ALERT, SHOULD THE ORIGINAL BALANCE AND CO BALANCE BE THE SAME?

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This topic contains 2 replies, has 3 voices, and was last updated by  Dave Barrett 2 weeks, 2 days ago.

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  • #147530

    GLORIA ROBINSON
    Participant

    I have questions.

    If a broker sends a file without SS# on it after payment would that be a red flag?

    Is it customary for a portfolio to have the same originating balance as the charge off balance?

    Should the original balance and charge-off balance be the same even if there is a last payment amount showing on the file?

    Could not having the correct open balance affect collection efforts?

    Does telling the customer the wrong open balance mean we are out of compliance?

    Do you frequently experience very angry and very irate customers for 1st placement online payday loans who may or may not have other payday loans?

    #147552

    Robert Bass
    Participant

    If a broker sends a file without SS# on it after payment would that be a red flag?
    -Red Flag? Possibly. Foul play? Probably not. It sounds like bad record keeping more than anything. If I understand your point correctly, the SSN is only missing on accounts that have a payment on file. Is that correct? If that is the case it seems that the previous agency has the PCI compliance settings for their collection software configured improperly. The system is under the impression that when a payment is made, the account is also being closed (as if the payment was a Balance in Full or Settlement). This of course should not be happening for partial payments and NSF transactions which is the only set of circumstances in which the account would be re-sold after payment(s) have been scheduled. Now, if the SSN is masked or missing on the account and the debtor has not made a payment, that is a red flag for completely different reasons. Accounts are not sold with some accounts having SSN info and others not having it. For example, you may purchase a medical file that doesn’t have SSN data simply because the chiropractor doesn’t ask for SSN’s nor do they keep them on file. If you are purchasing PDL or Credit Card debt, there is no reason the SSN should be obscured or missing. That would be a red flag in my book. I have to say that it’s worth asking your broker why the accounts are coming to you with some information missing.

    Is it customary for a portfolio to have the same originating balance as the charge off balance?
    -Customary? No- but it’s not completely unheard of either. Again, we are looking at what may be bad record keeping. When the debt is loaded into the collection software, it first needs to be mapped. For example, the collection software will have the following fields (or something very similar):

    -Original Balance
    -Principal Balance
    -Charged off Principal
    -Current Balance

    The spreadsheet may have the same fields, it should have as much accurate information as possible- or it may only have:

    -Original Balance
    -Accrued Interest
    -Current Balance

    If the later is the case, it sounds to me like they had mapped the original balance to the charged off principal where it would generally be a slightly better practice to map the ‘current balance’ to the ‘charged off principal’ field if they are in fact lacking the exact match on the spreadsheet. Keep in mind, I am not advocating this, I am only trying to justify the reason this may have occurred for you. Now if that is what happened, when they exported the debt to sell it to you, the software would export the ‘charged off principal’ heading over the ‘original balance’ field. Again, it’s poor record keeping on the part of the previous agency if I am speculating correctly.

    Should the original balance and charge-off balance be the same even if there is a last payment amount showing on the file?
    -Based on everything you have said previously, I’d imagine that the ‘charged off principal’ field is nothing more than the original balance column essentially copied and pasted with a new heading. It’s not a good or correct practice but that’s what it seems like based on the information you have provided. As you have accurately come to realize, a successful payment on file would decrease the ‘current balance’ and based on your collection software, it will likely also decrease the charged off balance. I am aware that CollectionsMax for example will deduct payment from the ‘charged off principal’ field as well as the ‘current balance’ field. That may not be accurate of all collection software but it may not necessarily be an indication of foul play. Again, it is likely just a matter of poor record keeping and I would advise that you ask the seller about it. It may be a good idea for you to ask the seller which collection software the accounts were exported from before you purchased them. For the record, the ‘charged off principal’ balance is the balance of the account at the time of the original creditor’s charge off of that account. That number shouldn’t technically change but some software does modify it along with the current balance.

    Could not having the correct open balance affect collection efforts?
    -Yes it could. You should always get the correct information when buying debt. Information is power and proper record keeping is important for compliance and legal reasons. Having the incorrect original balance will cause the debtor to lose confidence in the legitimacy of your agency, however I have seen situations where a portfolio may not have accurate original balance information. As everything else I had mentioned previously, it is generally the result of poor record keeping. Unfortunately the creditors are occasionally guilty of poor record keeping which means that the information is corrupted at the source. I have noticed in particular with small ‘mom and pop’ payday loan shops selling their debt that they may export the portfolio with the ‘current balance’ and not including the original balance whatsoever. This is not right, it is not common, but it has happened. If you receive a portfolio and you believe that any information on the file is incorrect or missing, please contact the seller and request that the spreadsheet be corrected. It’s entirely possible that the accurate information exists in the system and that a more competent individual will export the file with more data integrity. Again, I’d like to state- I do not condone shoddy record keeping or cutting corners. I am simply stating that it occasionally occurs with inexperienced debt buyers/sellers. If I was in a situation where my agency had a portfolio in which the original balances were questionable (but the current balances are absolutely accurate), I would have my compliance manager write a script to be used on those accounts where the original balance is not mentioned. If the debtor were to ask, a rebuttal would be provided about the original balance not transferring from the creditor because it is irrelevant for the purposes of collecting on the current balance. You can then have the collectors provide the debtors with the phone number for the creditor and the original account number so that the debtor can verify the original balance if they need to know what it is. I’d say that missing any information at all is going to make the debt more difficult to collect on. Knowledge is power and it is quite honestly irresponsible to collect on a debt when you’re missing information as important as the actual original balance.

    Does telling the customer the wrong open balance mean we are out of compliance?
    -Lying to the consumer is non-compliant without a doubt. Your best bet would be to say ‘We do not have access to that information. You are more than welcome to review your records or contact the creditor directly to verify the original balance; all I can see currently is that there is an outstanding balance currently in the amount of $X,XXX.XX. Just don’t lie, deceive, mislead, or otherwise misrepresent anything to the consumer. It’s definitely a violation of the FDCPA to provide the debtors with knowingly false information.

    Do you frequently experience very angry and very irate customers for 1st placement online payday loans who may or may not have other payday loans?
    -Not generally. First placement and even 1 agency debtors are generally pretty pleasant. When we used to work 2-4 agency PDL debt we had irate and combative consumers but Zeros and 1’s are generally not hostile right from the get-go as long as you’re not initiating contact in a hostile or demeaning way. If a large portion of the debtors are irate and hostile with your first pass on the portfolio, I’d imagine that it’s not a 1st placement. Also based on everything else you’ve said in your post, a lot of things aren’t adding up. On a first placement, the data integrity should be spot on. You only really see things like the original and charged off principal balances being the same after it’s been through a handful of agencies. It’s later in the life cycle of the debt that the information tends to be mishandled. For example, a large and reputable broker will know how to keep information where it belongs and they will follow compliance guidelines. I started answering your post trying to provide the seller/broker the benefit of the doubt but as the questions progressed, it started to sound more like the file you purchased was misrepresented. Also, PDL debtors tend to not be unfamiliar with PDLs. PDL debtors often get stuck in a cycle of needing PDLs more than once. Of course some people use them once and never touch them again, but if you’re noticing a pattern that the majority of the people you speak with are telling you that they didn’t obtain the loan etc. it sounds like the debt may not be legitimate.

    Due diligence is important. I was personally ripped off a few times when I was new to buying debt until I had established myself in with a reputable network of brokers who I could trust. It sounds like there are a lot of problems with the portfolio you’re working with right now and I hate to be the bearer of bad news but I have a hard time believing that the portfolio was sold to you with the best of intentions.

    I hope that helps.

    #147674

    Dave Barrett
    Participant

    If charge off and original balance are the same it means that a payment was never paid in most cases. If it does show a payment than this means someone has uploaded the file into their system using the wrong balance columns. It could be a number of scenarios. Also, a payment recorded could have bounced but you may not haven nsf data fields.

    For all intensive purposes original balance should be the original balance loaned to them. The charge off balance should be the balance at the time it was charged off. There should be a last payment date and amount paid. Current balance should reflect todays balance after all payments have been deducted from it.

    We cannot legally sell interest in this industry compounded after the charge off date. Anything applied by the issuer prior to charge off is fine.

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