Reporting question(s)

[funkiehouse]

Can a company that bought a CO debt from the original creditor also report the trade line as a CO if they sold the debt to another company? Or can they even report a CO in the first place, if they bought (acquired) the debt, meaning that they are now a debt collector? From my understanding only an OC can report a charge off. If that's correct, what section of the FRCA would it violate by reporting it as such, if any? Or is there a better violation in the FDCPA that would cover the reporting of a CO? I've been reading but haven't really found anything that is clear. Any sections you could direct me to would be helpful.

 

Here's more info if your wondering what the heck I'm talking about. I'm preparing my CFPB complaint.

 

http://creditboards.com/forums/index.php?showtopic=520530&hl=

 

Thanks

 

 

[Sandscrit]

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

[funkiehouse]

In my case I believe Capital One cannot be/act as the OC because they are reporting the debt after it was charged off and sold by HSBC, which occurred a year before Cap One came along. Since it was charged off and sold to a third party, in my case Portfolio, Cap One should not be able to report it as a loss to Cap One because they assumed no liability from my accounts. Cap One is verifying a debt that they don't and have never owned. I can understand how the accounts could be reported by HSBC but not reported and verified by Cap one.

 

The reason I say they may be subject to the FDCPA is because they bought the debt after it was charged off. After looking at the dates a little closer from some papers I found this evening, it looks like my argument above may be more relevant (if useful at all) than the FDCPA argument just because it was CO and sold before Cap One bought HSBC. If the account had been CO but not sold I think the FDCPA argument would have more merit.

 

I'm no legal expert by any means but this is a excerpt from a letter drafted by the FTC quoting Kimber Vs. Federal Financial Corp. which was what I was partially basing my argument from:

 

At least one court has considered this issue and we find its reasoning persuasive. In that case, the court analyzed the Act's construction, particularly its definitions of a "creditor" and a "debt collector," and the relationship between these two definitions. First, the court noted that Section 803(4) defines a "creditor" as any person who "extends credit creating a debt or to whom a debt is owed" but does not include those who "receive an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." The court suggested that the first part of the definition defines generally "the universe of creditors" while the second part, the assignee exception, excludes from that universe "those persons who collect assigned or transferred debts that are already in default when assigned or transferred. The court opined that interpreting the second part or the definition as applying only to those who collect debts for others would "render the exception superfluous and meaningless.

The court applied a similar reasoning to the phrase "owed or due another" in the Act's definition of a debt collector. The court reasoned that the first part of Section 803(4) defines the universe of creditors as those who collect debts for themselves, and that Section 803(6)(A) then excludes these creditors from the general definition of a debt collector. It then concluded that "[t]here would be no need to exclude creditors -- those who-collect-debts' for themselves -- from the general definition of debt collector unless that general definition included those who collect debts for themselves.

The court then held that the Act applies to a corporation collecting its own debts if that corporation regularly collects debts, is engaged principally in debt collection, and collects debts that were "already in default when they were assigned to the corporation.

Those who collect debts for others are not in the original definitional universe, and there is therefore no need to exclude them. Rather, the excluding factors in the exception are that the debts are the result of an assignment or transfer and that the debts were already in default at the time of assignment or transfer. With the phrase "for another" at the end of the exception, Congress merely intended that the debts should have originally belonged to another."

http://www.ftc.gov/os/statutes/fdcpa/letters/klayman.htm

Edited December 6, 2013 by funkiehouse

[Sandscrit]

The chain of custody from HSBC to Capitol One is unassailable. Capitol One is still considered the origional creditor because of the FDIC. The FDCPA does not apply to the banking industry or it's in house collections.

[cv91915]

I wonder if the cardholder agreements have ISAOA language...

[funkiehouse]

I think this is a copy of the agreement, although I'm not 100% sure on that, but doesn't seem very useful in this case.

 

http://www.4shared.com/web/preview/doc/lhAZu7WC

[ICANHASMUNY?]

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

 

Yes it does. Any Bank who purchases a debt in default is subject to the FDCPA

 

the rules you cite are only if the account was in good standing and current when purchased.

[funkiehouse]

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

 

Yes it does. Any Bank who purchases a debt in default is subject to the FDCPA

 

the rules you cite are only if the account was in good standing and current when purchased.

 

This was my understanding too.

[funkiehouse]

I was going to use a FDCPA violation as an argument because they reported without sending a notice that they were attempting to collect a debt. BUT, as I mentioned before I'm not sure if my argument that the debt was sold to Portfolio a year before HSBC was bought by Cap one is a better approach OR potentially use both argument and let the CFPB decide if there is any merit to either. I have been looking for info about whether Cap one could actually report a debt that was already sold to someone before a merger but I have found nothing so far.

[mindcrime]

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

 

Yes it does. Any Bank who purchases a debt in default is subject to the FDCPA

 

the rules you cite are only if the account was in good standing and current when purchased.

 

Ohhhhhhh....this changes things !

[funkiehouse]

 

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

 

Yes it does. Any Bank who purchases a debt in default is subject to the FDCPA

 

the rules you cite are only if the account was in good standing and current when purchased.

 

Ohhhhhhh....this changes things !

 

Yeah, the kicker is whether or not it was already charged off and/or sold and when.

[mindcrime]

C1 bought in mid 2012, right?

[funkiehouse]

C1 bought in mid 2012, right?

From what I could find on the interwebs it was May 1, 2012

[funkiehouse]

I was trying to clear this up with the EO but not with either of these arguments, and no luck. I think I will prepare my CFPB this weekend.

[funkiehouse]

Hang with me as I try and figure out what I'm trying to say here. I know about the FDIC but I'm not very familiar in the role they play other than insuring banking deposits because of the great depression fiasco. What exactly would be the FDIC's role in this? I guess I'm asking how they would play a part in the debt bought or does it just concern the merger rules, guidelines or whatever it should be called? Does the FDIC also insure banks who issue credit cards from consumer default and charge off? Do they make the bank whole after a write-off/charge-off?

Edited December 6, 2013 by funkiehouse

[walterg55]

The more likely regulator is the Office of the Comptroller (occ.gov)

[funkiehouse]

The more likely regulator is the Office of the Comptroller (occ.gov)

Makes sense. I was just curious is the FDIC played a role in making a company whole after a charge off. Or maybe that's done through tax write-offs??? This type of stuff is out of my league.

[creditkingpin]

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

[creditkingpin]

In my case I believe Capital One cannot be/act as the OC because they are reporting the debt after it was charged off and sold by HSBC, which occurred a year before Cap One came along. Since it was charged off and sold to a third party, in my case Portfolio, Cap One should not be able to report it as a loss to Cap One because they assumed no liability from my accounts. Cap One is verifying a debt that they don't and have never owned. I can understand how the accounts could be reported by HSBC but not reported and verified by Cap one.

 

The reason I say they may be subject to the FDCPA is because they bought the debt after it was charged off. After looking at the dates a little closer from some papers I found this evening, it looks like my argument above may be more relevant (if useful at all) than the FDCPA argument just because it was CO and sold before Cap One bought HSBC. If the account had been CO but not sold I think the FDCPA argument would have more merit.

 

I'm no legal expert by any means but this is a excerpt from a letter drafted by the FTC quoting Kimber Vs. Federal Financial Corp. which was what I was partially basing my argument from:

 

At least one court has considered this issue and we find its reasoning persuasive. In that case, the court analyzed the Act's construction, particularly its definitions of a "creditor" and a "debt collector," and the relationship between these two definitions. First, the court noted that Section 803(4) defines a "creditor" as any person who "extends credit creating a debt or to whom a debt is owed" but does not include those who "receive an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another." The court suggested that the first part of the definition defines generally "the universe of creditors" while the second part, the assignee exception, excludes from that universe "those persons who collect assigned or transferred debts that are already in default when assigned or transferred. The court opined that interpreting the second part or the definition as applying only to those who collect debts for others would "render the exception superfluous and meaningless.

The court applied a similar reasoning to the phrase "owed or due another" in the Act's definition of a debt collector. The court reasoned that the first part of Section 803(4) defines the universe of creditors as those who collect debts for themselves, and that Section 803(6)(A) then excludes these creditors from the general definition of a debt collector. It then concluded that "[t]here would be no need to exclude creditors -- those who-collect-debts' for themselves -- from the general definition of debt collector unless that general definition included those who collect debts for themselves.

The court then held that the Act applies to a corporation collecting its own debts if that corporation regularly collects debts, is engaged principally in debt collection, and collects debts that were "already in default when they were assigned to the corporation.

Those who collect debts for others are not in the original definitional universe, and there is therefore no need to exclude them. Rather, the excluding factors in the exception are that the debts are the result of an assignment or transfer and that the debts were already in default at the time of assignment or transfer. With the phrase "for another" at the end of the exception, Congress merely intended that the debts should have originally belonged to another."

http://www.ftc.gov/os/statutes/fdcpa/letters/klayman.htm

 

You've articulated my thinking on this perfectly!

[funkiehouse]

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

 

Anyone feel like reading??

http://www.occ.gov/news-issuances/news-releases/2011/2011-138a.pdf

[funkiehouse]

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

 

I believe they just purchased their U.S. credit card business. I don't believe HSBC actually operated as a bank in the U.S. like say a community bank. I could easily be wrong about this too. I think if they operate 2 or more branches that you can deposit money into that would then consider them an actually bank. I think I read something along these lines but again don't take this as fact.

[creditkingpin]

 

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

 

I believe they just purchased their U.S. credit card business. I don't believe HSBC actually operated as a bank in the U.S. like say a community bank. I could easily be wrong about this too. I think if they operate 2 or more branches that you can deposit money into that would then consider them an actually bank. I think I read something along these lines but again don't take this as fact.

 

What I mean is did Capital buy a division of HSBC or did they just acquire their card accounts? Sort of like Google buying Motorola Mobility a previous subsidiary to Motorola.

[creditkingpin]

 

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

 

Anyone feel like reading??

http://www.occ.gov/news-issuances/news-releases/2011/2011-138a.pdf

 

oh... seems like my answer might be in this document

[funkiehouse]

 

 

 

Cap One bought HSBC;therefore, Cap One is the successor in interest from HSBC as a bank. Since Cap One is not a collection agency, they are now the OC. The FDCPA does not apply to them.

Did they buy the portfolio of credit card accounts or the entire company HSBC bank because I think that would be the lynch pin to this question. They would only be the original creditor if they still extended credit to the active customers who's account they now own? Is their any situations similar to this?

 

Anyone feel like reading??

http://www.occ.gov/news-issuances/news-releases/2011/2011-138a.pdf

 

oh... seems like my answer might be in this document

 

My luck it would be on the last page after reading the whole thing

[creditkingpin]

So, I think they would still be considered a creditor because it does state that HSBC sold all their assets and liabilities to Capital One through the merger of HSBC subsidiarity; HSBC Finance Corporation, HSBC USA Inc. and HSBC Technology. But still I wonder if they have rights to maintain credit files charged off beforehand because at the time it was not a asset of liability of HSBC due the the fact that they sold the account.

Edited December 6, 2013 by creditkingpin