Can You Use a No Contract Dispute for Debt Collections?


Debt free

The ‘No Contract’ is a new kind of loophole which has recently gained popularity in the financial market that claims that it can help you with your credit repairs or even help you to get out of the debt obligations.

The actual truth behind the ‘No Contract’

Now what happens is that when you create a debt with a particular company, then that company will sell the delinquent debts to one another company (the third party) which is assigned the task of collecting the debts form you on the behalf of the main company. So even when the borrowers makes no contract with the lending company, the main creditor will still hold the rights to sell the contracts that originally belonged to you. Thus it gives power to the collection agencies to add even more debt to the credit report of yours and pursue you for this debt.

How can a no contract dispute work?

Now suppose a person has the right to the accurate credit reports which allows him to remove the incomplete and unverified information from their credit report by using the dispute process. Now when a dispute is done on the credit report the credit bureaus come into action and investigate the dispute with the collection agency. Then it is the job of the collection agency which here acts as the information furnishers to validate the dispute. After this the credit reports of that person is updated by the credit bureaus on the basis of the information provided by the furnishers. So if the debt collectors give no response on the dispute it becomes easy to dispute a collection account on his credit reports thus making the ‘no contract’ a success.

Now supposing that the collection agency no longer collects debts they may simply not be able to respond to the request for debt verification. Here the request comes under the category of ‘unverifiable’ and hence the collection is deleted by the credit bureaus. Thus since here the debt collector wasn’t able to respond to the investigation, the dispute becomes successful instead of the ‘no contract’ claim.

But in the case where the collector is active when it comes to the collection of debt, the dispute may get verified here and the collection would still be there on the credit reports of that person. So in situations in which the active debt collection is being disputed for its validity may encourage the debt collector to take subsequent actions on the debt taken by that particular person. This may be in the form of calling or sending of official letter or may lead to filing a lawsuit if the debt is found to be within the statue of limitations.

How to tackle with the above problem?

Since the debt collectors do now have any valid data that proves that you owe a debt, you can request for this from the debt collector within the span 30 days from the day f the hearing. If by any chance they fail to prove your debt, they no longer will have the authority to collect the debt from you. All though they may start the process all over again by assigning the debt to a new collection agency.

Conclusion

So in general it is beneficial to pay the debt collection if you want to get approved for a mortgage. Also one must keep in mind that for seven years the debt collection is listed on the credit reports. Here the lender requires for all the outstanding debts to be taken care of by you. Thus you may either pay the full debt to the collector or may settle so as to bring the past due status of the debts.

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