Last week when I pulled my credit report, I was shocked to see a cell phone bill of $3500 sitting in collections. I was not given any notice about it before. And, I left that cellphone 3 years back. When I called the cell phone company and enquired about the bill, they asked me to contact the collection agency as the bill is with them.
After 2 days of this incident, I got a call from a collection agency where a lady informed me that I have to pay $3500 to them.
I had no idea about this cell phone bill. The cell phone company never informed me about this bill. The delinquent bill is on my credit report. Can the cell phone company do this? Can they send my bill to debt collections without informing me? Is it legal? What should I do now?
Sorry! If my post is a bit long.
I have read your question. Hopefully, I will be able to satisfy your queries. So, just read my answer patiently.
First, let me tell you that you're not the only one who is facing this problem. Thousands of people go through this kind of problem every year.
If I try to put your problem in one simple question, then it will be something like this:
Can creditors send your bills to debt collection agencies without giving you any prior notice?
Can I be sent to debt collection agencies without any notice?
Can you be sent to debt collections without notice?
Is it legal to send bills to debt collection agencies without notice?
As per the law, some creditors are not required to send you a notice before sending your bills to a debt collection agency. This is especially applicable when cell phone bills or hospital bills are involved.
The practice of sending a bill directly to a debt collection agency without any notice is called 'parking of debt.'
Several instances are there where debt collectors report past due bills on the consumer's credit report without making any effort to collect them. They don't make a collection call or send a written notice to the consumer. They sit quietly until the consumer needs a loan or a credit card. This is known as parking a debt.
Parking of debt is quite helpful for the collectors since they don't have to waste time or energy on the debtors. But it is quite problematic for the ignorant debtors. I'll tell you why.
Even if you pay $3500 right now, it won't benefit you. The damage has already been done. The paid collection account won't be removed from your credit report. It will stay there for 7 years.
As per the FCRA Act, any business or financial institution that issues loans or extends credit has to give written notice to consumers before putting negative information on their credit report. Note that this law is only applicable to the financial institutions that are involved in the money lending business.
In your case, this law is not applicable. Cell phone companies are not required to abide by this law. So, they have not done anything illegal.
There is yet another fact that needs to be considered. According to the FCRA, the lenders are only required to send the written notice 30 days before or after furnishing the negative information on your credit report. So, even if you had a credit card bill and lenders/collectors informed you after 30 days, you couldn't have done anything.
In your case, if you feel that the bill is not valid, then you can take a few steps to protect your credit.
You can dispute the collection account with the credit bureau. As per the FCRA, credit bureaus are required to check the validity of the collection account within 30 days and inform you of the result of the investigation. If the collection account is legitimate, then it will be there on your credit report. You have to either pay the full amount or settle the debt.
You have to negotiate with the collection agencies for a lower payoff amount. However, if the account is not legitimate, then it has to be removed from your credit report.
If the credit bureau refuses to remove it, then you can dispute the account with the collection agency. Like credit bureaus, they need to give you a reply within 30 days. Since you were never notified about the bill, you have the right to ask the collection agency to validate the debt at least once.
If the CA refuses to cooperate with you, then you can report the matter to the CFPB or call at the toll-free number 800-530-OVLG. Our attorneys will help you to fight against the collection abuse. Hope this helps.