Collections to Credit Reporting

Started by JoK2 • 14 replies • 2185 views

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JoK2 (California)
Posts: 198

Posted:

Hello,
Someone suggested that since we, (in MD) can't apply liens for unpaid violation fines/fees that we should send them to collections which would then allow us to have it reported on their credit score.

Has anyone used this as an option before and what were the results?

Thanks!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JoK2 on 04/10/2014 4:50 AM
Hello,
Someone suggested that since we, (in MD) can't apply liens for unpaid violation fines/fees that we should send them to collections which would then allow us to have it reported on their credit score.

Has anyone used this as an option before and what were the results?

Thanks!

Personally I would be all for this. I also think a letter of forewarning could aid in collections as most people are paranoid about their credit score.

That being said, I am not sure a collection agency would take such on as they might question the legality/authority/right, whatever to impose fines.

We use a law/collection firm for past dues and in one of the letters from them to the offender, reporting to credit bureaus is referenced and it does get peoples attention.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jok

An additional thought. In some states an association can apply dues payments toward fines thus the dues payment comes up short and liens can be placed. I believe there was a case in KY where the owner ended up being foreclosed on using this procedure.

Worth checking to see if this can be done in MD.

LarryB13 (Arizona)
Posts: 4,099

Posted:

This might not work. I think to report someone to a credit bureau you must have their SSN and date of birth. I don't know about others but I have never supplied this information to my association.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Posted By LarryB13 on 04/10/2014 5:46 AM
This might not work. I think to report someone to a credit bureau you must have their SSN and date of birth. I don't know about others but I have never supplied this information to my association.

Although ssn and date of birth are helpful, they are not required to report them to credit bureaus. We use www.olddebts.com Inexpensive enough to use regularly. We tell people it will be reported to the credit bureaus before we do it and what it means when it reported. Higher interest rates on cars, denial of cell phone service, inability to buy a house, etc. Most of them pay up after being educated.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

HOA's do not collect social security numbers of the owners and have no right to them either. Social security numbers are typically attached to credit reporting. Although some say you can report without it. However, placing a lien on the property or foreclosing should show up a "hit" on the credit report on their own.

Also keep in mind not having a social security number of the owner can effect court actions too. If you were to sue, the HOA would just get a "judgment". The process of collecting on that judgment involves sometimes going to a collection agency or even garnishing wages. Those 2 processes is helped by also having a social security number. However, the court system does not require that information when you sue. So you may win the case but when it comes to collections is when the issue comes into play.

It's a big issue if your HOA decides it wants to collect social security numbers of it's members. Most will refuse. In addition, there are most likely various laws out there protecting one from providing that information to the HOA.

It's really not worth the credit reporting. It's just best to go and file the lien on the property if they owe. One can't lien for fines nor foreclose for them in many states. However, as others have pointed out there are some "fishy" ways around that.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By MelissaP1 on 04/10/2014 3:25 PM

It's really not worth the credit reporting. It's just best to go and file the lien on the property if they owe. One can't lien for fines nor foreclose for them in many states. However, as others have pointed out there are some "fishy" ways around that.

Actually, I've had a business owner tell me that simply by including the line:

"failure to pay your account on time may impact your credit rating"

on his companies invoices that on time payments increased by 20% the first year they used it. He admitted that they have zero intention of ever going through the hassle of reporting anyone. However, for some, the mere suggestion that it could happen has them paying on time.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 04/10/2014 4:38 PM

I agree, but remember I am the one that believes in public shaming. Big bulletin board at the entrance with names of those behind in dues. My old country club did this. Very effective.

RaymondS2 (Maryland)
Posts: 42

Posted:

Quote:

Posted By n/a on 04/10/2014 4:50 AM
Hello,
Someone suggested that since we, (in MD) can't apply liens for unpaid violation fines/fees that we should send them to collections which would then allow us to have it reported on their credit score.

Has anyone used this as an option before and what were the results?

Thanks!

Under Fair Debt Collection Practice you CANNOT do this. You could be sued for Defamation of title, which comes with very harsh consequences for the person or board doing this. IT IS ILLEGAL UNDER FEDERAL LAW

I know because my board tried this and it costs us ALL!!!!! financially

TimB4 (Tennessee)
Posts: 21,062

Posted:

Raymond,

This thread is over 2 years old. It's best not to reactivate an old thread as what may have been good advice in 2014 may be bad advice in 2016 (as laws change).

Many States allow monetary penalties for rule infractions to be treated as Assessments with full authority to lien, etc. Example: VA § 55-513.

Our attorney, just recently, reported the non-payment of assessments to the credit bureau. Once the issue has been turned over to collections, the collection agency will typically report the incident to the credit bureaus. There are services offered on the web for Associations to report assessment payments to collection bureaus.

I believe the issue becomes is the monetary charge for infraction of rules, etc. treated as an assessment or not. That determination will likely depend on State laws and vary from State to State.

Can you please provide a citation of the Fair Debt Collection Practices Act that supports your statement?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By RaymondS2 on 03/19/2016 7:28 AM
Under Fair Debt Collection Practice you CANNOT do this. You could be sued for Defamation of title, which comes with very harsh consequences for the person or board doing this. IT IS ILLEGAL UNDER FEDERAL LAW

I know because my board tried this and it costs us ALL!!!!! financially

I never heard of "Defamation of Title" before and found that it is a recognized tort. The indispensable element in bringing such a lawsuit seems to be that the defendant made false statements, no matter how or where the false statements were made. That is to say, the plaintiff has no case if the statements are substantially true. This tort could be pursued whether the defendant recorded a false lien, made a false report to the credit bureau, or put up a cardboard sign making false allegations.

In my previous readings of the Federal Fair Debt Collection Act I failed to note anything regarding Defamation of Title. It would be helpful if you could point out in federal law where this found.

TimB4 (Tennessee)
Posts: 21,062

Posted:

In rereading, it could be that Raymonds Association filed a lien based on fines.
This might not be permissible under FL law (as it was not permissible under MD law - as the OP stated). It's possible that this is what Ray was referring to and not the question at hand about reporting delinquent payments to the credit bureau.

Of course, I could be wrong in my reread interpretation.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Raymond accusing an association of poor/illegal behavior. This is unheard of.

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