So You Have Decided to Pay Off that Debt–How Do You Know that the Debt Collector Really Owns It?

Dear Readers,

Thanks for tuning in. With debts being transferred around today like so many baseball cards, it happens that some consumers pay a debt, only to learn later that the debt collector that they paid does not owe the debt. We handle these types of cases.

Gerri Detweiler, a consumer credit consulting expert, has referred a question on this from Jay in Indiana. I answer Jay’s question about how to handle this situation, where you are not sure that the debt collector trying to collect from you really owns the debt. Here’s the question and answer:

“I am trying to do the right thing and pay off a judgment but cannot locate who to pay. The judgment is from Sears and the debt has been purchased by Sherman Financial Group initially who was the plaintiff for Sears, then it was bought by Eltman Eltman and Cooper then by LVNV Funding or Resurgent Capital Services, then by Capital Recovery or Recovery Management Systems Corp.

“Recovery Management Systems is saying that a third party is involved (Sherman Financial Group)and that they are having a hard time finding out the information from Sherman Financial Group (Even though they are related).

“I would like a settlement offer if at all possible so I can get my life back together.

“Any Advice?

“Jay in Indiana

“Dear Jay in Indiana,

“Gerri Detweiler has asked me to assist with this question.
“When you cannot determine who owns a debt you would like to pay off, there are two things you need to do:
“1. For the party (usually a debt collector) who apparently owns the debt currently, request of them all documentation showing that they indeed own the debt. Minimally, there should be an agreement showing that they have bulk-purchased a bunch of debts, of which yours is one. It may not conclusively prove that the current debt collector owns the debt—it probably will not—but it is a document which you can keep in your files to protect yourself against future claims for the same debt. These types of future claims, “second bites at the apple,” occur frequently, so put the document into a safe place.
“2. This is the most important one: make the current debt collector indemnify you against any future claims on the same debt if you pay it. “Indemnify” means, essentially, insure. You are making the debt collector, in writing, promise to pay for your defense and for any damages assessed against you if you are sued on the same debt in the future. Put this in writing: “[Current Debt collector] warrants and guarantees that it currently owns the debt of $***, originally incurred through a credit charge with Sears. [Jay in Indiana] has agreed to pay this debt, in full, with a payment of $*** made payable to [current debt collector]. If [Jay in Indiana] is, at any future time, sued for the same debt, [current debt collector] will fully defend and indemnify [Jay in Indiana] for all costs, attorney’s fees or expenses or damages which [Jay in Indiana] may incur as a result of such future suit.” If the current debt collector will not agree to include this language in the release, which the current debt collector signs, then don’t pay them. Simple.
“I hope this helps.

Robert F. Brennan, Esq.
La Crescenta, Ca.

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