A collection agency can report your debt to a credit bureau without giving you notice
See if they can and what the laws are about this.
Imagine owing a bill and not knowing such a debt existed, only for it to show up on your credit report. As odd as it may seem, it’s entirely possible.
In fact, a collection agency can report a debt to the credit bureaus without sending you a notice.
To begin with, when a collection agency purchases the debt from your original creditor, they can instantly report the debt to credit bureaus. This means there is no need to wait a certain amount of time or notify you before reporting the debt to the bureau. This is because, by the time your original creditor sends your debt to collections, you’re already late with payments.
The practice of a collection agency reporting your debt to a credit bureau without notifying you beforehand is called “parking” the debt. It’s a tactic that saves the agency the stress of taking any steps or making any form of communication to collect the debt. The agency waits until the debtor needs to open a new line of credit to collect.
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What is the law’s position on the matter?
The law does not prohibit the practice of a collection agency reporting your debt to credit bureaus without notifying you. So, it’s perfectly legal.
The Fair Credit Reporting Act requires financial institutions that report debts to credit bureaus to notify the customers of such debts. However, this legal provision is applicable only to financial institutions that are in the business of extending credit. It doesn’t cover collection agencies reporting delinquent bills.
What’s more? The legislation posits the notice must be given to the customer before or no later than 30 days after reporting the debt to the credit reporting bureau. Therefore, even if collection agencies came under the umbrage of the law, they can still report to the credit bureau without notifying you.
This would cause the debt to appear on your credit report, which will cause your credit score to drop.
What to do?
Since the law seems to be on the collection agencies’ side in the matter, here are some pointers that can save your credit from sheer damage:
- Monitor your credit report. Thankfully, you can obtain your credit reports from the three biggest credit bureaus at Annual Credit Report for free.
- Identify and dispute any strange collection account on the report. The credit bureaus are obligated to resolve the dispute within a certain time frame. The credit bureau will remove it if it cannot be confirmed within the stipulated time.
- When the credit bureau fails to remove the negative mark from your report, you can dispute it with the collection company. In the event the collection company proves the debt is valid, negotiate with them to have it taken off your report if you pay it. Chances are they’ll consider it since you weren’t notified.
Doubtlessly, the process can be quite convoluted. It might not be entirely smooth, and that’s why you need an attorney who is an expert in credit reporting cases. At Consumer Attorneys, we are worth our salt when it comes to dealing with credit reporting and related issues.
If you’re having such a challenge, then contact us immediately.
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