National Action Financial Services

I received a letter from National Action Financial Services for a debt I do not owe. What are my rights? What can I do?

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Bill's Answer: Answered by Mark Cappel

Just because a collection agent has access to the credit reporting agencies and learned your contact information does not mean you owe a debt. There are two possible explanations for National Action Financial Services contacting you with a debt you know you do not owe: It is an honest mistake; Your name is John A. Doe and reside in Springfield and National Action Financial Services wants the Jon A. Doe residing in Shelbyville. The other explanation is that National Action Financial Services is a predatory collection agent that picked you at random to try to collect a debt you do not owe.

National Action Financial Services the Innocent

Let us assume for a moment that National Action Financial Services is an upstanding, scrupulous collection agent and it located the wrong John A. Doe. You do yourself and National Action Financial Services a service by informing the collection agent it made an error. Do so by demanding a debt validation immediately. Do not wait because your window for validating the debt is narrow — 30 days from the date of notification of the collection attempt. Learn how to validate a debt and learn if a debt is validated property by following the link I just mentioned.

A collection agent may not collect a debt it cannot validate. In your case, if National Action Financial Services bought a fully document collection account, it will provide you evidence to show you are not the debtor. Your name will not match the actual debtor, nor will your age, Social Security number, and other identification. On the other hand, if National Action Financial Services bought a bare account it cannot validate, then according to the Fair Debt Collection Practices Act (FDCPA), National Action Financial Services cannot report the debt to the credit reporting agencies or try to collect the debt.

National Action Financial Services the Malicious

Now let us assume for the sake of argument that National Action Financial Services is unscrupulous. Unfortunately, you do not know whether National Action Financial Services is unscrupulous until you ask it to validate the debt. If it cannot validate the debt and continues to try to collect the debt in violation of the FDCPA, then the motivations of National Action Financial Services are clear. In that case, consult with an attorney who has experience in consumer law. He or she will gather evidence from you, file a lawsuit and collect damages under the FDCPA because you will have a cause of action to sue National Action Financial Services.

Fair Credit Reporting Act

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c)
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer

The FCRA 7-year rule is separate from state statutes of limitations for debt issues. Under the FCRA, all trade lines can be reported on each of the credit bureaus. However, the reporting agencies must update and keep accurate data in their credit files. If there is erroneous information (like a collection account that is more than 7 years old), you must notify them (typically through a certified letter) and then wait one reporting cycle (90 days) for the errors to be removed.

Recommendation

Send the debt validation letter immediately because there is a 30-day time limit on the letter you received. The collection agent, in turn, has 30 days to respond with a proper and complete validation. Send letters to the credit reporting agencies explaining that the debt is long since passed the seven-year rule.

To learn more about your rights as a debtor, read the Bills.com resource Collections Advice.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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