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About Regan Shinski
Expertise
I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit credit reporting.

Experience
Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports. Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry. I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA). I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage. In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.

Education/Credentials
BA University of Minnesota

You are here: Experts > Business > Corporate Law > Collections Law > Loan Sent To Collections After Bike Was Reported Stolen

Collections Law - Loan Sent To Collections After Bike Was Reported Stolen

Expert: Regan Shinski - 11/13/2009

Question
I had a 2007 Kawasaki ZX6R motorcycle. I had purchased it from a dealer "new" in California. I had to take a 4 year loan from HSBC. I made payments on the bike for almost 2 years, then it was stolen from my apartment complex. I didn't have full coverage so insurance didn't cover anything. I called HSBC and explained what happened. I told them that I was not able to make the full monthly payment of $300+ a month but I could do half. They were not willing to work with me on the payments and told me that if I couldnt pay the entire balance they would send me to collections. I made one more payment after it was stolen and could not afford any more. I tried to call back and speak with a manager and he told me that it was company policy and there was nothing he could do to work out a payment option with me. I recieved a letter from HSBC's collection department trying to collect thwe debt. I later recieved a letter from a collection agency stating the same thing. About 4 months after the bike was stolen, a repo guy came knocking on my door. He stated that he needed to pick up the bike for a non-payment. I told him that it was stolen and gave him a copy of the police report. He told me, "Our company was not informed it was ever stolen. We were told you had refused to make payments on the bike." About 2 months later, I recieved a phone call from the forest service. They had recovered my bike fully intact. It was verified through the CHP database. I have not told HSBC that it was recovered yet. They have put a huge negative mark on my credit. Can I call HSBC and give them what is owed to date on the late payments? If I do, can I tell them to take the mark off my credit? Or do I contact the collections agency? Can they reverse a negative mark 7 months later? Can they even take me collections even though I was willing to make half payments each month? Help!!!?!!!?!! I need this off my credit bad.

Answer
Hello James:

For the record, they are under no legal obligation to delete accurate information - which it sounds like this is. Whether you pay it or not. That does not mean you don't have options. Although the odds are against you, it can be done.

This basically becomes a negotiating issue. They want their money, you want your credit restored. So what do you have to offer? Money and the bike. You have to make them think they are getting something from you that they normally would not get from you. Another card you can play is bankruptcy. If they think you may file bankruptcy - where they may get NOTHING - you can probably negotiate a better deal. There is no special way to do this. Again they are under no obligation other than demanding full payment and keeping it on your credit reports. you are trying to convince them the ONLY way they are getting ANY money is if the fix the credit issue.

I say the odds are against you for a few reasons:

HSBC is traditionally more of a hard-line creditor. That has changed in this economy but still a tighter lender on changing terms.

Secondly, you may have two accounts showing derogatory on your credit reports; HSBC and the collection agency. Any agreement you enter into has to involve deleting both accounts. HSBC may be able to control both. The collection agency likely cannot delete any derogatory information HSBC reported before turning over to the collection agency.

Thirdly, you have this issue with the bike. Certainly a very usual situation. They are going to want it back unless they refinance or re-open the previous loan. They will sell it - likely at auction - and deduct the amount from the balance you owe. This starts a new process because the debt then becomes an unsecured loan, meaning they obviously lose the interest in the bike after selling it. You won't be able to get a clean title until the balance is paid, they may have reported it stolen on their own, it's kind of a mess and I'm not exactly sure how that issue will play out. You may be able to use the bike as a negotiating ploy - I don't know. "IF I find the bike and turn it in, will you delete the bad credit?" My point is the circumstances certainly complicate the issue and complication is normally not good for a negotiated settlement like this.

If you get an agreement, make sure it is in writing that the derogatory information - or the whole account - will be deleted from Experian, Equifax, and Transunion. Don't pay until it's in writing and in your hand.

I believe I have answered your questions, but I want to cut and paste them below to make sure I address all your concerns:

Q: Can I call HSBC and give them what is owed to date on the late payments?
A: Yes. Although there is no guarantee of it really changing anything at this point.

Q: If I do, can I tell them to take the mark off my credit?
A: You can ask, but you need a written agreement to be safe - see above.

Q: Or do I contact the collections agency?
A: Difficult. I think HSBC may be able to handle both, but make sure any agreement addresses both - see above.

Q: Can they reverse a negative mark 7 months later?
A: Yes, but they are not obligated to and it is not always easy.

Q: Can they even take me collections even though I was willing to make half payments each month?
A: Yes. Your contract did not call for half payments did it? :)

Good luck. I hope you can work it out.

Regan
mbscompany@aim.com

p.s. Remember they are trying to collect a debt. Contacting them may even "wake a sleeping giant." The debt is in the statute of limitations and they can sue you and get a judgement. Although in this market, most creditors just want some money.

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