Can My Credit Report Have More Than One Collection for the Same Debt?

Which collector should you pay?

Here's a horror story for you: You let a debt fall delinquent and the creditor sells it to a collection agency. Two years later you pull your credit report and discover not one, not two, but three collection accounts on your credit report for the same debt. Needless to say, your credit scores are in the toilet. This may sound farfetched, but multiple collections are a relatively common result of sheer carelessness.

Just as original creditors eventually sell unpaid debt to debt collectors, collection agencies also sell "uncollectable" debts to other debt collectors. The problem debtors often run into is this: debt collectors, like original creditors, often report their company's accounts to the credit bureaus. This results in a collection tradeline appearing on your credit report.

When the collection agency sells the debt, the new collection agency may also report the debt to the credit bureaus. If the previous debt collector doesn't bother to delete its tradeline from your credit report when it sells the account, your credit report will eventually contain several different collections for the same debt.

Multiple Credit Report Entries for the Same Debt Are Against the Law

It's perfectly normal to have two entries on your credit report for the same debt if those entries are the original creditor's account and the resulting collection account. Any further entries for the same debt are prohibited--even if each tradeline contains different account numbers (which they almost inevitably will). This isn't in the interest of protecting you, but rather in the interest of protecting future creditors.

Your credit scores are based on the most accurate portrayal possible of your past financial history. Multiple collections for the same account deal a devastating blow to your credit scores--making you appear to be a much higher lending risk than you actually are. By ensuring that multiple collection accounts can't appear on your credit report for the same debt, federal regulations protect lenders from making judgment errors that could ultimately affect their profit margins.

Prohibiting multiple collection accounts also protects the collection agency's interests. If you see a plethora of collection accounts on your credit report, you'll probably be confused about whom you should pay. This could lead to you paying off an account with a collection agency that no longer owns the debt. Unfortunately, that payment can "vanish" into thin air. The collection agency that actually owns the debt will continue to demand payment and the collector that actually received the payment may conveniently have no record of receiving it. This cheats both the debt's actual owner and the consumer.

How Long Can These Multiple Collections Stay on Your Credit Report?

Federal law restricts collections to only seven years on your credit report. This seven-year clock begins on the date the debt first falls 180 days' delinquent. This generally coincides with the date that the original creditor charges off the debt and sells it to a collection agency.

All the collection accounts that appear on your credit report for the same debt must fall off when the original creditor's tradeline falls off. This means that some collection accounts may only remain on

After 7 years, all collections must come off.

your credit report for a few years---if that. For example, if a debt collector reports a debt six months before the credit reporting period expires, its tradeline won't stick around for a full seven years. In order to comply with the Fair Credit Reporting Act, the company must delete the tradeline in six months.

Is There Any Way to Remove Multiple Collections for the Same Debt?

I plan on making a more in-depth post about this soon and providing a step-by-step guide to help you get rid of any clone collections. For now, however, just know that you aren't stuck with these tradelines forever. The Fair Credit Reporting Act, which governs credit reporting practices in the U.S., provides you with a dispute process.

You aren't limited to only disputing incorrect information. You can also dispute information that is obsolete, such as multiple collections or accounts that appear on your credit report for longer than the credit reporting period allows. You can dispute via mail, over the phone, or even online. Just be sure that you dispute multiple collections as multiples. If your dispute goes into the system as an accuracy complaint, the collection agencies in question are a lot more likely to validate the accounts and they won't get removed.

Long story short, you aren't alone. It's very common for consumers who've had financial difficulty and ended up with several delinquent debts to discover that their credit reports reflect more than one collection account for the same debt. As tempting as it may be to ignore the hassle, removing any additional collections will help you maintain the best credit scores possible until the credit reporting period expires.

Related Posts:

How Much Do Medical Collections Affect Your Credit Score?

Improving Credit Scores After Collections

Removing Re-Aged Collection Accounts From Your Credit Report

Q&A: NCO Re-aged Collection Debt on Credit Report/International Identity Theft

Lee,

I found your info by googling NCO Collection Agency.

I am a United States citizen living in Canada.  I moved here in Dec. 2002 and would visit home every few months as my parents were both ill and were both deceased in just over three years.  There is a collection account on my credit report that I didn't recognize at first.  I injured myself in the 3rd week of January 2006.  My father died on Jan. 28, 2006 and it honestly slipped my mind.  Quite frankly, it took me until this past April to even remember I had been hurt.  Now, there's this entry that shows NCO "opened" it on Aug. 16, 2007 and a "report" date of May 17, 2009.  To date, I have not been contacted by them. 

I was reading your comment to Lisa dated June 19, 2014 on collectionagencydebt.blogspot where you stated, "If the original default date was more than seven years and 180 days ago this shouldn't be on your credit report at all and you should be able to get it removed as obsolete." and wondered if this also applied in my case. 

Further complicating matters, someone in my hometown has apparently obtained cell phones under my name and social security number and (according to the credit reporting agencies) a mortgage.  It is one of the security questions and when I reply I have "no mortgage", I get an "incorrect answer" and a phone number to call.  My friend is the retired Chief of Police in my hometown and informed me that until I move back home, there is nothing that can be done from here.

Any advice you have to give is appreciated and I thank you for your time.

Sincerely,

Nancy

Nancy,

The seven-year credit reporting period is the same for everyone. so what I told Lisa would also apply to you. Debt collectors generally have to remove their negative tradelines when the original creditor removes its charge-off. Unfortunately, you owe a medical debt, and medical debts don't come with an original creditor. Particularly insidious collection agencies use this to their advantage. The original creditor's report is the yardstick that both you and the credit bureaus can use to determine if a collection is obsolete. Medical debts don't appear on your credit report if they're paid on time, so there is no original account for the debt on your credit report. Without an original creditor account on file, the burden of proof is on you to demonstrate that the collection agency is in error. 

Here's a fun fact for you. The Federal Trade Commission already hit NCO with the largest business fine in history for altering collection accounts dates to ensure they remain on debtors' credit reports far beyond the seven-year limit. The clock on the credit reporting period should start ticking when you stop paying the original creditor--not when the collection agency receives the debt. 

If you dispute this directly with the credit bureaus, NCO will probably verify it as accurate. What you want is some proof that the original debt was incurred in 2006, not 2007. An old medical bill for your injury that notes a late payment and how late the payment is (i.e. 30 days late, 60 days late, etc.) should work just fine. You can also check with your insurance company or the original medical provider for the date of service. The hospital records may not go that far back, but your insurance company might. It can't hurt to try.

Black out any information you don't want to share with NCO on your documents of proof (the details of your injury, for example, are none of their business) and make a photocopy of each item you're using as documentation. Highlight the date. Also print and photocopy the credit report pages from each of your credit reports that reflect the error.

Write NCO a letter stating that the account they are reporting to the credit bureaus is obsolete. Note exactly when you incurred the debt and refer to your medical paperwork as evidence. Point out that you never made any payments on this debt, thus the date of delinquency occurred in 2006, not 2007 and the debt should no longer appear on your credit report. Tell them that re-aging a debt is against the law, and that you have the right to sue (and will exercise this right) if they don't immediately delete this tradeline from your credit report. 

If they don't delete, make photocopies of the same information you sent to NCO and send the proof, along with a letter explaining that this debt is obsolete and must be removed, to each of the credit bureaus whose files reflect the collection. If you want to make absolutely certain that your dispute falls into human hands and doesn't get shuttled into the computer system (the computer system neither acknowledges or analyzes your evidence) write out the letter by hand. Make sure to send both the NCO dispute and all credit bureau disputes via certified mail, return receipt requested. 

I have to wonder though....why does this matter? You're living in Canada. I used to live in Canada. American credit doesn't mean squat over there. Although they have the same credit bureaus, their credit system is based on Social Insurance numbers, not Social Security numbers. You can't pull an American credit report using Canadian credit bureaus. Their system simply isn't set up that way. 

On to the case of identity theft. Identity theft is serious business. Most debts don't follow you to Canada, but if the identity thief racks up enough of it, sooner or later a creditor is going to find you and outsource that debt to a Canadian collection agency which will hunt you down on your home turf in Canada. Don't let this happen. 

You need to file a police report. I think what your policeman friend meant wasn't that you had no course of action to defend yourself but rather you can't fill out an identity theft report with the U.S. police. Go down to your local police station, explain that your identity was stolen and ask to fill out a police report. You can use a Canadian police report the same way you would use an American police report. Use your Canadian police report to file an identity theft complaint with the credit bureaus. 

Make sure to point out that the report was filed in Canada because that it where you're currently living. You don't want the credit bureaus to think that you're a Canadian citizen and dealing with Canadian identity theft concerns yet somehow reported the theft to the wrong bureaus. If that doesn't work (I can't see any reason why it wouldn't unless you keep running into idiots who don't know what they're doing. Believe it or not, the credit bureaus employ scores of these people) Wait until your next trip to the U.S. and fill out a police report about the identity theft there. According to the FTC, you can file a police report either with the police station where you live or the police station where the identity theft occurred. 

You'll also want to place a fraud alert on your American credit reports pronto. The following resource from the Federal Trade Commission should provide you with a detailed guide on exactly what to do when you find out your identity has been stolen: Federal Trade Commission: Identity Theft. 

I'm going to list some numbers for you to call if you run into problems along the way. 

• Federal Trade Commission headquarters: (202) 326-2222
• Experian:  1 (888) 397-3742
• TransUnion Identity Theft Department: (800) 680-7289
• Equifax fraud alert: 1-888-766-0008

If you are financially able, consider contacting a consumer law attorney within the U.S. You can do what's necessary to take care of these issues on your own, but its time consuming and extremely stressful. A good consumer law attorney has extensive experience doing this very thing. In addition, collection agencies and credit bureaus alike take lawsuit threats from an attorney much more seriously than lawsuit threats from the debtor. You also have to consider that this person committed a major fraud by purchasing a house in your name. You would retain the right to file a civil suit against the individual and force them to pay for your attorney. 

I cannot stress this enough: Do NOT ignore this. DO NOT. If this person has gotten a mortgage in your name, she knows that you are living out of the country and plans to simply live as you indefinitely. Someone has to bring her to justice. A fraud this significant can carry jail time and, lets face it, this lady belongs behind bars so that she can't turn around and do this very thing to someone else. 

Best of Luck,
Lee

Can a Doctor or Hospital Send Medical Bills Directly to Collections Without Notifying You?

No matter how careful you are with your finances, a medical emergency can pose a threat to your credit scores. If a doctor or hospital sends your unpaid medical bills to a debt collector, the collection agency is likely to report those debts on your credit report. Unfortunately, the FICO credit scoring formula doesn't discriminate when calculating your credit scores. Any collection over $100 has the same devastating effect on your credit scores (and sometimes collections under $100 can do the same thing depending on the version of FICO your lender pulls) This means that a collection account for an unpaid medical bill can hurt your credit just as much as a collection for a defaulted credit card.

Every mom in the world is quick to point out to their kids that life isn't fair, but the idea that a medical emergency--something you have no control over--can make lenders consider you just as high

Medical debt can go to collections

a risk as someone who just doesn't pay his bills is really and truly unfair. What's even more unfair is the fact that a hospital doesn't have to give you any notification at all before turning your debt over to a collection agency.

Some Medical Bills Go Directly to Collections

Hospitals are accustomed to billing insurance companies. If you don't have insurance (and yes, there are still plenty of people out there without it) the hospital is supposed to bill you directly. Unfortunately, this doesn't always happen. Sometimes billing errors (or pure unadulterated carelessness) result in you not receiving your bills but sometimes, hospitals send your medical bills directly to a collection agency--without even attempting to get payment from you directly.

Why Hospitals Don't Contact You First About Your Bill 

A hospital may send your bill directly to collections for a number of reasons. The primary reason, however, is convenience. To some hospitals, its worth paying the commission to the collection agency to not have to deal with your account. Billing you directly, negotiating the debt and working out a payment plan all require time and resources on the part of the hospital. It's much easier to simply send the bill directly to a collection agency and let debt collectors do all of the work. This is especially true if you have a coinsurance plan. Your coinsurance has already paid

Another reason a doctor or hospital may send your medical bill directly to collections is that this method robs you of the opportunity to dispute the bill. Medical collection agencies often put extreme pressure on you by giving you a set amount of time to pay the debt before they report the account to the credit bureaus. Once the account appears on your credit report, your credit scores suffer. This limited time frame in which to protect your credit scores doesn't give you the time you need to dispute a medical bills you believe is inaccurate--forcing you to choose between fighting for the correct amount or saving your credit scores.

What Can You Do to Prevent Medical Debts Going Directly to Collection Agencies?

Unfortunately, there are no laws requiring doctors and hospitals to notify you first before sending your bills to collections. Doctors and hospitals are original creditors. This means they aren't bound by the Fair Debt Collection Practices Act, which governs the behavior of all third-party debt collectors.

The best way to ensure that your bills are sent to you rather than directly to a debt collector is to contact the doctor or hospital's billing department and ask about their policies. Make sure that your address is correct in their system and ask if you have any outstanding bills. If you do not, call back a week later and ask again. Keep in mind that, according to your insurance provider's policies, doctors and hospitals can wait up to a year after the date of service to bill you or your insurance company, so don't stop checking up on your debt until the billing office is willing to give you a zero balance statement, in writing, for the medical services you received. In the event a collector tries to collect the debt from you in the future, a zero-balance statement from the hospital is your greatest armor against the collection agency and any potential credit damage connected to your previous medical debt.

Related Posts:

Keeping Medical Debt Out of Collections and Off Your Credit Report

Reader Question: Medical Collections Never Sent Bill

Improving Credit Scores After Collections

Improve your credit scores

I keep getting questions from readers wanting to know how to improve their credit scores after collections show up on their credit reports. Because lets face it, paying off the collections doesn't remove them from your credit report nor does it improve your score. So what do you do?

Before I go into any depth here, I want to point something out: This is where I got my start. This is my home turf. Working as an activist for consumer rights against debt collectors came later. Credit – and making it better – is where it all began. Ah, the memories...

Anyway, back to the issue at hand. You have several options.

Option #1: Dispute Paid Collections With the Credit Bureaus

This is a very "maybe" course of action, but if you're working on cleaning up your credit anyway, it's worth a shot. Now, the legality of disputing accurate information is a gray area. I am not advising anyone to dispute accurate information on a credit report. If, however, you discover errors in the collection agency's trade line on your credit report – no matter how minor that error may be – disputing the information is an option.

In most cases, when a person disputes credit information, the credit bureaus contact the information furnisher (in this case, the bill collector) and say, "Hey, is this right?" and the information furnisher says, "Yep, sure is." and its game over for you. Is this ethical? Heck no, but its how the game is played. The advantage you have here is that, once the debt is paid, the collection agency really has no incentive to respond to the credit bureau's inquiry. If they don't respond within 30 days, the trade line vanishes and your credit improves.

Option #2: Pay Down Some Debt

Your credit score (and when I say "credit score" I mean "FICO score" because no other credit score matters) is made up of a variety of different things. One such factor is your debt-to-limit ratio. Some also refer to this as your credit utilization ratio. Basically, this ratio is the balance of how much revolving (credit card and HELOC) debt you owe compared to your limits on those accounts. The larger the gap, the better your credit score will be. For example, a person who has one credit card with a limit of $1000 and only owes $50 is in a lot better shape credit-wise than a person in the same situation who owes $500. If you can afford to pay down some of your credit card or HELOC debt, that will help you quite a bit.

It seems like everywhere I look, I see "experts" telling consumers to keep their credit card debt below 30%. Doing that will provide your credit with some measure of protection, but if you're trying to improve your credit scores, you need to go much lower. Ideally, a person hoping to improve his or her credit should carry a balance between 5% and 9% of the credit limit. It isn't necessary to pay the card or line of credit off each month.

Where did I get that number? Simple. I've spent years using my own credit as the guinea pig for my theories. In my experience, this is the ideal number.

Option #3: Become an Authorized User

This one won't work for everyone, but if you have an immediate family member with great credit and a credit card, its the way to go. Just ask your family member to add you on to his/her credit card account as an authorized user. The card information then appears on your credit report and – provided the primary card holder is an immediate family member – it factors into your scores. You can become an authorized user on any account, but it won't help your scores unless that person is someone whose card the credit bureaus can be reasonably certain you would actually use, like that of a parent or spouse.

Try to avoid secured credit cards if you can, and it should go without saying that you should pay all debts on time. I'd write more here, but I'm falling asleep at my desk...

Related Posts:

What to Do When a Collection Agency Validates Your Debt

Death of the Pay for Delete Agreement

Deleting Collections From Credit Reports With the "One-Two" Punch

Collection Agency Re-aged Derogatory Information On Credit Report

If you're one of the many Americans who are lying low and waiting for old collections to fall off your credit report, you may be in for a nasty shock. Some unethical collection agencies tamper with the dates they report to the credit bureaus. By changing the dates associated with the account, the collection agency can ensure that a derogatory entry remains on your credit report for longer than the law allows. This process is known as "re-aging" and it is illegal.

How Debt Collectors Re-age Debts

You may end up waiting longer than 7 years...

Let's say your original debt was a defaulted credit card debt and you stopped making payments in January of 2005. In June of 2005 – 180 days later – the credit card company assigns your defaulted account to a collection agency and updates your credit report to reflect that the debt you owe was charged off. When the collection agency gets the debt, it adds a new derogatory trade line to your credit report. Now you have both the original creditor's derogatory entry and one from a collection agency.

The Fair Credit Reporting Act dictates that most debts can only remain on your credit report for 7 years and 180 days from the date of first delinquency. The date of first delinquency is the date that your payments to the original creditor were first classified as late.

What many debtors don't realize is that the DOFD applies to all entries for a given debt. Because few creditors send accounts to collection agencies until they are 180 days' delinquent, collection agency entries rarely remain on debtors' credit records for the full 7.5-year period. The absolute latest a collection account should disappear is at the same time as the original creditor's charge-off. In other words, it simply isn't legal for a collection agency to leave derogatory information on your credit report for longer than the original creditor.

SOL and the Credit Reporting Period

Don't confuse the statute of limitations for lawsuits with the credit reporting period's statute of limitations. These are two totally different time frames. The statute of limitations for lawsuits refers to the amount of time a debt collector can legally sue you in your state. Each state has different statutes of limitations. The credit reporting period – 7.5 years – is federally mandated and the same in every state. Generally the statute of limitations for lawsuits expires long before the credit reporting period.

This is covered in more detail here: The Credit Reporting Period vs. the Statute of Limitations

Re-aged Collection Accounts

If you pull your credit report and the original creditor's derogatory information is gone but a collection agency's negative trade line lingers on your report, there's a good change the collector re-aged your debt.

Re-aging sets back the clock on your debt.

When a debt collector re-ages accounts, it reports a date of first delinquency that is much later than the actual DOFD. In the above example, our DOFD was January of 2005. The collection agency gets the account in June of 2005. If the collection agency reports the date of first delinquency as the date it received the account – in June – the derogatory information will remain on your credit report until June of 2012, rather than being removed in January of 2012, as federal law dictates it should be.

Although clearly illegal, this nasty little trick is incredibly common. I see it literally All. The. Time. A collection agency that regularly alters the dates on its accounts could theoretically ensure that a collection account remains on your credit report indefinitely.

What To Do About Re-aged Collection Debts

Removing a re-aged collection account from your credit report is much easier if you have proof to back up your claim of re-aging. This is one reason I recommend that all individuals print out their credit reports from each credit bureau once each year. The dates reflected in the original creditor's trade line prove your claim of re-aging – but that's much harder to do once the original creditor's trade line ages off your account. Most credit card companies don't keep charge-off records longer than 18 months, so getting proof from the original creditor after the fact is difficult, if not impossible.

If you have proof, send it to the credit bureau along with a letter explaining that the collection account is obsolete and should have been deleted, as the 7.5 year period for that particular debt has already passed. Make sure to use the word "obsolete" in your dispute. Disputes are coded and while I won't get into that right now, I will say that you want your dispute to have the "Obsolete" code.

You can also take your re-aging issue up with the collection agency itself. A well-written "I have every right to sue you" letter along with proof of the re-aging is often enough to coerce debt collectors to remove derogatory information from your credit report. Make sure you point out that you want the trade line deleted. Anything less is against federal law.

Death of the Pay for Delete Agreement

Once upon a time, back when the "pay for delete" was still widely available, credit repair was a much easier game to play. Now...not so much.

Don't count on getting your collection account deleted.

Death of the Pay for Delete

Let me explain. For those of you who don't already know, a pay for delete occurs when you pay off a collection and in exchange the collection agency deletes the negative entry from your credit report. The collection agency gets its money and you get better credit. Everybody wins, right? Not exactly.

You see, the credit bureaus have this little hang-up about accuracy. Imagine that. The bigger picture is at stake. The credit bureaus may maintain your credit information, but they make their money selling FICO scores to lenders. FICO scores are supposed to help lenders make financial decisions by accurately predicting your risk of default. A past collection account on your credit report is a great big red flag that practically screams, "Don't trust me! I stopped paying in the past and I'll do it again!" If the collection agencies granted everyone a pay-for-delete, that would skew the FICO's reliability – costing the credit bureaus money in the long run.

(Just for reference, the credit bureaus would really prefer that FICO tank just so they could push their ridiculous VantageScore on lenders, but since VantageScore is also based on your credit information, the same logic applies)

So what do the credit bureaus do? Simple. They lay the smackdown. If the credit bureaus find out that a collection agency has been handing out pay-for-delete agreements to debtors the credit bureau revokes the collector's ability to report debts. That may not sound terrible to you, but its a death sentence to a collection company.

Still Trying to Get Collection Accounts Deleted?

So the scenario goes something like this...you contact the collection agency, make an offer in writing to pay the debt in full in exchange for deletion and sit back and wait with baited breath for the collection agency's response only to receive something along these lines:

Guess who won't play ball?

"We are not authorized to..."

"We cannot alter.."

"Our company does not modify..."

No matter what your form letter says, it can be summed up like this: The credit bureaus don't let us do that. Unfortunately, it usually comes out sounding like "We refuse to help you." This angers you and doesn't help the collection agency either. So you don't pay, the collection agency doesn't make any money, and nobody's happy but the three fat men on the hill (the credit bureaus, who could care less about you and your credit repair efforts).

Prior to the smackdown, pay for deletes were all the rage. Every credit repair forum you visited couldn't say enough about pay for deletes. Everyone had a different method or theory for "duping" the debt collector into accepting the pay for delete agreement. In reality, collection agencies were on board with this. After all, they don't really care if your credit report is accurate either – they just want their money.

Remember, collection agencies still play the game, but for them its a numbers game. Lets look at these two scenarios:

Jane owes $172 to Big Bad Debt Collector for an old cell phone bill she never paid. That $172 debt is really hurting her credit and she'd like to have it removed. Jane's smart enough to know that simply paying it doesn't help her credit one iota, so she writes Big Bad a pay for delete letter in the hopes that it will be willing to erase the negative entry in exchange for payment. 

Money talks....to debt collectors

Josh owes Big Bad Debt Collector a little over $5000 for an unpaid deficiency on an old repossession. Through the help of his attorney cousin and some heavy research, Josh has managed to get rid of the repossession notation – now he just has to deal with that monstrous collection account. Fortunately for Josh, the statute of limitations on the debt has expired so there is no chance that Big Bad could sue him. After six months of saving, Josh has $3700 to put toward the debt, but he won't bother if Big Bad won't delete the collection from his credit. 

So who has the greatest chance of winning the pay for delete game? Josh of course. Collection agencies still hand out pay for deletes, but they choose the recipients with care. The bigger the debt, the greater your odds of getting it deleted. Jane has options for having her $172 debt removed, but a pay for delete isn't one of them.

Now you have to ask yourself, are you a Josh or a Jane? I'm very interested in hearing others' experiences with this. Please, add a comment, let me know how your pay for delete attempt went, be it a good experience or a bad one.

Related Posts:

Collection Accounts and Your FICO Score

Why Credit Bureau Collection Disputes Rarely Work 

Collections on Your Credit Report