Iowa Debt Collection Laws

July 25th, 2010

Question: What happens if you send a scavenger debt collector money?

I know it’s a huge mistake, but my boyfriend… in a not-so-smart move, sent a scavenger debt person $200 because he got scared when he read the word “sue” in the stupid letter. Instead of consulting anyone about it, he sent the money and they cashed the check. He’s talking to a lawyer next week, but what happens if you send them money? Does it reactivate anything? Do these firms have the ability to report to credit bureaus? This was regarding a debt he owed back in 1997 in California. We live in Iowa now.

Remember this is not a collections agency. It is a law firm that buys debt from CAs.
My main concern is can companies like this (who are NOT collections agencies or creditors) report to credit bureaus? He has worked so hard to repair his credit.

Answer: The Statutes for Iowa are as follows:
Open account: 5 years from last charge, payment, or admission of debt in writing.

So in effect, he has restarted the time clock on this debt. He could have just thrown it away as they had no legal recourse and could not have sued him.
Was this payment a settlement payment or just a single payment to hold them off. No matter what, they can now take civil action in court to collect the full amount including legal fees.

HOWEVER, this will not reset the SOL for reporting on his credit report as per:
Running of Reporting Period – Section 605 [15 U.S.C. § 1681c]
As of December 29, 1997 the reporting period runs 7 ½ years (7 years plus 180 days) from the date (month and year) of the last delinquency (known as “last missed payment:).
So, regardless of how long a creditor waits to charge off, sell or transfer a debt, they must report the true and correct “delinquent or last missed payment” date (month and year) that preceded the creditor’s action.

Use the following link to see if the so called Law Firm is truly legit, many debt collectors use bogus letterheads or pay a lawyer for the use of his letterhead. If it is a bogus letter, then you have rights under the FDCPA regarding misleading collection attempts.

http://www.budhibbs.com/drowning_in_debt.htm

At least he got smart enough to consult a lawyer on this one.

Hope this answers your question.

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