Legal Question in Credit and Debt Law in California

Re: debtors rights

It's kind of like when your local bookie sells your markers to Tony Soprano, except the process is legal, and slightly less unpleasant.

Re: debtors rights

If the debt has been charged off, that probably means that the originating creditor has put it on its tax return as a business loss and obtained a tax credit for it. Often times, the originating creditor has an agreement with the collection agency that it will get a percentage of what the collection agency collects. If this is the case, and it probably is, then there is an argument that the originating creditor has just committed income tax fraud. The IRS will pay you for reporting known instances of income tax fraud.

If you hire an attorney to deal with the collection company, he could use the potential income tax fraud issue as negotiation leverage to help you reach a settlement.

Also, you have claim under the Fair Credit Reporting Act that the information contained on the report is false because the debt was never charged off; it was assigned to a collection company.