Can a collection agency add fees on to a debt?

March 7, 2013 22:55 by Consumer Ed

Dear Consumer Ed:

I'm in grad school and had some medical care that I was told was covered by my insurance. The insurance company wouldn't pay and now the doctors say that it's been turned over to a collection agency and there's an additional 38% fee. That's another $400. Is that legal?      

Consumer Ed says: 

If a bill goes unpaid, it is common for the original party to sell the debt to a third-party collection agency after a reasonable period of time.  Your doctors are legally permitted to turn over your debt to a collection agency without giving you any notice.  Turning debts over to collection agencies enables the original party to focus on their business instead of chasing their delinquent clients or customers. 

What might be illegal is the 38% fee that the agency added onto your debt.  Debt collectors can add reasonable charges to your debt, but only if you agreed to pay collection costs in your original contract with your doctors.  To determine whether these fees are reasonable, you will need to know why you are being charged the additional 38% fee.  You are entitled to an explanation of this fee from the collection agency.  Some examples of reasonable charges are for attorney fees, court costs and legal fees as allowed by state law.

Debt collection is regulated by the Federal Fair Debt Collection Practices Act (FDCPA).  If the collection agency is trying to collect unreasonable fees or fees to which you never agreed, they are in violation of that Act.  In that case, you have the right to sue them through a private attorney in state or federal court within one year from the date of the violation.  If you win, you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000.00.  You may also be able to recover court costs and attorney fees.  However, please remember, even if the debt collector violates the FDCPA, that does not erase the legitimate debt that you owe.

If the collection agency has violated the FDCPA, you may also file a complaint with the Governor’s Office of Consumer Protection (OCP), provided that the debt collector is not an attorney licensed in this State.  You can contact OCP at www.consumer.ga.gov  or by calling 404-651-8600 or 1-800-869-1123 (toll-free in Georgia, outside of the metro Atlanta calling area).  You should also file a complaint with the FTC.  You can contact the FTC at www.ftc.gov or by calling 877-FTC-HELP.  If the debt collector is an attorney, you should contact the State Bar of Georgia at www.gabar.org or by calling 404-527-8700.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Will co-signing a loan for my daughter affect my credit?

February 22, 2013 18:18 by Consumer Ed

Dear Consumer Ed:

My daughter wants me to co-sign a loan for a car. If she is late on a payment, will this affect my credit, as well as hers?

Consumer Ed says:

Yes, when you co-sign on a loan, of any kind, both you and the borrower put your credit scores at risk.  If your daughter is late or misses a payment, this fact will be reflected on your credit reports and may negatively affect your credit ratings.  Any late or missed payment will affect your daughter’s creditworthiness as well.
   
There are a number of other responsibilities and risks that you might want to consider before you agree to this co-sign arrangement.  First, you need to understand that cosigning a loan is the same as guaranteeing a debt.  This means that if your daughter does not pay her own debt, you will then have to make the payments for her.  Second, in most states, including Georgia, if the borrower misses a payment, the lender can immediately collect from you as the cosigner.  Therefore, you should carefully evaluate your own finances and only co-sign on the loan if you can afford to pay off the loan plus any potential late fees or collection costs associated with the account.  
   
It is very common for parents to cosign on a child’s loan.  Assuming your daughter pays at least the minimum due every month, this arrangement will help her establish or re-establish good credit.  As her parent, you are better equipped to evaluate whether your daughter is financially responsible and if the terms of the loan are an economically feasible undertaking for her. 

If you decide to cosign on her loan, you should then take appropriate steps to protect yourself and your credit as much as possible.  One way to do this is to try to limit the terms of your obligation.  For example, you can request a contract that states, “The cosigner will be responsible only for the principal balance on this loan at the time of default.”  The lender is not required to consent to your request, but may if asked. You could also ask the lender to agree, in writing, to notify you in the event you daughter ever misses a payment, prior to effecting collection.  Early notification will help you prevent any potential problem from escalating to the point where you would be asked to repay all at once the entire amount owed.  Finally, get copies of all of the important documents involved in the transaction from either the lender or the borrower—the loan contract, Truth-in-Lending Disclosure Statement, and warranty.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Background Checks

December 26, 2012 18:33 by Consumer Ed

Dear Consumer Ed: 

I was turned down for a job because my application responses did not match the background check.  I want to see what information came up on me. Where can I get ahold of the same background information that businesses pull?

Consumer Ed says: 

You haven’t said what type of job you applied for and, since different businesses have different practices, it’s impossible to identify exactly what your potential employer searched for or took into consideration in deciding not to hire you.  However, following are some ways you can find the information that a potential employer may have seen when conducting your background check:

  • Order a copy of your credit report.  TransUnion, Equifax, and Experian, the three nationwide credit reporting companies, are required to provide you with a free copy of your credit report once every 12 months upon request.  To order, visit annualcreditreport.com or call 1-877-322-8228;
  • If you have a criminal record, have been involved in court cases, and/or have been adjudicated bankrupt, visit the courthouse where any proceedings took place and inspect and copy the pertinent files;
  • Obtain a copy of your driving record from the Georgia Department of Driver Services;
  • Hire a company that performs background checks to conduct one for you, upon you;
  • Ask neighbors and work colleagues if your potential employer contacted them, and what information was requested;
  • Conduct a search using your name through the major search engines online;
  • If you have created profiles on social networking websites, review those profiles;
  • Ask to see a copy of your personnel file from a previous or current job; and/or
  • Request previous background check reports that your employers conducted.


Generally speaking, several different pieces of information are accessible to potential employers when they perform background checks.  The Georgia Crime Information Center (“GCIC”) is authorized to make criminal history records available to private businesses when the businesses provide your fingerprints or provide your signed consent.  The GCIC can make criminal records available without your fingerprints or consent when the identifying information provided is sufficient to identify you and when the records are requested electronically.  This only applies to the electronic dissemination of criminal history records for in-state felony convictions, pleas, and sentences.  Additionally, the military may disclose your name, rank, salary, duty assignments, awards and duty status without your consent.  On the other hand, a potential employer must obtain your written consent and notify you in writing in order to run a credit check on you, as per the Fair Credit Reporting Act.

The following are additional pieces of information that could be included in a background check, especially since some of the information is public record:  

  • Driving records
  • Court records
  • Workers' compensation
  • Bankruptcy
  • Character references
  • Neighbor interviews
  • Property ownership
  • State licensing records
  • Past employers
  • Personal references


There are certain pieces of information that will not be included in your background check.  Under the Family Educational Rights and Privacy Act, educational records such as transcripts, recommendations, and financial information are confidential and will not be released by the school without your consent.  The Employee Polygraph Protection Act prohibits most private employers from using lie detector tests, either for pre-employment screening or during the course of employment. The law includes a list of exceptions that apply to businesses that provide armored car services, alarm or guard services, or those that manufacture, distribute, or dispense pharmaceuticals.  Under the Americans with Disabilities Act, employers cannot discriminate based on a physical or mental impairment or request your medical records. Businesses can, however, inquire about your ability to perform specific job duties.

 

If you enjoyed this post, make sure you subscribe to my RSS feed!

Rate This


Credit/Debt
nav_cap