Why debt collectors hate marking your account as disputed on your credit report
Why do debt collectors absolutely hate marking your account as “disputed” on your credit report?
In this article, we will discuss what this means, why they hate doing it, and what you can do when they violate the law.
What does it mean to mark an account as “disputed”?
This does not have to be specific. The dispute can simply be “I dispute owing any debt with your company.”
Assuming it is a debt that is covered by the FDCPA, that debt collector must show that you, the consumer, have disputed the debt when it updates your credit report.
Typically, collectors update your report once per month.
Why do debt collectors hate doing this?
A lot of the scoring models such as FICO, the most predominant credit scoring model, will usually just ignore a disputed collection account.
They understand that there are so many errors with collection accounts and that collection accounts are devastating to your credit score.
This could be something you absolutely do not owe and only shows on your report because the debt collectors are incompetent.
For these reasons, a lot of the scoring models just ignore the disputed account and do not count it as part of your score.
If you are going through underwriting for an auto loan or a mortgage, they may be looking beyond the score to see if you qualify and may still ask about the account.
Marking an account as disputed takes away the debt collector’s leverage.
In other words, you’ve got this collection account that has just tanked your score even if you don’t owe it.
You may call and pay just to get this off your account.
Debt collectors know this.
We’ve had debt collectors say that the person didn’t own the account, but knew they would pay whatever the amount was just to get it off their report so they could get their mortgage, car loan, etc.
It is extortion.
What can you do if they break the law?
Look at your credit reports.
Look at the date the report was last updated.
For instance, you send a dispute letter and they receive it by certified mail on September 1st.
On September 20th they update your credit report, but the account does not show that as disputed.
This is a problem for the debt collector.
Particularly if you go more than one cycle without your account marked as disputed.
If the FDCPA applies to this debt, then I would definitely look at suing that debt collector for violating the FDCPA.
When debt collectors refuse to mark your account as disputed, they violate the FDCPA.
The collector may be violating several parts of the FDCPA.
Specifically, in this example, they would be violating section 1692e(8).
We have a series of videos on our Youtube channel which takes an in-depth look at the FDCPA. Each of the sections deals with a specific way the debt collectors may be violating the law.
1692e specifically deals with conduct that is misleading or deceptive. In the subsections, we are given examples of how the collector may be violating the law.
E(8) specifically states that if a debt collector does not mark an account as disputed, this is a violation of the law and you can sue the collector for this violation.
We have filed many lawsuits for these violations. These are not big lawsuits, assuming the debt collector has the good sense to go “ you caught me, I’ll pay some money.”
They can settle for relatively modest amounts of money, maybe $5,000 to $10,000.
Personally, my rule is that the debt collector must delete the debt from the credit report and they have to pay money to my client.
If they want to be foolish and fight this they may end up with $100,000 attorney’s fees tacked on to this.
Usually, these companies are pretty smart and realize when they get caught.
They just want to pay some money and make this go away.
It is worth your time to look into this.
Here are my suggestions for you:
Make sure that you can clearly and absolutely document that you did dispute this debt. Double and triple check the account number.
Say that you dispute any and every debt they have with you.
You want to be able to show that you disputed the debt, the exact date and time you disputed it, then show that your credit report was updated and not marked as disputed.
Have the lawyer look at your situation to make absolutely sure you can prove that you disputed, after your dispute the account was not marked as disputed, and that you can now sue for money damages.
Abusive debt collectors should be held accountable.
The more people that take action against these abusive debt collectors, eventually it will get through the heads of these debt collectors and all those running the numbers will realize it will cost them more to disobey the law.
This is where change will happen.
Know your rights.
Hold them accountable.
If you live in Alabama, you are welcome to call us at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly.
Thanks for reading, and have a great day!