Question:

Is it legal to send an invalid debt to a collection agency?

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I need to know if there is a specific law against knowingly and willfully sending an invalid debt to a collection agency without a judgment? I have given this "creditor" ample explanation of why I do not owe them the money; therefore, I feel that the correct next step for them is to get a judgment against me if they feel they can win. However, I think they know they can't win in court and simply intend to send it to collections without a judgment for the sake of ruining my credit.

The reason I am asking this is because I would like to cite a specific law in a letter I am writing to this "creditor" in response to a fraudulent "account statement" they sent me recently.

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6 ANSWERS


  1. It is illegal for creditors to solicit the sale of a debt, advertise, or in any other way promote the selling of your debt to a collection agency. However, it is not illegal for them to actually sell it off.  What you should make sure of now is that, if in fact the creditor did sell off the debt, that they are no longer claiming rights to it.

    Another alternative could be that the collection agency is assigned, a nuanced difference, to the debt, and it still belongs to the creditor.  

    But the above poster is right, it's rare for a creditor these days to seek a judgment itself, because of the lack of time and funds to put into collections, the job is usually outsourced to non-inhouse operations.

    One more BTW, by the way. A judgment in reality looks worse on a credit report than does a default account. At least if it goes to collections and it gets paid, it shows lenders that you paid it without the need for legally forced compliance.


  2. I personally do not know of any laws that prevent the creditor from selling an invalid or disputed debt (unless it was a case of ID theft) however you would have recourse if the collection agency sells your disputed debt to another, as the link below explains.

    http://creditboards.com/forums/index.php...

    Just make sure you understand your rights under the FDCPA, mainly demand to validate letters, so you can fight this if a collection agency does get ahold of it.

  3. There is really no law that would prevent them from selling your debt to a collection agency.  But once it is with the collection agency the debt falls under the Fair Debt Collection Practices Act(FDCPA).  This is the set of laws that govern what a collection agency can and can not do.  It also provides you with a way to request debt validation, in which if you request it they must prove that you owe the debt.

    However, if this original creditor is reporting information on your credit report that is false and refuse to remove it you may have a good case using the Fair Credit Reporting Act(FCRA).

    Without knowing what your dispute is it is hard to say if you would have a case either way.  But if your "ample explanation" was just that an explanation without any proof you are going to have a hard time to prove it is fraudulent.

    EDIT(based on Additional Details):  You need to consult a lawyer.  Your interpetation of  "statutes written in clear language" may be incorrect.  You may be 100% correct, and if so this would confirm it, but you also may be incorrect.  If you get the advise of a lawyer now, then if it ever goes to court you don't mount a defense on false beliefs.

  4. It   is  legal  unless  you  have  been  to  court  and  the  court   decided  that  the  debt  was  invalid .

    What   was  the  outcome   when  you  sued  to  have  the  debt  declared  invalid  ?

    { FYI:  conversation  /  explanation  to  the  company  is  nice if  it  works ,  

    BUT ,   does  NOT   qualify  as   legal  reversal  of   the  debt }

    >

  5. Hi,

    I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58%.It's legitimate. I came across this company on NBC News Special Edition.Check it out here:

    http://www.x.se/a5nf

  6. You would need to get a letter but my guess is they don't feel your claim is substantial enough to prove the debt is not yours.  Most creditors do sell their bad debt and it is often the collection agency who files for a judgement.

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