The Federal Trade Commission sends a very clear message to renegade debt collectors: “If you abuse consumers, you lose… everything!”
63 abusive collection companies and individuals across the US are forever banned from operating in the debt collection business thanks to lawsuits filed (and won) by the FTC.
According to the lawsuits, these companies must stop all operations and surrender their assets – some of which will be used to pay damages to the abused consumers. To protect consumers in the future, many of the judgments also placed permanent bans on the owners, managers, and employees of these companies to prevent them from striking again.
Since January 1, 2010, the FTC has sued over 180 companies and individuals who broke the law, banning 63 companies and individuals from the industry, and securing more than $220 million in judgments. Thank you, FTC! Read more about it on the FTC’s consumer blog.
But… what happens to all the collection accounts? If the collection company is out of business because of abusive practices, is the debt no longer valid?
To answer these very important questions, we went right to the source. According to Christopher Koegel, one of the Assistant Directors in the Division of Financial Practices at the FTC, there are many misconceptions surrounding this issue.
“It’s not safe to assume an outstanding debt is discharged because the abusive collection companies have been shut down as a result of one of the FTC’s lawsuits,” Keogel explains.
“Your debts are still yours,” he continues, “the collection company’s misdeeds do not automatically invalidate any money you still may owe. The collection accounts that were serviced by the banned companies were transferred to an independent third-party as part of the lawsuit. This new company may sell or reinstate the collection process according to the law.”
There is some gray area here, however. Some of the accounts may be dismissed or written off if the new collection company cannot properly verify the debt. You may get a letter explaining if this is the case with your account… but maybe not.
If you had a debt in collection with one of the banned companies and want to verify the status of your account, here’s what Mr. Keogel recommends:
- • Get a free copy of your credit report from www.annualcreditreport.com
- • Read over it carefully to see if the account appears on your report
- • IF IT DOES, it should clearly state the name of the new company handling the collection account. You can contact them to start the repayment process and begin rebuilding your good credit.
- • If you believe the account is inaccurate, DISPUTE the record through the credit reporting company from which you ordered your credit report. You can do this by writing a letter or filling out an online form on the credit reporting company’s website.
- • If the account DOES NOT appear on your credit report, it DOES NOT mean it is “gone”. It’s just not currently affecting your credit score. Continue checking your report quarterly to keep tabs on the situation. If it never reappears, the statute of limitations on the debt will eventually expire and the account will no longer be collectible.
If you have any questions about debt collections, communicating with the credit reporting companies, or correcting errors on your credit report, please contact us. Our credit professionals will be happy to help.
If you have any questions, please give us a call at 770-952-5168 or contact us online.
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This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult a attorney who specializes in consumer rights and defense.