Collection agencies make their living by collecting debt. They typically have little regard for reporting information correctly until they are forced to.
There are different types of collection agencies, they will usually specialize in a certain area of collections like junk debt or commercial, some collection agencies are hired to work for the original creditor, and some purchase the debts from creditors another collection agency.
After a collection agency has exhausted their attempts to collect a debt and they feel the debt is uncollectable or not valuable enough to them, they will package similar debts together and resell them to other collection agencies.
The buyers of these debts are commonly known as “Junk Debt Buyers”. The transfer of ownership of these debts is often done with little or no documentation other than a simple spreadsheet with basic data on the debt.
The new owner of the debt will have a difficult time proving they have a right to collect, and proving the validity of the debt.
A tactic of “Validation of Debt” will be discussed in Chapter 8. For now, knowing the transfer issues is important so you can understand how easy it is for the collection agency that originally was collection the debt to “forget” to remove that collection reporting from the client credit report.
A valid collection can only be reported by the party that has legal authority to collect the debt, therefore any reporting by collection agencies that previously had ownership or collection rights would constitute illegal reporting.
Using a standard dispute, or validation of debt, would be proper tactics for removal of this type of derogatory account.
