Ask Me Help Desk - 3rd Party Legal Entitlement on Unsecured Debt

Hello,

Even though this is my first post on AskMeHelpDesk, I have frequented the site on a semi-regular basis. Generally, my questions are already answered. But, I think I have a problem with this one. :confused:

I have an Unsecured Debt, (Credit Card), that was charged off and sold to a collection agency. The agency has gone to arbitration and was granted an "Award."

After contacting Mr. Bud Hibbs about this issue, he stated that the Award - on it's own - carries no weight and that the collection agency has one year to actually act on the award. He suggested that I "slow" down the process by requesting validation and stringing out my replies.

After looking over reasons I feel that this debt collector is NOT entitled to this money, I am questioning whether they can legally be allowed to collect as a 3rd party on an unsecured debt.

I do know that, as a 3rd party, whether I pay these guys off will have no real baring on my Credit Report since they do not have the legal authority to dismiss any charges/debt reported by the original creditor. If I'm current in assuming this is true, then why would I pay them off?

So, my question [finally ;) ] is this:

* Does a 3rd Party have any legal entitlement to collect on an unsecured debt?

Also, just to add, my father took a student loan out for ME. Because of some honest confusion, (and our mail-carrier was held up a couple of times), the debt was reported to another collection agency. I actually think that this agency is an in-house department. That aside, I requested a copy of the Promissory Note which clearly states that the debt will be owed to anyone possessing the note, i.e 3rd Party. Does this usually apply to Unsecured Debts as well?

- Thanks and I apologizie for being so wordy. :rolleyes:

Whether a debt is secured or not has no bearing on the debtor's obligation to pay. The difference between secured and unsecured debt is the collateral used to secure it. If a debt is secured, the lender knows that there is real property that can be used to pay the debt therefore their risk is reduced so they can charge less. Unsecured debt is backed only by the debtor's promise and ability to pay. The risks are greater so the charges are greater.

Debt can be transferred. Companies sell their debt to third parties all the time. The idea being they may need immediate cash rather then an income source. So a third party will pay a discount on the face value of the debt.

Charging a debt off doesn't absolve the debtor. Its simply a tax and accounting move to remove the asset from the books.

So the answer to your question is yes. A third party has the right to collect on any debt that they legally obtained.

Have the validity of the debt confirmed. Use this link

https://www.askmehelpdesk.com/bankru...ask-29036.html

Most debt collection firms do so by either the purchase of the debt, which makes them the new owner of the debt, or they do it working as an agent for the lender. They work under a contract for the lender to collect the debt and in return normally receive a portion of that debt.

So as their legal agent they have full rights to collect, to sue on their behalf just as if they are the lender.

Dang. While I don't think that was the answer I wanted to hear, I think it was the one I needed to hear. :o

I thought I read somewhere about there not being legal transfer of a debt if the original contract didn't expressly state it. As much as that kind of made sense when I first heard it, I thought about it awhile. If that were true, then wouldn't debtors wise up and just never pay collection agencies? Too good to be true...

Regardless, I have looked over the referenced example validation letter, (Thanks, btw), and I have some questions regarding it.

1) If this is something I send, do I leave the "Yes/No" options there - kind of like a questionnaire for the debt collector to fill out?

2) Do I simply send the document have the collector fill it out or should I include a self-address envelope?

And also, this has nothing to do with the Validation Form, but am I responsible for any fees the Debt Collection Agency added on? I know this might vary from state to state, but I can't find any definative answer on my Attorney General's Website, (Maryland)

Again, I apologize for being so wordy and I do thank sincerely you for all your input!

Debt Collector disclosure Statement is for the Debt Collector to fill out under oath. If they dare!

I think the answer you are looking for in the Fair Debt Collectors practice from the FTC

Link below:

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

Quote:

Originally Posted by FootballGuy

I thought I read somewhere about there not being legal transfer of a debt if the original contract didn't expressly state it. As much as that kind of made sense when I first heard it, I thought about it awhile. If that were true, then wouldn't debtors wise up and just never pay collection agencies? Too good to be true...

Its probably more the opposite. Unless the contract expressly forbids transfer then its transferable since the law generally holds that assets are transferable. And no lender is going to limit themselves.

I haven't personally needed information such as this, but I have been heavily involved in multiple versions of unsecured and secured debt collection as the office manager for a severely distressed corporation. This company was started on credit cards and that has caught up with it big time.

That said, communication is extremely important. I have found all the major lenders will work with you if you are honest, hold true to the commitments you make and keep regular communication with your assigned collector. In our case, I had a list of 12 cards which I shared with all and made next to nothing payments on most of them as I knocked off one at a time by sending the bulk of the funds to the one accruing the most interest. As long as effort is made, most companies seem to be reasonable. Remember, you are the one with hat in hand.

In some cases, we reached an agreement to settle for 3 large monthly payments at $.35 on the dollar of recorded debt. This is still a huge mark on the credit report and time will tell the impact of that.

I am not a CPA nor a lawyer. Certainly, the solutions I have found for this business is not the "perfect world" choice. But I will say that our vendors are now working with us and the aggressive tactics employed prior to my actions have ceased. The business is thriving.

I think I'm getting it. But, I have more questions now :confused: Sorry! :o

Referring to the Debt Collector Disclosure Statement, how would I know if a debt collector fills it out under oath - so to speak?

Also, Quixotic2pw, regarding the settlements, how does that affect a Credit Report? I thought I read that a 3rd party cannot clear a credit report - even if paid off. Is that false information?

Again, thanks! Oh, and ScottGem, that sounds right. Actually, that makes alot more sense! :D

Quote:

Referring to the Debt Collector Disclosure Statement, how would I know if a debt collector fills it out under oath - so to speak?

What a company puts in writing had better be true or they face the law.

Quote:

Originally Posted by talaniman

What a company puts in writing had better be true or they face the law.

I see. Makes sense.

Well, I think I'm going to get the letter out today!

I'll post back with an update - as it unfolds.

Again, to all, THANKS!!! :D