with Midland (what now?)

17 posts in this topic

So you have debit with Midland Funding, they have a law firm sue you in court. You motion to compel arbitration and the case is dismissed as a non-suit by the law firm. Midland is still reporting negative debt to my credit reports after months. I called them and they told me to call the law firm... and vice versa. What steps do I need to take to get this dissolved? Thanks!

 

 

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Dispute it with the CRAs. It's a gray area at best and I don't believe on its own that it's worthy of an FCRA lawsuit.

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Are they reporting that the account is in dispute?

It is obviously in dispute since you compelled arbitration and they failed to proceed and their case was dismissed. It makes little sense to update a disputed account, since it is not included in calculating FICO scores.

Failure for a debt collector to report the dispute is grounds for both a FDCPA and FCRA lawsuit.

 

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18 minutes ago, cjtx2 said:

Are they reporting that the account is in dispute?

It is obviously in dispute since you compelled arbitration and they failed to proceed and their case was dismissed. It makes little sense to update a disputed account, since it is not included in calculating FICO scores.

Failure for a debt collector to report the dispute is grounds for both a FDCPA and FCRA lawsuit.

 

The OP did not state that he disputed or denied owing the account.

In addition, in order to file a claim such as you have suggested under the FCRA, one must dispute with the credit reporting agencies.

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12 hours ago, cjtx2 said:

It makes little sense to update a disputed account, since it is not included in calculating FICO scores.

What makes you think disputed debts aren't calculated by FICO? 

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7 hours ago, Harry Seaward said:

What makes you think disputed debts aren't calculated by FICO? 

I had read about it before, but had no evidence it was in fact true.

I used the myfico monitoring service. In addition to a combined 3 report and FICO scores for different purposes (credit cards, car loans, mortgages, etc.) they provide other information they used to calculate your score, such as total amount owed for each CRA. This is important in computing your debt to credit ratio to see how much you have overextended yourself and how much of a risk you are.

The total amount due, which was not consistent across CRAs, included all other balances listed on the respective report, except for the one related to an account marked in dispute.

I do not know for sure if collection accounts are handled the same way, but I suspect they are.

The account was a charge off and was consistently marked in dispute by all CRAs.

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19 hours ago, BV80 said:

The OP did not state that he disputed or denied owing the account.

OP responded to a lawsuit and did not admit to the debt as stated, that is why OP invoked arbitration. Otherwise, if there was no dispute, Midland would have received a judgment and not a dismissal. Therefore, the account is in dispute and an arbitrator needs to make a decision to resolve the dispute.

You are right about having to dispute with the CRAs before suing for FCRA. But, since Midland has been updating the account without reporting that it is in dispute, FDCPA applies, and it counts how persistent Midland was in updating false and incomplete information. Disputing with the CRAs would make his FDCPA case even stronger.

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29 minutes ago, cjtx2 said:

OP responded to a lawsuit and did not admit to the debt as stated, that is why OP invoked arbitration. Otherwise, if there was no dispute, Midland would have received a judgment and not a dismissal. Therefore, the account is in dispute and an arbitrator needs to make a decision to resolve the dispute.

You’re assuming again.  He needs case law that says denying a debt in a lawsuit or electing arbitration serves as a dispute under the FDCPA.  

31 minutes ago, cjtx2 said:

You are right about having to dispute with the CRAs before suing for FCRA. But, since Midland has been updating the account without reporting that it is in dispute, FDCPA applies, and it counts how persistent Midland was in updating false and incomplete information. Disputing with the CRAs would make his FDCPA case even stronger.

He said they are still reporting but did not elaborate.  He did not state that they are updating each month.  We need to make sure he understands that the mere presence of a TL is not “reporting”.

 

 

 

 

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20 minutes ago, BV80 said:

He said they are still reporting but did not elaborate.  He did not state that they are updating each month.  We need to make sure he understands that the mere presence of a TL is not “reporting”.

You are right. Unless Midland updated incomplete info after it was clear there was a dispute pending, just leaving an old trade line on your report does not count as "still reporting negative info". They are not actively still reporting, it is just an old report, which you need to challenge if you think it is inaccurate. So in either case, a dispute with the CRAs must make it clear that the account is in dispute and failing to mark the account as such would be actionable.

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1 hour ago, cjtx2 said:

I had read about it before, but had no evidence it was in fact true.

I used the myfico monitoring service. In addition to a combined 3 report and FICO scores for different purposes (credit cards, car loans, mortgages, etc.) they provide other information they used to calculate your score, such as total amount owed for each CRA. This is important in computing your debt to credit ratio to see how much you have overextended yourself and how much of a risk you are.

The total amount due, which was not consistent across CRAs, included all other balances listed on the respective report, except for the one related to an account marked in dispute.

I do not know for sure if collection accounts are handled the same way, but I suspect they are.

The account was a charge off and was consistently marked in dispute by all CRAs.

So how do you know disputed accounts aren't scored in FICO? You said the account was marked as in dispute the whole time, so there's no 'before' to compare the after to. 

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1 hour ago, Harry Seaward said:

So how do you know disputed accounts aren't scored in FICO? You said the account was marked as in dispute the whole time, so there's no 'before' to compare the after to. 

Usually I have several things change every month, so it would be difficult to single out one change. At least with a static report.

There was no report before to compare, but it was the only account in dispute at the time and the only balance excluded from the total owed, as calculated by myfico. A few days later, another charge off was sold, so the account balance came down to $0 for the charge off and it was still not reported in collections. The total amount owed myfico re-calculated was decreased exactly by the amount reduced from the balance on the reports where it appeared, and FICO score increased a few points (very few).

While not conclusive, I think it is a very good indicator. Every time there is a change, the monitor re-calculates the score, so it has given me a better perspective on the impact of changes. I will have more definite proof when the next dispute appears.

There is also a FICO simulator of how your score improves as you pay off the amount you owe. While it shows the effect of making monthly payments to other debts, disputed debts balances are left alone.

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2 hours ago, cjtx2 said:

While not conclusive, I think it is a very good indicator.

I don't agree.  There are way too many other factors at play, especially with a heavy credit file.  Average age is the hardest to predict.  Your score could have increased due to sliding into a higher age scoring bracket.

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1 hour ago, Harry Seaward said:

I don't agree.  There are way too many other factors at play, especially with a heavy credit file.  Average age is the hardest to predict.  Your score could have increased due to sliding into a higher age scoring bracket.

They give you some idea of the different factors that make up your score:

Payment History 35% of FICO score. Shows how many accounts show 30+ days late

Amount of Debt 30% of FICO score. Shows the percentage of available credit you are utilizing.

Length of Credit History 15% of FICO score. Shows the average age of accounts

Amount of New Credit 10% of FICO score. Shows the age of your most recently opened account.

Credit Mix 10% of FICO score. Types of credit you are using and whether you miss something.

For each of them you get a score of poor, fair, very good or exceptional. So again by process of elimination: for example, no new credit, same credit mix, same 30+ late, etc. If you score exceptional in a certain area, you could probably assume you have most or all of the percentage for that category.

Then if the average age is the same across CRAs and the score did not change in all reports...

But true, in the end it is just guesswork. For example: two different factors may counter each other.

 

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The other thing that is a huge wildcard is the age of derogatory info.  A 30-day past due takes a huge hit on the first reporting cycle.  3 years later the effect is nearly zero, if not actually zero.  Same goes for collection accounts.  I've had my score actually drop when a collection account came off.  I presume it was because the age of the account was helping my score more than the "collection" status was hurting.  (As with you, it's pure speculation, but there were no other changes that would have explained a drop in score.)  The 'unknown' is the rate at which the effect of derogatory info degrades.

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16 hours ago, cjtx2 said:

You are right. Unless Midland updated incomplete info after it was clear there was a dispute pending, just leaving an old trade line on your report does not count as "still reporting negative info". They are not actively still reporting, it is just an old report, which you need to challenge if you think it is inaccurate. So in either case, a dispute with the CRAs must make it clear that the account is in dispute and failing to mark the account as such would be actionable.

When we dispute with the CRAs, the CRAs will automatically note that the account is in dispute.  In order for a debt collector to notify the CRAs of a dispute, we must dispute directly with the debt collector.  However, that has its limitations.

In Wilhelm v. Credico, the 8th Circuit Court of Appeals quoted an FTC commentary and ruled that the disputed nature of a debt need not be disclosed to CRAs if the debt collector is not currrently reporting.    If the TL is not being updated, it is not currently being reported. 

That is based upon the language in 1692e(8) which uses the word “communicating” (present tense). 

From Wilhelm v  Credico:

1. Disputed debt. If a debt collector knows that a debt is disputed by the consumer ... and reports it to a credit bureau, he must report it as disputed.

2. Post-report dispute. When a debt collector learns of a dispute after reporting the debt to a credit bureau, the dispute need not also be reported.

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6 hours ago, BV80 said:

When we dispute with the CRAs, the CRAs will automatically note that the account is in dispute.  In order for a debt collector to notify the CRAs of a dispute, we must dispute directly with the debt collector.  However, that has its limitations.

Do you happen to know if there is a way to know who is marking the account in dispute, the CRA or the furnisher? There are some codes to report that it is no longer in dispute, which obviously the furnisher must use. But I have always wondered, because if the CRA marks the account in dispute and there is no way to tell the furnisher agreed, there is no easy way to know that the account was not really verified at all.

The case you referred to is right on point. Which supports the view that a collector does not have to report the dispute (take any action) when you contact them directly even if they already reported a collection. As long as they leave the old reporting alone, there is no problem. Which is relatively common because a collection usually tanks your score and there is no need to update.

But when you dispute with the CRA, the collector needs to respond to the CRA and verify it, so they have to take action and, and according to the plain language of the statute,  report it as disputed. Also, if for whatever reason they decide to update it, any new report must disclose the dispute.

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52 minutes ago, cjtx2 said:

Do you happen to know if there is a way to know who is marking the account in dispute, the CRA or the furnisher? There are some codes to report that it is no longer in dispute, which obviously the furnisher must use. But I have always wondered, because if the CRA marks the account in dispute and there is no way to tell the furnisher agreed, there is no easy way to know that the account was not really verified at all.

I don’t know if there’s a way to know.   In fact, I wonder if the CRAs mark it as disputed on their own every time or if they’re even supposed to do so, at all. After thinking about it, I can remember that when I disputed, sometimes it was immediately marked as disputed and other times it took a few days.

If, after disputing with the CRAs, the account in dispute is not verified or corrected by the furnisher, the CRAs must delete it.  It can be reinserted only if the furnisher verifies or corrects it at some point.  So, if it was marked as disputed, I think that would mean the CRAs marked it.

 

52 minutes ago, cjtx2 said:

But when you dispute with the CRA, the collector needs to respond to the CRA and verify it, so they have to take action and, and according to the plain language of the statute,  report it as disputed. Also, if for whatever reason they decide to update it, any new report must disclose the dispute.

Correct.

 

 

 

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