More Debt Collection Questions Answered

Here are two more questions we received in response to my appearance on CNN talking with Gerri Willis about debt collectors:

Q: Maybe you can help me. We got an Oakwood mobile home in 2000. It was repossessed in 2004. It was not foreclosed upon. On our credit report it states it was a car repo not a mobile home. Also Oakwood sold the 2000 mobile home for $3000.00, and now they are trying to come after us for the unpaid balance.

A: Mobile homes are often classified on credit reports as vehicles, because for purposes of the loan, they are more like vehicles than homes. In most states, lenders repossess mobile homes, they do not foreclose upon them. (I assume you did not own the land the mobile home was on.)

In most cases, when a vehicle (or mobile home) is repossessed the lender can come after you for the difference between the amount you owed and the amount for which they sold it. (That is called a “deficiency”). As we explain in the chapter of the book about repossessions, you have several options for dealing with that deficiency: 1. Negotiate a settlement of that debt for less than the amount you owe (which we discuss in detail in Stop Debt Collectors), 2. Dispute the debt if you believe it is inaccurate, and/or 3. Talk with a consumer law attorney.

Q: I just saw you segment on CNN and need advice on how to handle a debt collector. I have been paying $50.00 per month to XYZ Collection Agency to settle a $3,000.00 Sears credit card debt. I made 14 regular monthly payments to them since our agreement. I noticed early in the process that the loan amount was not decreasing accordingly. I questioned it in writing multiple times and began noting the correct balance due each month in the memo line of the checks, which they cashed. The last check cashed stated the loan amount to be $2320.07. The two checks written for June and July have not been cashed yet.

On July 9, I received a phone call from a new collection agency claiming they purchased my account from XYZ and that I owe them $2,800.00. They also claimed I am two months behind on my payments to them. I immediately disputed both the alleged balance owed and the fact that I was 2 months behind. I have not received anything in writing from either XYZ or this new collection company that my account was being sold or purchased. I do not even know the name of this new company. I only have a phone number because they have bombarded me with phone calls prior to and since my conversation. I verbally requested written communication from them verifying everything and asked that they stop calling me three times a day. They have honored neither request.

I want to know if I have the right to refuse any further payments on this debt until the balance dispute is settled and the two missing checks to XYZ are either cashed or returned back to me. Can XYZ sell my account with an incorrect balance, making me liable for it? Can this new company add more on to my balance? What should I do? Do I need a consumer law attorney? I really can't afford that, I'm just trying to pay off my debts without stress. Please help!

A: Your complaints are not unusual. Many consumers have complained to the FTC that they have received indecipherable bills with questionable interest charges from debt collectors.

If you read our new book Stop Debt Collectors (which is available online to download immediately), you will probably find yourself highlighting numerous passages that describe ways in which these companies have violated the federal Fair Debt Collections Practices Act in their efforts to collect from you. I recommend you immediately start using our free Collector Contact Worksheet to record every conversation with this collection agency. The second thing I would recommend is that you gather all your documentation about the debt into one file. Third, the next time you talk with this new collection agency ask them for their name and address. They are required by law to provide you with that information.

Finally, I would recommend you consult with a consumer law attorney. He or she may be able to take your case on a contingent-fee basis, which means they get paid only if you win. If s/he does not think you have a good case, or you cannot afford the fee, you can use the information in the book to send a solid Cease and Desist letter to the collection agency, and/or consider taking them to small claims court yourself.

Please note, the answers to questions on this blog are educational, and should not to be considered legal advice. Please consult a consumer law attorney for specific information regarding your situation.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com. Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts