Why Does Capital One Hate America?
by Michael
The experience of my company, CRN, which works with financially challenged consumers and their creditors nationwide since the economic downturn, reflects that virtually every national issuer of credit cards, even larger regional credit unions, are going as far as they can to assist their struggling account holders. Issuers offer plans to reduce interest rates on credit cards through hardship plans, debt management plans or offer balance concessions through debt settlement, which go a long way in helping heal their individual account holders financial wounds and assists them in avoiding bankruptcy. In this way (credit card debt concessions), I see these financial institutions as actually helping the nation heal, one account holder at a time.
Not so with Capital One, in my experience.
Banks who are paying attention know that working out some type of arrangement with account holders, who will otherwise be forced into filing chapter 7 or 13 bankruptcy, is in their best interest. Creditors will generally offer fair concessions as a final option because they will lose the least. For more about this see: Banks Choose to lose the least.
I am not sure Capital One is paying attention.
Capital One, is quick to use the courts in order to collect on delinquent accounts. They would apparently rather their account holders file bankruptcy where they may receive as much as 10% of the account balance in a chapter 7 (if they’re lucky) or maybe as much as 40-60% over 3/5 years in roughly 30% of the chapter 13s that are filed (approximately 70% of chapter 13s are reportedly not completed).
I have continued to encourage consumers with unmanageable debt heavily weighted with Capital One accounts to seek bankruptcy protection.
Now we have Capital One choosing to be spiteful, and perhaps illegally, with those few they may offer fair concessions to. To see the collection letter referred to below in its entirety: Capital One Collection Letter
The coupon for $50.00 you will see in the collection letter linked above is not all that new a twist to get a delinquent CapOne card member to call MRS Associates (a debt collector). It is worth noting however, it is only a collection ploy and nowhere near worth taking advantage of the perceived “FREE STUFF”. The main problem I want to draw your attention and provide awareness to, is number 9 on page 2 of the collection letter.
9. Credit Reporting of Your Settled Account. If your Account is settled before it is charged off, the remainder of your Account balance will be charged off. We will then report your Account to credit reporting agencies as settled with an outstanding balance.
How does reporting an outstanding balance due after an agreed upon settlement, where both parties agree that when settlement terms are met it satisfies the obligation, comport with the Fair Credit Reporting Act (FCRA) and the requirement to report only complete and accurate information to the Credit Reporting Agencies (CRA’s)? This would FALSELY characterize the trade line and SKEW any later debt to income and/or utilization formula rendering them inaccurate as well. This means that Capital One could be causing consumer’s damages post settlement, when they are applying for future loan products whose interest rates and even approval will be factored on a credit report that contains erroneous and false information.
Reporting a balance still due and owing when it has been forgiven would falsely characterize this trade line in your credit report. How do we know the unpaid portion of the settlement is forgiven? Let’s look to number 8 on page 2 of Capital Ones collection letter:
8. IRS Reporting of Debt Forgiveness. If we cancel or forgive $600 or more of principal on a debt you owe, we must provide a 1099-C tax form to you and the IRS. Please consult your tax advisor and the instructions accompanying your tax forms for more information.
How can number 8, indicating the required reporting of forgiven debt to the IRS, comport with erroneously reporting an outstanding balance when it has:
- Been forgiven
- Been settled for a lesser amount agreed to by both parties, thereby leaving no “outstanding” balance
How is this NOT in violation of the FCRA?
Remember the marauding Viking themed commercials that Capital One ran for many years on television? Here they are wreaking havoc through the lives of real people, NOT ACTORS!
What’s in your wallet?……Indeed!
If you have a Capital One story to share, especially as it relates to improper credit reporting, I invite implore you to share it in the comment section below.
6:00 pm
The Star Tribune Published a list of the top 15 companies garnishing Minnesota residents over a 5 year period today.
No surprise that Capital One is at the top of the list, even beating the second place companies in both categories by nearly double.
http://www.startribune.com/investigators/101723943.html?elr=KArks:DCiU6:5DiaPQEacyiUiacyKUUs
There is a really good article from the Tribune today that tells the story of those who are garnished, even when their money in bank accounts are exempt from levy, or who did not even legally owe the debt.
http://www.startribune.com/investigators/101723868.html?page=1&c=y
5:35 pm
You raise a number of good points that will be fascinating to get answers to. I can’t wait to see what you uncover here.
Steve
12:05 am
I am currently dealing with Capital One and my ‘settlement offer’ contained the verbage of both 8 and 9 above. I had my cashiers check in hand today, and I actually went to the post office and overnighted it, when I came home I decided to google the verbage “settled with an outstanding balance.” to see what came up as this verbage bothered me from the beginning of my dealings with the Cap One rep. He would not put the verbage as settled in full as did my Discover Card. I, luckily was able to retrieve my overnight package, and therefore I will likely go to charge off but I dont think charge off will be any worse than paying the settlement only to have them sue me and add late fees to the balance that i thought was settled.
As a side note, Wayne, my CapOne rep gave me a very hard time about faxing me a copy of the agreement for the longest time. And then once he finally agreed last week, he, in trying to force me to pay via check over the phone, tried to tell me that oh the faxing department may not get to it til Tuesday or Weds and if you don’t pay by Weds, the agreement is null. So many times he told me I just don’t understand why you don’t trust us, you’ve paid us via your Checking account for 10 years, you know, the one we have on file… XXX I was adimate that I would be overnighting a cashiers check. At first he told me this was not an option. I told him I closed that account… which I did on Monday so that they couldn’t help themselves!
So this is where I am now, I did not mail the settlement check because I do not feel that verbage in the agreement is in my best interest.
12:51 am
Hi Jen,
Reporting a balance due when it is agreed through settlement that no remaining balance is in fact legally due is likely a violation of the FCRA.
To take CapOne to task on this you will have to first follow through with the settlement, then verify that they are reporting incorrect information to the bureaus followed by disputing the information with both CapOne and the reporting agencies.
If the incorrect information remains, you have the option of pursuing them in federal court for the violation. You can continue to be damaged by their reporting a phantom balance as due with paying higher costs for credit products in the future. Your actual debt to income will be skewed by the continued misrepresentation of a known inaccuracy.
If I were personally in your very shoes given the limited detail you shared in your comment (thanks for leaving one by the way), I would follow through with the settlement and take care of the reporting afterward.
Waiting for the debt to be placed after charge off is a plan, but may not be the best one.
What is the settlement you have currently? Can a similar deal be struck with a collection agency or worse, an attorney the account is placed with?
I cannot say until the account lands in the next lap.
CapOne plays so many monkey games that are totally unnecessary. Your comment reflects that. I am not sure who is in charge of developing and infusing company culture over there, but in my opinion they need to be replaced.
Capone will pay assignment costs and fees on any settlement you later agree to, so money now is better than what they get later.
Please come back to the comments and let me know what you decide to do and how the situation develops. If I can assist you in any way, I will.
Best of Success!