Take These 3 Steps When Portfolio Recovery Associates Calls You
Portfolio Recovery Associates is a collection agent based in Norfolk, VA. The company buys collection accounts from credit card issuers, auto finance companies, and cellphone providers for 4 to 10 cents on the dollar, and attempts to collect the balance due on the account. The company also buys debt owed by consumers who filed bankruptcy recently. PRA is one of the largest collection agents in the US.
Portfolio Recovery Associates employs 3,200 in the US and UK. More than half of its employees quit or are fired every year. It operates nine call centers in the US and one in Scotland. The company’s collections revenue, which doubled over the last 5 years to more than $500 million annually, is split between call center collections, collections from lawsuits, and chapter 13 bankruptcy accounts. It is a publicly-traded corporation (a rarity among debt collectors) using the stock symbol PRAA.
Because Portfolio Recovery Associates usually owns the accounts it is collecting and is not working for the original creditor, it has a huge range of flexibility in settling the debt. Expect settlements on Portfolio Recovery Associates accounts to range from 40 to 60 cents on the dollar.
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Take these steps when a collection agent at Portfolio Recovery Associates contacts you to collect a debt:
1. Learn the Statute of Limitations on the Debt
Whether the debt is older than your state’s statute of limitations is key to how you respond to a collection call from Portfolio Recovery Associates. Take three steps to learn the statute of limitations status on your debt:
- Learn when the account became delinquent: When did you make your last payment on this debt? Review your records. If you have no records of this account, review your credit reports to see what's reported. The date in your credit report may be incorrect: Use your own records as an accurate guide.
- Learn your state’s statute of limitations for this type of debt: See the Bills.com state statute of limitations page to learn the length of the statute of limitations that applies to your debt.
- Apply your state’s rule to your debt: Generally, the statute of limitations clock starts when the account becomes delinquent. Add 30 days to your last payment due date plus the number of years in your state’s statute of limitations to learn if the statute of limitations clock ran out.
You are in luck if the debt expired. Under the federal Fair Debt Collection Practices Act (FDCPA), a collection agent like Portfolio Recovery Associates may not collect an expired debt. If the clock has run out, send Portfolio Recovery Associates a written cease communications notice immediately.
What if a debt does not appear in your credit reports? It doesn’t matter. What appears or does not appear in your credit reports does not determine if you owe a debt. Debt validation determines if you owe a debt.
If the statute of limitations has not expired, then move on to the next step.
2. Validate the Debt
Validate a debt immediately when Portfolio Recovery Associates contacts you in an attempt to collect a debt. You have only 30 days to validate the debt, so act quickly. Follow the steps we describe in our Bills.com debt validation article to preserve your rights under the the FDCPA. Validate a debt regardless of your personal belief of you owing a debt.
Make sure Portfolio Recovery Associates validates the debt according to the law. If it doesn’t, then send Portfolio Recovery Associates a notice of insufficient validation. If Portfolio Recovery Associates cannot validate the debt, then game-over. It has no legal basis for collecting the debt.
If it can validate the debt and the statute of limitations has not expired, move to the next step.
3. Negotiate A Settlement With Portfolio Recovery Associates
Collection agencies buy collection accounts for 1 to 10 cents on the dollar, typically. The fresher the account, the more an agency pays for an account. Portfolio Recovery Associates has a reputation for buying collection accounts directly from original creditors, so their accounts tend to be fresher than others in the industry.
The individual debt collectors who work for Portfolio Recovery Associates are paid on a commission and have extra incentives to make deals at the end of the week or end of the month. Use this to your advantage if you want to negotiate a settlement to the debt.
Once you pay your collection account off, in full or paying a percentage back as part of a negotiated settlement, Portfolio Recovery Associates will request that the PRA tradeline entry on your credit report be removed from report. The request is generally made within 30 days of your paying off the account. How long it takest disappear depends on how fast the credit bureaus move.
If you do not feel comfortable negotiating, then partner with a debt settlement provider. Debt settlement companies employ teams of people who do nothing but negotiate settlements all day. Debt settlement companies rely on databases of past settlements so their negotiators know what range original creditors and collection agencies have accepted for settlements in the past.
| In May 2014, Portfolio Recovery Associates and another collection agent agreed to drop collections on $16 million in judgments. Portfolio Recovery agreed to pay $300,000 in civil fines and other costs. It did not admit to wrongdoing. |
According to the New York AG’s office, Portfolio Recovery failed to ensure its claims were filed within New York’s statute of limitations law, which requires actions be brought either under New York’s six-year limit or the limit in the state where the original creditor resides, whichever is shorter.
Portfolio Recovery Associates Lawsuit
If Portfolio Recovery Associates files a lawsuit against you, consult with a lawyer in your state with consumer law experience. You must file an answer to Portfolio Recovery Associates’ summons and complaint, or you risk losing the lawsuit by default. If you lose, Portfolio Recovery Associates will be awarded a judgment, which will allow it to garnish your wages, levy or freeze your bank account, place a lien on any property you own or allow the sheriff to seize your personal property. Ignoring a summons will not make it go away, so take action to respond to the lawsuit.
Bills Action Plan - Dealing with Portfolio Recovery Associates
When Portfolio Recovery Associates calls to collect a debt, learn your state’s statute of limitations for this type of debt, send Portfolio Recovery Associates a debt validation notice, and if necessary, negotiate a settlement to the debt. Get help if negotiations are not one of your skills. Consult with a lawyer if Portfolio Recovery Associates files a lawsuit against you.