Collections Law/charge off dismissed with prejudice
QUESTION: I was served with a lawsuit by an attorney for Midland Funding, who bought an $18,000 charged off debt from Chase Bank. I retained my own attorney for $2500 in hopes that he would help me negotiate a much lower settlement than the near $20,000 they were now asking for. After several unsuccessful negotiations, he went to court and called me with the 'good' news we 'had won'. I did not owe any money at all. He did not explain much at all, only that he was going to ask the plaintiff for attorney's fees. He did in fact receive attorney's fees, of which I received a small portion. A few months later, I saw called to ask if the debt would be removed, and only then did my attorney explain that the company is under no obligation to remove the debt from my credit report. I still did not quite understand until I researched myself how we 'won' as the case was dismissed with prejudice. I am now wanting to purchase a home and have this $18,000 charge off on my credit report. My questions are, 1) do I attempt to contact Midland Funding and negotiate my own settlement? 2)Do I bypass Midland funding and contact the 3 credit bureaus and attempt to have the charge off removed stating that the case was dismissed? 3) Do I contact Midland Funding and try to ask if they would remove the information as the case was dismissed?. This is all that is holding me up from obtaining a home loan. As I have read, I understand that the company could come back and serve me again, and technically, I still owe the money. The case was filed 9/2011, and I have heard nothing further regarding this. What are your thoughts? Thank you very much, Carrie
ANSWER: First, the term "with prejudice" means they cannot sue you again - what was prejudiced, or affected, was their ability to sue. The Judge ruled that you do NOT owe this money.
I disagree with your attorney's statement that Midland Funding is under no obligation to remove the Trade Line. Federal Fair Credit Reporting Act (FCRA) requires that only "accurate" information be placed in a person's credit file. The Judge ruled that you do not owe this money. For a creditor to report to a Credit Reporting Agency otherwise is a violation of FCRA.
In addition, it is a violation of Federal Fair Debt Collection Practices Act (FDCPA) to misrepresent the legal nature and status of a debt. Once again, the Judge says there is no debt. The creditor is saying there is. That statement is a FDCPA violation.
I would ask your attorney to file suit against Midland Funding for the FCRA and FDCPA violations. Each violation carries $1,000 Statutory Damages plus Attorneys Fees. After you have successfully sued them, you dispute the Trade Line with the Credit Reporting Agency. If Midland Funding does not remove the Trade line, you have new violations and you sue them again. Eventually Midland Funding will get tired of being sued by you and paying you Statutory Damages and Attorneys Fees.
You could file the lawsuits yourself - several years ago I set up a web site that shows people just how ro do that - www.debtorboards.com - it is totally free. Pay a visit there.
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QUESTION: Thank you for your prompt response. And let me apologize for a major mistake in my question, as it was written after working 14 hours in the hospital. I meant my case was dismissed "without prejudice" not "with prejudice". Now that puts an entirely different perspective on the question. If you wouldn't mind giving me your thoughts on my questions with that in mind. Thank you for your time.
Then disregard all I said. Dismissal without prejudice means they can file suit again. Since no Judge has ruled you don't owe, they can get away with saying you do owe.
You may be stuck with the Trade Line.
Question - when did the account first go delinquent? FCRA limits reporting to 7.5 years after that date. It is possible Midland has "re-aged" (meaning changed the Status Date to make the debt appear newer than it is). If that is the case then you still have FCRA and FDCPA suits to file.
Question - when was the last payment made? Check your State's Statute of Limitations (SOL). If the debt was "Out of Statute" when they filed suit, that is also a FDCPA violation and you have a lawsuit to file. SOL doesn't prevent suits, it is a defense which you have to raise.