Demand for payment on already-paid-off credit card

July 6, 2006 11:49 PM

SketchyDebtCollectionsFilter: Someone calling and demanding payment on a credit card that was paid off and cancelled in 2002. Fraud? Error? What can be done?

Asking for a friend who wanted to remain anonymous. Their words follow:
Someone left a message for me today about an "overdue Mastercard" -- a "Very Serious Matter" that I needed to get back to him about immediately. I called the 800 number he left and spoke to him, at which point he brought up a Visa account I'd paid off and closed in 2002 to the best of my knowledge. I had a bad run in with credit card debt and international life and not getting mail back in the first two years of this century, but in 2002 I paid off and closed nearly all my accounts. This man wanted proof. I wasn't sure I could find any, but what I seem to have found in my credit history on my three free reports gotten tonight is that two of them say the account is open and in good standing and last reported in 2001 and the third says the account was charged off in 2002. If the account was charged off in 2002 did I not pay it? Is this guy legit or a scammer (he does not appear to be with the company the card was issued by, but he does know my old card number)? If the account was charged off in 2002 will this all disappear in 2009? What should I do?

posted by moss to work & money (16 comments total)

Any info on who the caller actually was? What company was he representing?
posted by slater at 12:12 AM on July 7, 2006

Either sounds like a scam, or a collection agency bought some old and possibly inaccurate accounts from the issuing bank. Call the issuing bank and get the real scoop. I'm sure if there is/was an outstanding balance, they'd love to tell you about it. Also, ask about their policies with regard to collection agencies -- as in, do they do it at all, when do they do it, etc.

It's possible you paid off the card, but the timing of the payment wasn't quite right and you accidentally left behind a small balance which quietly racked up finance and service charges.

Don't fret too much. And don't give this person any money based on a phone call and a demand for payment. The worst that can happen is the collection agency places a ding on your credit report, which can be appropriately dealt with via the credit bureau's normal means of diputing reports.
posted by frogan at 12:13 AM on July 7, 2006

An Outcry Rises as Debt Collectors Play Rough (NYT)
posted by potsmokinghippieoverlord at 12:17 AM on July 7, 2006

Why not just call the card issuer, and ask them directly? If your account was never closed properly, they will be able to tell you. Ask what the last activity was on the card.
posted by antifuse at 2:33 AM on July 7, 2006

If he's demanding money, then surely the burden of proof is on him? Refuse to pay anything unless they provide written proof that you owe them money. If he can't produce it, he's scamming you.
posted by talitha_kumi at 3:11 AM on July 7, 2006

Just tell them not to call any more, flat out.

By law, a notification via mail requires them to cease harassing you. Generally they'll respond to the phone request though.
posted by jellicle at 3:49 AM on July 7, 2006

The term "charge off" does not mean the account was paid in full by the card holder. It means that the company wrote the debt off as uncollectable (but still is still able by law to try to collect the funds. Go figure.) I'm not saying your friend did not pay the debt, as there may certainly be an error, but it does need some attention by your friend.
posted by thebrokedown at 5:14 AM on July 7, 2006

Oh, and Talitha, you'd think the burden would be on the them, but a credit card company or collection agency doesn't really care, in the grand scheme. If there is an error, it is the consumer who ends up with the credit dings. It doesn't pay to ignore either your real debt or these errors.
posted by thebrokedown at 5:17 AM on July 7, 2006

thebrokedown is correct about what a charge-off is. He/She is also correct that the burden of proof is on you, the consumer.

The first thing I'd do is verify the claim by filing a dispute the the credit bureau that claims you have a charge-off. The dispute process takes anywhere from 2-8 weeks and you may as well get the ball rolling. Disputing something doesn't mean you'll win, but it definitely forces the bureau to find proof of the claim.

The second thing I'd do is call the credit card company. If two other reports claim that the account is open and good standing, perhaps the third report is incorrect. OTOH, perhaps the first two didn't do their due diligence and will soon update their files with the charge-off. You won't know until you call the credit card.

Normal disclaimers: Never give anyone that calls you your SS#, DOB, etc. Tell them to send you a notice in writing that claims that you owe them this money. The cease-and-desist work well if they're harassing you (4-6 calls a day), but if it's just once a day or once a week, I would let it go. You want to clear this up ASAP and writing a C&D would only slow the communications process down.
posted by SeizeTheDay at 5:42 AM on July 7, 2006

Don't give them *ANY* information or even acknowledge the debt could be yours. That can open the door to new collection activity.

Basically, tell the guy to go sodomize himself and put the phone down. Then call the CC company up directly.

It's up to the collection agency to provide proof. If they won't, and keep calling you, lawyer up and go after them. Record everything and let them know you're recording. Easy $1,000 per violation.
posted by drstein at 5:46 AM on July 7, 2006

Refuse to pay anything unless they provide written proof that you owe them money.

It's up to the collection agency to provide proof.

Both correct. Ask for documentation first. If they do provide something, then it's up to you to provide cancelled checks or whatever to show that it was paid.

You'd pretty much need to go through those steps and establish where everything really sits before you could take it to the FTC, your state's commerce dept., attorney general's office, etc.

Bear in mind: C&D does not stop the collections process, it only stops phone calls/letters. Everything could be quiet for weeks, then suddenly you have a civil court summons. You don't want that.
posted by gimonca at 5:55 AM on July 7, 2006

I had a similar situation come up a few years ago - being harrassed by bill collectors for something that I didn't owe.

The 4 words you need to know when dealing with debt collectors: "Put it in writing". Basically, don't deal with them over the phone. Tell them to put their request/demand in writing, say NOTHING else no matter what they try to bait you into saying, and hang up the phone. You don't want to deal with these people over the phone, because they have a HUGE advantage over you there: They're recording every word of the conversation, and you're almost certainly not. The recordings made can be used against you in future legal proceedings, which is where the disadvantage comes in.

By making them put everything in writing, it makes it much easier for you to document their claims/threats/promises. Also, bill collectors have a set of time-honored word games they like to play over the phone, to trick people into making a verbal agreement to pay - this, in a court of law, can be used against you, and it can also be used to reset the statute of limitations clock, giving them another 6 years (in most US states) to call and demand payment.

Oh, read up on the Fair Debt Collection Practices Act. If they cross the line, turn the tables on them and get your own lawyer.

Also, 30 days after their initial written contract, you have the right to request verification of the debt - I think this is probably important, since you don't think you owe this money. Contrary to a suggestion made up the thread, since debt collection IS a legal proceeding, it's up to the creditor to prove you owe the money - the burden of proof is on them, not you. That having been said, any statements/cancelled checks you have can only work in your favor - start looking for and organizing them now.

Good luck - these people can be a bit overzealous in their duties, and dealing with one is NEVER easy.
posted by deadmessenger at 6:02 AM on July 7, 2006

Have you ordered your free annual credit report yet? That should shed some light on the matter.
posted by croutonsupafreak at 6:48 AM on July 7, 2006

Ask for information in writing. Contact the bank. Charge-off generally means you didn't pay it (although it can show that if you negotiated a settlement for less than the debt; this still means they can't come back later to try to collect it), if that is correctly reported (a big if, considering how awful credit reporting agencies and their providers of information are).

If it's not your debt and you tell them that, and they can't provide you with proof that it is your debt or they just keep harassing you anyway, it's lawyer time. Go to one who's familiar with prosecuting FDCPA and FCRA actions.

This is, by the way, the type of law I practice, but I am not your lawyer.
posted by norm at 11:13 AM on July 7, 2006

For someone who supposedly deals with consumer debt in a law practice that's a horrible definition of a charge-off and muddles up several other aspects.

A charge-off is an accounting term and it represents the fact that the lender has to take it off their balance sheets by the time (but at their discretion they may do so sooner) than 180 days after it is in arrears. If you pay them in full on the 181st day (or the 1810th day) it's still a charge-off, it's just a PAID charge-off.

Also unclear from your statement, a partial or full settlement can happen w/o a charge-off situation - the two have nothing to do with each other.

A settlement for less than the full amount may or may not result in the remaining debt being discharged - not all agreements include forgiveness. You're presumably in a better position to know how successful people are in fighting it off, but it's a define fact that lenders have sold off the uncollected remainder amount from settlements and junk-debt buyers have initiated collection proceedings based on them.

Folks who have stated that your friend must not acknowledging the debt as his/hers and accurate are correct. Doing so, particularly in writing but possibly verbally, can leave your friend in a very bad position.

Folks who have mentioned requesting that the collector cease and desist all contact are giving you bad advice. If you do that you leave them no choice but to drop the matter or file suit. If they think they have a good case (meaning they can win, not that their evidence/position is necessarily great) they're going to file suit. Your friend may want this to happen eventually but not necessarily now.

What your friend really wants to do is give them a LIMITED C&D and demand that all future contact from them be in writing. Make this statement clear and HANG UP. If they call back make sure to note the time and record it if at all possible (local laws re: wiretapping etc etc etc, do your own googling) - they're now violating FDCPA and this is good ammo for your negotiations if they have a leg to stand on and a good moneymaker if they don't.

Your friend needs to make sure to demand VALIDATION of the debt (assuming this is not the original creditor, who is under no obligation to validate), and since you're under the purview of the 9th Circus (assuming your friend is in CA like you) s/he HAS HAS HAS to make the request within 30 days of initial contact. Everywhere else you can request validation at any time (though they don't have to cease collection activity while they do so, as they do if you request in the first 30) but the 9th cir ruled on something and fucked that up for you - if you don't request within 30 days you DON'T GET VALIDATION AT ALL.

A printout with just an amount on it is not validation, despite the claim and the word "Chaudry" they'll throw around with it.

Back to the charge-off issue, and in regards to your friend's last question "If the account was charged off in 2002 will this all disappear in 2009?" A derogatory item on a credit report will go away after 7 years. The existance of an item on the report has NO BEARING ON IF YOU OWE THE DEBT. I talked about collections over here, here and here with the last one discussing at length the difference between a credit report entry and a debt.

Your friend needs to look VERY carefully at when the last payment was made on this account. A quick googling seems to indicate CA has a 4 year statute of limitations on debts and from 2002 to now s/he may be right on the cusp. Start counting from 31 days after the last payment was made on the account. If it's been less than 4 years then s/he is in trouble if they can validate.
posted by phearlez at 2:13 PM on July 7, 2006

Do what phearlez advises. In my experience with similar situations (in Massachusetts), the first step is to immediately mail a letter that includes two instructions — "Please don't contact me at work, and please contact me only via written correspondence at X address" — and some variation of the phrase, "I dispute this debt."
posted by cribcage at 6:20 PM on July 7, 2006