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NCO Financial is an aggressive third party collection agency. They are also referred to as NCO, NCO Group and NCO Financial Systems. They are typically hired by a lender to come in and collect payment on delinquent accounts. Sometimes they will also purchase the debts directly, and collect for themselves.

NCO has a very bad reputation; they are known for unethical collection methods and have a history of violations with the FTC. The most notable violation occured in 2004 when NCO was fined 1.5 million dollars. This was a consequence of their attempts to manipulate the credit system. NCO Financial was reporting delinquent debts at a late date in an effort to keep a debt on the debtors’ credit report for longer than 7 years (violating the fair credit reporting act). NCO Financial is also said to collect on debts that are no longer legally theirs to collect upon.

So what to do when you are being contacted by NCO financial?

First thing, is to save any and all communications with them. The next step is to figure out if the debt they are collecting is legitimate. Third step if it’s a legitimate debt make arrangements to pay the debt at a reduced settlement and in exchange the account (negative listing) is to be removed from your credit report.

Also make sure that they are the only collection agency that is reporting the delinquent account. Often one account will be reported several times by every collection agency that tries to collect the debt. Thus the lender could be reporting it, NCO Financial and any other collection agency that tried to collect the debt. 

I recommend hiring a professional credit repair law firm to repair your credit on your behalf. You can do this very affordably with Lexington Law Firm a proven leader in the credit repair industry with over 15 years experience and 600,000 negative listings removed in 2007.    

It depends on how damaged your credit history is. If you have a lot of negative listings then it is a good idea, but if you have only a few then you can do it yourself. The reason you would want to hire a credit repair company is because the credit bureaus have designed a formula to respond to the dispute process.

The bureaus respond to a dispute letter by asking for more information regardless of the need for it. They do this in an attempt frustrate the individual into giving up on the dispute. The bureaus do this because it is more cost effective than investigating the dispute.

Furthermore, the only reason credit bureaus will investigate a dispute is to comply with the FCRA or Fair Credit Reporting Act. This piece of legislation was first passed in the early 1970’s and was in response to increasing complaints. It says the credit bureaus are responsible to fix any inaccurate or unverifiable listings.  

Credit bureaus are businesses and their objective is making a profit. So when an investigation occurs it comes at the cost of the credit bureaus. Contrary to popular belief credit bureaus are not government funded companies they earn a profit just like Sears, Best Buy and Wal-Mart.   

The benefit to hiring a credit repair company is they will cut through the red tape and typically are more effective in getting a dispute investigated. Furthermore each negative listing you have is listed with each credit bureau. In order to have the listing removed you must send a dispute letter to each credit bureau. 

Thus if you have a lot of negative listings on your credit report then you will be sending out a lot of mail.  If you are on the fence and have a lot of negative credit then I recommend looking at Lexington Law Firm a established credit repair company. They have been in business for over 15 years with thousands of deleted listings. If you only have a few negative listings then use this free credit repair letter.  

Exactly what is a Charge Off Anyways?

If you consider yourself as someone with bad credit, chances are that you have at least one or more “charge offs” on your credit reports. A “charge off” is a fairly generic term used in the debt and credit industry. A charge off is a term that simply means that the original creditor has given up collecting a delinquent debt. Once the creditor exhausts all collection efforts, it will typically charge the debt off and sell the debt to a third party.

For example, in the case of a delinquent credit card bill, the creditor usually attempts to collect the debt for approximately six months before determining that the debt should be written off or charged off. The creditor suffers because it has lost money on the loan, but experiences a tax benefit by writing the debt off. The creditor is allowed to deduct any charged off debts from its profits which mean it pays less income tax because of the lost profit directly related to those debts.

For consumers, a charge off can be devastating from a credit history perspective. Next to repossession or foreclosure, a charge off is about the worst mark a person can have on his credit. It can prevent you from getting approved for a mortgage, car loan, credit card, or nearly any other type of new credit. Further, a single charged off debt could create multiple separate negative marks on a person’s credit history. This is due to the fact that a debt could be bought and sold multiple times as each party tries to recover lost profits.

Using the credit card example above, let’s assume that a credit card account is charged off. It may be sold to the highest bidding collection agency for thirty cents on the dollar. If that collection agency is unsuccessful in collecting the debt, they will likely cut their losses and try to sell that same debt to another agency for ten cents on the dollar. As debts become older they are typically more difficult to collect. Debtors are less likely to pay old debts. Plus, the debt gets closer to the statute of limitations which is a point when reached, gives the debtor a “get out of jail free card.” A debtor has no legal obligation to pay once the statute of limitations runs on a debt.

In any event, as the debt is bought and sold over and over again, it is likely that each collection agency will place a negative mark on the person’s credit report. Some consumers report a long trail of charge offs on their credit report for a single debt! This may sound egregious to some people. The Fair Debt Collection Practices Act and the Fair Credit Reporting Act police credit bureaus and collection agencies and prohibit them from providing misleading, inaccurate, or unverifiable information. It does not specifically prohibit a string of collection agencies from this practice. Although it is implicit that a collection agency should remove a credit report charge off mark once they sell a debt, it does not mean it is always diligent in doing so.

Therefore, the burden often falls upon the individual consumer to remove the inaccurate items by way of dispute letters, investigation requests, etc. Thus, a person dealing with even a single charged off debt may have a lot of work to do if they want to clear their credit history of charge offs.

In sum, a charge off is something that consumers should try to avoid if possible. If you are delinquent on an account, try negotiating directly with the creditor. It is both in the best interest of both parties to avoid a charged off debt.

State and Federal Courts have long struggled with balancing the interests of debtors and secured creditors when it comes to the issue of self-help repossession. Self-help repossession refers to a creditor’s seizure of property that is the security interest (or collateral) of a loan. For example, when a bank seizes a person’s car because he was delinquent on the car loan, the bank has performed self-help repossession.

Generally speaking, section 9-503 of the Uniform Commercial Code gives a secured creditor the right to take possession of collateral if the debtor falls delinquent on the loan. However, there are some limitations. For example, a creditor cannot repossess collateral if doing so involves a “breach of the peace.” A “breach of peace” is somewhat of an ambiguous term, however, the use of physical force to repossess a car for example would be considered unlawful.

Aside from litigation over whether a creditor has breached the peace, there has been a considerable amount of case law on the issue of whether a debtor is entitled to a hearing prior to repossession. The concerns to both parties are significant. The creditor is motivated to take possession of collateral quickly and inexpensively since delay could result in damage to the collateral, depreciation to the collateral, and/or time for an embittered debtor to thwart future repossession attempts. On the other hand, depriving a debtor of property without first being heard poses serious risks to the debtor. Often such “surprise” tactics leaves debtors without necessary housing or transportation. Further, repossession without a court hearing deprives a debtor without his “day in court.”

This is a similar argument to the one the plaintiff made in the Supreme Court case of Fuentes v. Shevin. That case involved the issue of whether repossession without judicial intervention violated the Fourteenth Amendment to the United States Constitution as a deprivation of property without due process of law. However, the Supreme Court ruled that the Fourteenth Amendment only protects against state action. Since a secured creditor is considered a private party, it is immune from those Constitutional provisions. The subsequent case of Flagg Brothers v. Brooks contained a similar decision and creditor’s rights to self-help repossession have generally been immune against federal attack.

If you are a debtor facing repossession, you may want to be hasty in trying to resolve the issue with a creditor. Do not expect a court hearing first or you may find yourself without transportation.

A Review of the Fundaments Fair Debt Collection Practices Act and Debt Collection Laws

Have you even received a phone call or dunning letter from a creditor or collection agency? Whether you fell behind on your financial obligations or simply forgot to pay a bill one month, you probably have received a friendly reminder about the money you owe.

Most companies in the business of debt collection adhere to the Fair Debt Collection Practices Act, which are the laws that govern their behavior. Among other things, the Act prevents bill collectors from employing abusive tactics to pressure debtors into satisfying an obligation. For example, the Act prevents debt collectors from threatening a debtor with certain criminal prosecution, making excessive phone calls, certain third-party communication, etc. However, it is hard ball tactics which are often a bill collector’s best friend and employ the necessary pressure. In addition, the bill collectors are typically paid a commission on the debts the successfully collect. Consequently bill collectors often find themselves walking a fine line between regulatory compliance and illegal debt collection activities.

One debt collection agency which formerly did business in West Virginia jumped way beyond that line with their ultra aggressive debt collection activities and found themselves in federal court litigation. Specifically, the case of West v. Costen provided a prime example of how not to collect a debt. The case involves a class action lawsuit against named defendant William C. Costen.

One of the plaintiffs successfully proved that the defendant unlawfully contacted third parties about a debt. The FDCPA prohibits certain third-party contact which is designed to protect the debtor’s reputation and prevent the debt from losing a job. This can be most troublesome for a debtor if a bill collector continually contacts the debtor’s employer. A debt collector may legally contact an employer but certain limitations apply and they must cease any communication once the debtor advises them to stop contacting him or her in that manner. In the West lawsuit, one plaintiff successfully proved that a bill collector illegally communicated with his teenage daughter and another proved that the defendant unlawfully communicated with his grandparents and uncle.

In addition to the above, the plaintiffs alleged more humiliating types of conduct. Specifically that the defendants violated section 1692e(4-5) of the act which prevents debt collectors from using any false, deceptive, or misleading representation or means in connection with the collection of any debt and the representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person.

Specifically, the plaintiff alleged to have received a payment demand notice which indicated that a criminal warrant was pending. In addition, that the bill collector told the plaintiff that she would have a warrant issued for her arrest unless she paid her debt. The court failed to grant summary judgment on those issues since the defendants were collecting dishonored checks and it was possible to pursue criminal prosecution for such activity.

The case also includes a detailed discussion of other provisions of the FDCPA including the validation of debts, collection of service charges, and piercing the corporate veil.

In summary, if you have been contacted by a bill collector and feel that they may have stepped over the line, you may want to reference the Fair Debt Collection Practices Act and also the case of West versus Costen.