Expert: Creditwrench - 6/1/2008

Question
QUESTION: LVNV , acting as a junk debt buyer, has purchased a charged off account from Citibank that belongs to my wife. We now received a letter from Blitt & Gaines, P.C. Attorneys at Law, stating that they have been retained by LVNV to collect the debt. We have never received one bit of contact from LVNV and now we get this. Anyway, according to her credit reports, LVNV is reporting the account as a factoring account. This cannot be true, as Federal Law states that a junk debt purchases cannot be construed as a factoring account because the purchaser, in this case LVNV, is acting as a debt collector. If this is the case, then isn't Blitt & Gaines guilty of harboring a client that is guilty of breaking federal law? Secondly, doesn't Blitt & Gaines have to be registered as a collection agency in the state of Illinois, if they are attempting to collect a debt in the State of Illinois?

ANSWER: You have it all down pat. No, they cannot be a factoring company. A factoring company buys contracts and accounts receivables and ect. but not delinquent debt accounts. The reason they claim to be a factoring company is to attempt to evade having to obey FDCPA and lawsuits stemming from their failure to follow the rules.

Blitt & Gaines is a law firm and most states don't require lawyers to be registered as debt collectors although they are under federal law.

You would have to check Illinois law to see whether they must be licensed or not.

Bill Bauer
405-684-9297
405-227-9423

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We are going to start holding mock trials so that you can learn some court room procedures.

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QUESTION: Could you pinpoint for me the Law that is actually being broken , or the actual law that differentiates a collection firm vs a factoring firm? That would be a great help.

Answer
I don't know of any law that differentiates a collection firm vs a factoring firm. That would be a matter to be decided by a court of law and I have seen a court case dealing with that very subject ruled on by a federal court. If memory serves me correctly LVNV funding was the defendant in a case which was reviewed in a collections industry trade magazine a while back. Finding out whether or not memory has served me correctly would most likely be best ascertained by using a search for LVNV in Pacer or other such legal search facility.