CFPB v Portfolio Recovery Associates: A Guide to Debt Collection, Lawsuits, and Your Rights

If you're dealing with debt collection, you might have heard of the CFPB v Portfolio Recovery Associates case. This lawsuit led to significant changes in how debt collectors operate.

The CFPB found that Portfolio Recovery Associates was violating the Fair Debt Collection Practices Act by making false statements to consumers. This included claiming they could take consumers to court when they had no intention of doing so.

In the end, Portfolio Recovery Associates agreed to pay $14 million to settle the claims. This case highlights the importance of knowing your rights when dealing with debt collectors.

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Portfolio Recovery Associates LLC is suing you because they purchased your charged off debt from the original creditor.

They need to validate the debt before taking any further action, so it's essential to ask them for documented evidence of their right to sue. If you've already been sued, you can still request this documentation.

You can draft and file an Answer in the case to urge PRA to provide the necessary evidence.

Portfolio Recovery Associates is a debt collector that buys overdue debts, including credit cards and medical debt, from creditors. They then contact the debtor to set up a payment plan.

They have been in business since 1996, when they were formed in Virginia. They're one of the largest debt collection companies in the US.

Portfolio Recovery Associates operates under multiple business names, including PRA III, LLC and Anchor Receivables Management. This can be confusing for people who receive a collections lawsuit and see one of these names listed as the plaintiff.

Many consumers have complained to the Better Business Bureau and Consumer Financial Protection Bureau about Portfolio Recovery Associates' aggressive and questionable collection practices. They've been accused of using false or misleading information to collect debts.

To verify the debt, Portfolio Recovery Associates is supposed to provide written proof, but some consumers have reported that they didn't receive this documentation.

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The statute of limitations on debt is a lifesaver for many people. In Texas, for example, the statute of limitations on debt is 4 years.

Portfolio Recovery Associates will try to trick you into reactivating your old account by pressuring you to pay. This is why it's crucial to check the last activity on your account before paying anything.

If there has been no activity on your account for more than 7 years, it's likely that the statute of limitations has expired. This means that Portfolio Recovery Associates cannot take the case to court.

To determine if the statute of limitations has expired, you need to check the statute of limitations in your state. This information can be found in a list that's available online.

Joe's case is a great example of how the statute of limitations can work in your favor. He hadn't made any purchases or payments on his Citibank account in more than 7 years, so Portfolio Recovery Associates couldn't take the case to court.

Complaint Ranking is a crucial aspect of understanding the lawsuit process. PRA Group, Inc. has a notable ranking.

PRA Group, Inc. ranks #2 out of 2,458 companies in the CFPB Debt Collection Complaint Ranking. This is a significant position, indicating a substantial number of complaints.

Consumer laws and protections are in place to safeguard consumers from debt collection agencies that engage in unfair practices. In the case of Hempel-Dubois v. Portfolio Recovery Associates, LLC, the court found that Portfolio Recovery Associates (PRA) had violated federal and state laws in their debt collection attempts.

Consumers have the right to dispute a debt and request no further contact from a collection agency. This is a key provision under the Fair Debt Collection Practices Act (FDCPA). The FDCPA also allows consumers to tell debt collectors not to call them at work if such calls are not permitted by their employer.

Debt collectors must provide proof that a debt exists and that they are authorized to request payment. This is a crucial safeguard to prevent debt collectors from making false or misleading statements. In the case of Hempel-Dubois v. Portfolio Recovery Associates, LLC, PRA was found to have used counterfeit documents and filed a lawsuit with deceptive information.

Consumers can file a complaint against a debt collector if they believe their rights have been violated. The FDCPA provides a clear process for filing a complaint, which can be done online or by mail. Debt collectors cannot engage in abusive or harassing behavior, including making repeated calls or sending threatening letters.

Here are some key rights and protections under the FDCPA:

It's essential to understand these rights and protections to ensure that debt collectors do not take advantage of consumers. By knowing your rights, you can stand up for yourself and protect your financial well-being.

You can negotiate debt settlement at any stage of the collections process, making it a viable option even after a lawsuit has been initiated.

To settle with Portfolio Recovery, you'll need to follow specific steps, including responding to the lawsuit, sending a settlement offer, and getting the agreement in writing.

A settlement offer should start at 60% of the original debt, but can be lower if you're willing to fight back in court. You can use a prompt like "I am offering Portfolio Recovery a lump-sum payment of $___ to settle the debt with case number ___."

Debt collectors may try to get you to pay 80-90% of the debt before a lawsuit, but once the matter escalates, you're in a better position to negotiate a lower settlement.

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Settling with collectors can be a daunting task, but it's often the best option to avoid further financial strain. You can negotiate a debt settlement at any stage of the collections process, and SoloSettle makes it easy.

To start, you'll need to decide how much you can offer for a settlement. Review your savings and aim for a reasonable offer, usually around 60% of the obligation. This can help you save money compared to paying the total amount.

You can send a settlement offer to the collector, and it's best to start with a lower offer, giving yourself room to negotiate. Use a prompt like: "I am offering Portfolio Recovery a lump-sum payment of $___ to settle the debt with case number ___. You can accept or counteroffer."

Debt collectors like Portfolio Recovery would rather take your money and move on than continue with a long, expensive legal battle. If your finances are limited, explain your situation to the collector, and they may grant you additional room for savings.

If the collector initiates a lawsuit against you, you'll need to respond to the lawsuit with an Answer before the state's deadline. You can then send a settlement offer to kick off negotiations.

Here are some key steps to keep in mind:

By following these steps, you can increase your chances of coming to a successful settlement with the collector.

Portfolio Recovery Associates, Inc. (PRA Group) is a debt-buying collector that has grown to become one of the biggest in the nation, worth over $2 Billion.

They operate by buying large volumes of deeply discounted defaulted consumer debt from original creditors and then collecting on it at face value plus interest using mostly their own employees.

PRA Group employs over 3500 people worldwide and is expanding its acquisitions overseas into Europe, South America, and beyond.

The company's founder, Steve Fredrickson, was a banker who worked on the issue of selling off defaulted commercial loans in the mid 1990s.

Six years after its founding, with some external backing, Portfolio Recovery became a public company.

It's worth noting that PRA Group's success is largely due to its ability to identify and acquire large volumes of discounted debt, which it then collects on at face value plus interest.

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If you're facing a lawsuit from Portfolio Recovery Associates, it's essential to understand the court process to navigate it effectively. Responding to the lawsuit is a crucial step, and simply ignoring it can lead to a default judgment, allowing the debt collector to garnish your wages, take money from your checking account, or place a lien on your personal property.

To avoid this, file a formal response to the Complaint, which will set you apart from most consumers who ignore the lawsuit. This response should highlight the glaring deficiencies and shortcomings in the debt collector's lawsuit.

Requesting evidence to establish the basics, such as your responsibility for the debt, the debt collector's right to take legal action, and the specific amount owed, is crucial. This is because large debt collection companies like Portfolio Recovery Associates often sue the wrong person or lack basic financial documents.

You should also consider the expiration of the statute of limitations as an affirmative defense. If the debt collector filed the lawsuit after the expiration of the statute of limitations, you can file a motion to have the lawsuit dismissed.

Here are the key steps to navigate the court process:

By taking these steps, you can position yourself for victory in court and prevent the debt collector from taking drastic measures against you.