I have been meaning to write this one for a while.
We have these boards in our offices so that the folks we consult with can see examples of... well... what to be aware of. However, the lion's share of our clients can't see us in our offices, so this is for you.
One of the final steps in our process is to make sure the client pays off what needs paying. That portion is often times directed by the lender. Though we have a pretty good idea of what the underwriter is going to require to be paid off, we do like to involve the lender as well, just in case there are additional stipulations regarding closing.
Anyway, we had a client about... 3 1/2 years ago. Nice gal. We did some work for her, got her into a house. It was a win for us. ... And she had this final debt to be paid. The scores were there, we just needed to settle a bad credit card. It was a card from Aspire Card. The debt was then sold to Jefferson Capital, a collection agency.
We helped our client negotiate with Jefferson and they came to a settlement. The original balance was $917.00. The client settled with Jefferson Capital for $500.00. Or so she thought.
Here's the offer:
Our client made the payment the very next day. Here's the letter confirming the payment.
Awesome right?? We have a settlement letter that can be presented to the lender and possibly do a manual underwrite. Or, the lender can simply wait until the credit report is updated and once she shows a $0 balance, the lender can pull her credit again. We should be good right?
Wrong. What happened? The collection agency - despite their offer, despite their promise stating that our client is no longer obligated to the debt - re-reported the debt on the client's credit report, for the remaining balance of $417.
We at Credit Dr. went through the roof. Here it is on the credit report over a year later.
Jefferson Capital Systems didn't even have the decency to sell the debt to another collection agency (which they often do). Nope, they basically went back on their word and just reported the debt again to the bureaus.
Our client was in her new house at this point, and found out what happened only when she was going for a vehicle loan. Luckily, because we encourage all of our clients to give us everything they receive, and also because there's a lot of communication (this is a partnership after all) with us, we had everything on file and it was a fairly easy correction.
Pretty sneaky. Pretty spineless. We are not fond of collection agencies here. I could tell you stories....
Be well and retain your paperwork!!
Ed-Jack Dvorak is National Affiliate Liaison at Credit Dr., a national credit restoration company. He works with clients and creditors to improve credit profiles.