Sometimes, when a debt is overdue, the creditor sells your account to a collection agency. When that happens, the debt shows up on your credit report as a new collections account. It’s all legal. But it seems unfair. It will make getting new credit very difficult and can have even more serious consequences for years to come. Find out what to do!
The Fair Debt Collections Practices Act
Two important laws affect the practice of debt collection in the United States.
- The Fair Credit Reporting Act (FCRA). When it comes to creditors reporting debt and collections efforts to the credit reporting agencies, the Fair Credit Reporting Act (FCRA) only applies to financial institutions involved in the credit business. In simpler terms, it means that only the company that provides the credit is responsible for notifying the debtor.
- The Fair Debt Collection Practices Act (FDCPA). This law imposes a similar requirement on collection agencies. The FDCPA contains a provision that says collection agencies must send a written notice called a validation notice to debtors within five days of the first time that the collection agency contacts the debtor. This FDCPA requirement seeks to add fairness and transparency to the debt collection process and allows the debtor an opportunity to either pay or dispute the debt before the collection status appears on their credit report.
Under the FDCPA, the validation notice that the collection agency sends to the debtor must contain the following information:
- the amount of debt
- the creditor's name
- Notice to the debtor that they have the right to dispute the debt within 30 days.
The collection agency or the creditor can send this notice through the U.S. mail or via email. The collection agency can report this debt to the credit reporting agencies only after they send this notice to the debtor. Failing to do so can result in serious consequences for the collection agency.
The right to dispute the debt within 30 days is an important part of the validation notice. Too often consumers accept what the collection agencies and the credit reporting agencies report at face value and do not question it. Too often, the credit reporting agencies and the collection agencies make mistakes.
If you have any questions about a collections item on your credit report, contact an FDCPA attorney to discuss your situation. If a collection agency fails to comply with this FDCPA requirement, it faces serious legal consequences, including lawsuits from affected debtors. Debtors who have been wronged by premature collection reporting may seek damages for any harm that a credit report caused.
So, can a collection agency report to a credit bureau without notifying you? The short answer is yes. But there are also rules concerning what a collection agency can and can’t do depending on whether the original creditor sold the collection agency the debt or if the original creditor just hired the collection agency to collect the debt.
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.
Consumer protection attorneys make it their practice to help consumers as they navigate the world of debt, credit reporting agencies, and when applicable, collection agencies. If you have any questions about a collections notice appearing on your credit report or any questions about your credit report, let us know. Attorneys for consumers offer personalized advice and representation to navigate through the complexities of credit protection.
Remember, taking proactive steps to safeguard your credit is a crucial aspect of managing your financial health. Does a collection agency report to a credit bureau? Again, it depends. Call Consumer Attorneys for clarity or if you have any questions about collections agencies, or if you have any problems with credit reporting in general. We can help you fix issues with your credit report and also make sure your rights to sue are preserved should we discover damage to your financial health.
Contact us by:
- Visit our website at consumerattorneys.com. Once there, you can chat with a live representative or fill out a form to be contacted.
- Emailing us at [emailprotected] to request a meeting with an attorney.
- Calling us at 1-877-615-1725.
Unlike other attorneys, consumer protection is 100% of our practice. We have helped thousands of people recover from collections agencies’ carelessness, credit bureau mistakes, and reporting errors. And we can help you, too.
