I was swindled into overbuying several rental properties that went into foreclosure in 2006. The properties were resold by the banks at amounts less than the amount I purchased them. The banks are credit reporting for the full amount owed. I am concerned about cleaning up my credit report, but I am more concerned about the banks eventually selling off the balanced owed to a debt buyer. I am trying to get proactive. If the banks did not ask for a deficiency judgment, and two years has passed in Ohio, are they prohibited from enforcing collections by Ohio's statute of limits? Would a debt settlement attorney be the best option to negotiate a settlement, or should I get an attorney to attempt to block them from collecting and credit reporting?
If you believe the information reporting on your credit report is incorrect then you have a right to dispute the inaccuracy. However, if the information that is reporting is accurate then typically there is not much one can do in order to block the creditor from reporting the bad debt on your credit report, let alone block them from trying to collect the debt. Regardless of the fact that you believe you were swindled into purchasing rental properties the creditor can try to collect on the debt and report it accordingly. Hiring a debt settlement attorney or an attorney in general does not guarantee that these accounts will no longer be sent to collections or stop reporting on your credit report. However, if you believe that your rights have been violated I encourage you to speak with a licensed attorney in your state to discuss your options. Below, I will provide you with information regarding the FCRA and collections advice.
The Fair Credit Reporting Act (FCRA), a federal law, requires consumer credit reporting companies to report accurate information. If you find any inaccurate information in your credit report, you should dispute the credit report listing with the bureau in question.
When a debtor stops paying on a debt, a creditor will attempt to contact the debtor on the telephone and via the mail. When the number of days since the most recent payment reaches 120-180 days, the account is no longer considered current and the creditor is required by generally accepted accounting principles to "write-off" the debt. Writing-off a debt does not mean the debtor is no longer responsible for the debt, or that collection efforts cease.
The write-off date has almost nothing to do with the statute of limitations for debts. To learn more about the distinction between these issues, read Charge-Off & Credit Report.
At the write-off point, the creditor will transfer the debt to a late-accounts department, or has the option to sell the debt to a collection agent. The collection agent will buy the debt at a discount. However, the collection agent has the right to collect the entire balance due plus interest.
A collection agent may use aggressive tactics to when contacting the debtor. The collection agent may threaten to call the debtor's employer, file charges with the local sheriff, or say they will park a truck in front of the debtor's house with a sign that reads "Bad Debt" on it. All of these tactics and many others are illegal under the Fair Debt Collection Practices Act (FDCPA). Start here to learn the rights consumers have in collections under the FDCPA.
A creditor -- a debt collector that owns a debt account is a creditor -- has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. A court (or in some states, a law firm for the plaintiff) is required to notify the debtor of the time and place of the hearing. This notice is called a "summons to appear" or a "summons and complaint." In some jurisdictions, a process server will present the summons personally. In others the sheriff's deputy will pay a visit with the summons, and in others the notice will appear in the mail. Each jurisdiction has different civil procedure rules regarding proper service of notice. (See Served Summons and Complaint to learn more about this process.)
If you ever receive a summons you should do as it instructs! This is not just a social invitation that you can ignore. In the hearing, the judge will decide if the creditor should be allowed to collect the debt. If the debtor fails to appear, the judge has no choice but to decide on behalf of the creditor.
Therefore, if you receive a summons, the first thing you should do is contact the law firm representing the creditor. Open a negotiation to see if they are willing to settle the debt. If not, it would be wise to respond as indicated in the summons. If there is a hearing, attend it and present your side of the story to the judge. Use facts, tell the truth, dress appropriately, and show the court respect. The court may or may not decide in your favor, but at least you exercised your right to be heard.
The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor's property. Which of these tools the creditor will use depends on the circumstances. To learn more I encourage you to read the Bills.com Collections Advice article I wrote.
I hope this information helps you Find, Save, and Learn.