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Suing For FCRA, Incompetence Ensues

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I decided to share this saga for your entertainment and some input. As I have shared many times on this board, I started out several years ago deeply in debt. I was not able to do a bankruptcy, so I decided to go it alone and settle my own debts because I had a steady income. Fast forward to today, I have settled all of my charged off debts, except for 2. One of them I am waiting out the statute of limitations on (come on March 2021!) and the other one is the main issue in this story.

 

To make a long story short about this debt, I owed it to a credit union that was absorbed into another, much larger credit union. The account was already late before it was "purchased," which created a bunch of errors on my credit reports. Ultimately, I got it deleted off of all my reports, except for one. I disputed it with this one credit bureau over and over again, and they would not fix it. The errors included a comment saying I never made any payments on the account, illegally re-aged late payments, incomplete reporting of all the payment history before it was absorbed, and the credit limit was wrong. These were blatant errors that anyone with common sense could recognize, but the disputer computer kept verifying all of them. After disputing with the bureaus, I wrote directly to this credit union and disputed it with them. They wrote back saying it was all accurate and that I need to make payment arrangements. I had previously discussed settling with their collection agency, who had offered me an 80% settlement, which was not financially possible.

 

At this point, I talked to my lawyer and decided to sue the credit union and the credit bureau for FCRA violations. The credit union balked at our lawsuit at first, requesting payment in full to fix the errors. A few months went by, and we made a counteroffer for them to delete the account, cease collection activity, not sell the account, and forgive the debt entirely for $0. They countered with a much lower amount, and we countered with something reasonable (20%) to resolve the debt and delete. Finally, we reached a deal. After that, they sent over the agreement, I signed it, and sent them a cashier's check overnight. After that, my lawyer and I were just waiting for the deletion of the account and continuing to negotiate with the credit bureau.

 

Well, I noticed about 10 days after I paid them that the account updated on my credit report. It showed a $0 balance, but it was also marked as "transferred/sold." That sounded weird. I checked my soft pulls on said credit bureau and saw 2 collection agencies pulled my report that same day. I thought maybe this had to do with the other debt I am waiting out. Apparently not! A few days later, I get a letter in the mail from one of the collection agencies that pulled my report. They said they were collecting the full balance on the account and that the debt had been sold to a debt buyer! The debt buyer was the other entity that pulled my report.

 

Now, the credit union had taken my money, not deleted the account, and completely breached the agreement we signed by selling the debt. On top of that, they sold the debt without crediting the payment I made. As for the credit bureau, we reached a deal right about the same time all of this happened. I am currently waiting on their agreement and check. My lawyer has emailed the credit union's lawyer, but we have not yet gotten a response. He suggests suing for breach of contract, making the court enforce the settlement agreement, and suing the debt collectors.

 

The questions I am left with at this point are:

 

1. Can the credit union recall the sold debt? I was under the impression that they could not.

2. Can the 2 collectors actually collect on this debt? If it was illegally sold to being with, then I don't think it would be legal under the FDCPA.

3. How much should I ask the credit union to pay me? This will depend on if they can recall the debt. At a minimum, I think they should give me back all of my money I paid them. But maybe I should ask for more?

4. Should I sue the credit union for breach of contract? Let's say they are not cooperative.

 

 

Thank you in advance for any input. I know there are some fairly knowledgable members on here, which is why I am posting this. I may not leave it up after I get responses 

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I'm sure others here can give you better advice than I can about this but yes, I would certainly sue the CU. As for the collection agencies, follow the same process of disputing. I would state that this has been settled and provide a copy of the settlement agreement. I would also tell them to remove any negative items on your CR that they are responsible for or you will sue them too under the FCRA.  Don't back down.  

 

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First, take any advice here with a HUGE GRAIN OF SALT.  I understand looking for alternate perspectives on possible answers to these questions, BUT you've engaged a lawyer and, either through payment from you or a percentage of any settlement, he's being paid to be the knowledgeable and authoritative source for answers to these questions.  If he can't answer these questions to your complete satisfaction, you need to seek out other counsel.

 

This goes doubly for anything I add to this post (!) ...

 

If you and the credit union executed an agreement that absolved you of any further liability upon the agreed payment then, at minimum, you have the ammunition with which you and your lawyer can go to court and get a judge to order satisfaction of the agreement and invalidation of the sale to the CA that purchased the debt.

 

To me, the "lay of the land" is that simple. 

 

The CRA dispute is a separate matter.  Unless a CRA is provided with counter substantive evidence of account history/status by a source outside of the credit reporter, the CRA is within its rights to report the information that a credit reporter provides in response to a credit dispute by an account holder.

 

So, if you merely asserted that certain data was incorrect and that it should report in an alternate matter, without providing statements/cancelled checks/or whatever that substantively backs up your dispute, then I'm not sure what action you can bring against any CRA.  On the other hand, if you provided sufficient evidence that a court would accept it as reasonable challenge to the reporting, and the CRA failed to require the credit reporter to reconcile their reporting with those records, then the CRA could be liable for damages under the FCRA (and there's a notable case where such an finding was made against TU).

 

Has the CU put themselves at risk to a breach of contract suit, and if so, what remedy/damages are appropriate?  I'll leave that to your lawyer.

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1 hour ago, hdporter said:

First, take any advice here with a HUGE GRAIN OF SALT.  I understand looking for alternate perspectives on possible answers to these questions, BUT you've engaged a lawyer and, either through payment from you or a percentage of any settlement, he's being paid to be the knowledgeable and authoritative source for answers to these questions.  If he can't answer these questions to your complete satisfaction, you need to seek out other counsel.

 

This goes doubly for anything I add to this post (!) ...

 

If you and the credit union executed an agreement that absolved you of any further liability upon the agreed payment then, at minimum, you have the ammunition with which you and your lawyer can go to court and get a judge to order satisfaction of the agreement and invalidation of the sale to the CA that purchased the debt.

 

To me, the "lay of the land" is that simple. 

 

The CRA dispute is a separate matter.  Unless a CRA is provided with counter substantive evidence of account history/status by a source outside of the credit reporter, the CRA is within its rights to report the information that a credit reporter provides in response to a credit dispute by an account holder.

 

So, if you merely asserted that certain data was incorrect and that it should report in an alternate matter, without providing statements/cancelled checks/or whatever that substantively backs up your dispute, then I'm not sure what action you can bring against any CRA.  On the other hand, if you provided sufficient evidence that a court would accept it as reasonable challenge to the reporting, and the CRA failed to require the credit reporter to reconcile their reporting with those records, then the CRA could be liable for damages under the FCRA (and there's a notable case where such an finding was made against TU).

 

Has the CU put themselves at risk to a breach of contract suit, and if so, what remedy/damages are appropriate?  I'll leave that to your lawyer.

As of now, the 2 new collection agencies I am dealing with haven't reported anything to the credit bureaus. That's not an issue YET.

 

As for the account that is currently reporting on my credit, the credit union agreed to delete as part of the agreement and the credit bureau agreed to delete it as part of my deal with them. So one way or another, it should be gone from my report soon.

 

The main issue here is that the credit union cashed my settlement payment, agreed to the terms, and then sold the debt afterwards. The agreement expressly states that my payment satisfies the debt in full, the credit union will not assign or sell the debt, the credit union has the sole authority in all matters relating to the account, and that the credit union will cease all collection activity. So we definitely have them on breach of contract.

 

I also confirmed with my bank today that the credit union cashed the certified check a full 7 days before they sold the debt.

 

Really, the question here is what can I do to get the best outcome. TBH, I should be getting some money back from the credit union after all this and maybe even some money from the 2 debt collectors. I am hoping that the email my lawyer sent will convince them to cooperate without us having to sue them. However, I worry that they will just make excuses.

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1 hour ago, RehabbingANDBlabbing said:

Really, the question here is what can I do to get the best outcome. TBH, I should be getting some money back from the credit union after all this and maybe even some money from the 2 debt collectors. I am hoping that the email my lawyer sent will convince them to cooperate without us having to sue them. However, I worry that they will just make excuses.

 

So again, stressing (I ANAL ... "I am not a lawyer"):  A breach of contract suit generally seeks two things:  satisfaction of the agreement that was breached (if possible), and remuneration for any damages suffered as a consequence of the breach.

 

Potentially, a judge might see as adequate remedy the measures that I suggested as a minimum:  enforcement of the CU agreement and nullification of the sale of the account to a CA (which, in turn, would void their possession of a collection claim).

 

I won't speculate about possible damages that you might sue for, leaving that to your lawyer.

 

If I were the injured party involved, I would do exactly as you seem to suggest and that is persuade the CU the correct their erroneous behavior without further action, additionally agreeing to instruct the CRA's to remove all relevant reporting as erroneous.  I wouldn't be looking for additional settlement from them so long as they agree to, and perform, "with all deliberate speed".

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2 hours ago, hdporter said:

 

So again, stressing (I ANAL ... "I am not a lawyer"):  A breach of contract suit generally seeks two things:  satisfaction of the agreement that was breached (if possible), and remuneration for any damages suffered as a consequence of the breach.

 

Potentially, a judge might see as adequate remedy the measures that I suggested as a minimum:  enforcement of the CU agreement and nullification of the sale of the account to a CA (which, in turn, would void their possession of a collection claim).

 

I won't speculate about possible damages that you might sue for, leaving that to your lawyer.

 

If I were the injured party involved, I would do exactly as you seem to suggest and that is persuade the CU the correct their erroneous behavior without further action, additionally agreeing to instruct the CRA's to remove all relevant reporting as erroneous.  I wouldn't be looking for additional settlement from them so long as they agree to, and perform, "with all deliberate speed".

Thank you for your detailed responses, @hdporter!!!! I think you're right. I really just want to get the CU to perform the agreement as originally setup. I don't need a bunch of other litigation that will drag on for months and months. It has already taken since the beginning of 2020 to get to this point. And I will not venture a guess as to how damages would be calculated in a breach of contract suit....

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Ask the credit union for a letter confirming that the card was paid off and has a zero balance. Forward it to the CA and CRA and alert them the claim was satisfied. I'm hesitant to suggest sending the CA a settle agreement as giving additional information, including if it was assigned prior to settlement date just creates new layers of chaos. If the CAs continue collection activities after that, sue the CA and CRA again. A JDB claims as assignee and stands in the original creditor's shoes. If there was a problem with the sale that is between the credit union and the JDB. The settlement extinguished any assignee's claim. As it stands, you can sue the credit union for breach of contract and sue for specific performance of the settlement agreement.

Edited by CreditCurious20

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17 hours ago, RehabbingANDBlabbing said:

The questions I am left with at this point are:

 

1. Can the credit union recall the sold debt? I was under the impression that they could not.

2. Can the 2 collectors actually collect on this debt? If it was illegally sold to being with, then I don't think it would be legal under the FDCPA.

3. How much should I ask the credit union to pay me? This will depend on if they can recall the debt. At a minimum, I think they should give me back all of my money I paid them. But maybe I should ask for more?

4. Should I sue the credit union for breach of contract? Let's say they are not cooperative.

 

1) Recall?  No.  But that does not preclude them from REPURCHASING the paper (if it was actually sold).  After all...remember- transferred/sold CAN be interpreted as a placement instead of sale.

 

2) Keeping in mind the above in #1, there is nothing to preclude placement with more than one entity.  However, another thing to look at and that cannot be ruled out with the limited information in the first post is that this could be a subsidiary type of situation where one of the pulls is the entity who acquired the paper and then immediately placed it with someone under their umbrella.  It could ALSO be the collection equivalent of a sign and trade deal seen in sports...entity acquired the paper and immediately flipped it as part of a larger portfolio.

 

3) Amount would depend on how it actually reports on paper reports from the four major bureaus.  What has been paid is likely a sunk cost that you then argue as your action in good faith (that had followed the previous actions in bad faith vis-a-vis the original default).  Damages are going to be driven by the actual harm you can demonstrate.

 

4) You have a signed Agreement which I hope was carefully crafted to ensure that it was not inconsistent with your earlier Agreements vis-a-vis the credit vehicle.  As it was in litigation, your attorney would be better suited to advise as to the processes for a Motion to Enforce in your jurisdiction as opposed to a commencement of a new action...

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16 hours ago, RehabbingANDBlabbing said:

The main issue here is that the credit union cashed my settlement payment, agreed to the terms, and then sold the debt afterwards. The agreement expressly states that my payment satisfies the debt in full, the credit union will not assign or sell the debt, the credit union has the sole authority in all matters relating to the account, and that the credit union will cease all collection activity. So we definitely have them on breach of contract.

 

 

You will need to demonstrate that the sale had not actually occurred PRIOR to your handing over of payment.  If the sale was IN PROCESS as the Agreement was being hammered out, it certainly shows incompetence, but not necessarily acting in bad faith.  You and your counsel HAVE to connect all of the dots.  DO NOT proceed without being able to conclusively PROVE UP each and every allegation advanced...

 

Remember, even in criminal court, allegations STILL have to be proven up.  Case in point- Michael Jackson.  Second case in point- OJ.  We are also about to see a series of similar situations in locales around the United States because of States having rushed to appease certain groups and, as a result, overcharging.  In civil case, it is NOT enough to say someone is a sonofa*Admin and our Terms of Service prohibit profanity*- you STILL have to connect the dots to allow the preponderance of the evidence to allow the fact finder to know that the someone is, in fact, a sonofa*Admin and our Terms of Service prohibit profanity*.

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As for the credit bureau, we reached a deal right about the same time all of this happened. I am currently waiting on their agreement and check. 

 

What's this? You cannot collect twice for the same injury. That's called double recovery. In a breach suit, you generally sue for actual damages, which is money out of pocket. Generally speaking, punitive damages do not fall under the breach umbrella unless there is a clause in the contract setting an amount in case of breach.  The nincompoop you hired should have told you this. 

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7 hours ago, legaleagle2012 said:

As for the credit bureau, we reached a deal right about the same time all of this happened. I am currently waiting on their agreement and check. 

 

What's this? You cannot collect twice for the same injury. That's called double recovery. In a breach suit, you generally sue for actual damages, which is money out of pocket. Generally speaking, punitive damages do not fall under the breach umbrella unless there is a clause in the contract setting an amount in case of breach.  The nincompoop you hired should have told you this. 

You misunderstood what is going on. I sued both the credit bureau and credit union for failure to correct my credit report at the beginning of all this. They were both responsible for not fixing my credit report after I disputed the original charge-off showing on my report. All of the breach stuff happened after I signed the agreement with the CU to settle their liability for the FCRA issue. Settling the debt was part of that agreement. The credit bureau's only role in this so far has been to settle their liability for the original inaccurate credit reporting/failure to investigate.

 

Now, because the credit union didn't follow the agreement, I have to deal with a debt buyer and a contingency debt collection agency collecting on a debt I don't owe anymore. I also have to deal with the credit union breaching the agreement. Nothing has popped up on my credit reports yet for the debt buyer/collection agency, so I will deal with that once it arises.

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What was the check for? The one you said you were waiting for. The other side (CU) is probably going to argue that you have already been compensated (at least in part) for the mistake. The only thing that is unclear is what happened to the money you originally paid them. Did they refund you?

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16 hours ago, legaleagle2012 said:

What was the check for? The one you said you were waiting for. The other side (CU) is probably going to argue that you have already been compensated (at least in part) for the mistake. The only thing that is unclear is what happened to the money you originally paid them. Did they refund you?

So the credit union got back to us yesterday. The debt was sold due to a technical error on their end. They did not elaborate, but I will assume they are selling debts based on a certain timeframe or through an automated process.

 

Anyway, they immediately purchased the debt back from the collection agency they sold it to and said the original account would be deleted from my credit report once it updates into their computers.

 

As of now, it looks like I won't have to pursue anything against the debt buyer or the contingency debt collection agency. They should leave me alone now that the debt went back to the credit union. I am glad I don't have to deal with months' worth of more of this. While I came highly prepared, it is a tedious, time consuming endeavor.

 

To address the other topic of double injury, the original problem is that I disputed the original charge off with both the credit bureau and with the credit union multiple times. Neither party corrected or deleted the account. We sued both parties at the same time, but for different reasons. It is my understanding that the actions of both parties were separate injuries they way we pursued this. The credit bureau kept parroting the creditor, even though the inaccuracies were so blatant that any real investigation would have gotten the account deleted. The credit union kept bad records, which is what they relied upon to furnish the inaccurate information. But they also failed to investigate my disputes or address any of the inaccuracies when I wrote directly to them. They violated different sections of the FCRA and state law at different times, even though this was all about the same account.

 

Ultimately, I just wanted the debt settled and my credit report fixed. I didn't technically collect anything from the credit union. I paid them to settle the debt for about $11k less than the original balance. The credit bureau agreed to settle only after the credit union settled their part of the lawsuit. In fact, the credit bureau scoffed at doing anything before we settled with the credit union.

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Final update to this thread:

 

The credit union deleted the account from my report on Friday. It's amazing how quickly they moved once they realized how badly they messed up. I am so glad they just fixed all of this instead of making me sue them again.

 

Interestingly, my FICO for that particular bureau did not change. It was 659 before the deletion and 659 afterwards. I did see an initial bump of about 22 points when the account reported a $0 balance (right after the mistakenly sold the debt), and I think that's all the increase I am going to see out of it for the time being. I guess it is true what they say about paid charged off accounts not affecting your score after a certain amount of time. 

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2 hours ago, RehabbingANDBlabbing said:

I guess it is true what they say about paid charged off accounts not affecting your score after a certain amount of time. 

Not really. But when you have other derogs, removing one old one usually doesn't have any positive effect. 

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4 hours ago, RehabbingANDBlabbing said:

I guess it is true what they say about paid charged off accounts not affecting your score after a certain amount of time. 

 

3 hours ago, shifter said:

Not really. But when you have other derogs, removing one old one usually doesn't have any positive effect. 

 

Just to keep a new factoid on the radar, under FICO 9, once a charge off or collection is recorded as "PAID", it no longer has a negative impact on your credit score.  ("Oh, blessed day ...")

 

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4 hours ago, shifter said:

Not really. But when you have other derogs, removing one old one usually doesn't have any positive effect. 

I think the main two factors now that are keeping my score down is the mere presence of the 4 paid charge-offs and late payments as well as the fact that the fifth one is unpaid has a balance that is actively affecting my utilization.

 

For example, when I got the final negative account deleted from TU, my score went from being in the 690s into the high 700s. Just having one negative item made that big of a difference.

 

I am going to continue my dispute process for now, until I get the check from the credit bureau.

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