Wednesday, December 5, 2018

Here’s What You Need to Know About Midland Credit Management and Midland Funding

Midland Funding is a company that buys old credit card debts at a steep discount, often without proper documentation. The company tries to collect by hiring collection agencies; if that doesn’t work, Midland will hire a lawyer to file a collection lawsuit.
If you go past due on a credit card debt, it’s going to be sold to another company. That’s how credit card companies make their money – by selling old debts that they can’t collect on their own.
The companies who buy old debts usually pay far less than face value for the account, so your $5,000 debt may be sold for as little as $500 depending on the exact nature of the account. Once the deal is done, the credit card company is out of the picture and only the debt buyer has the legal right to receive payment.
One of the major players in the debt buyer arena is Midland Funding, a unit of Encore Capital Group. Encore Capital, based in San Diego, is the largest debt buyer in the nation, buying enormous portfolios of charged-off debts each year in the hopes that it will be able to collect.
Midland Funding LLC is one of the nation’s biggest buyers of unpaid debt. Midland Funding LLC purchases accounts with an unpaid balance where consumers have gone at least 180 days without making a payment, or paid less than the minimum monthly payment.
Midland Funding LLC works with its affiliate, Midland Credit Management (MCM), to service accounts.
So there you have it – Midland Funding LLC buys the debts and hires Midland Credit Management to try to collect from you.

Midland Buys Debts, But What is it REALLY Buying?

The problem isn’t that debts are sold to other companies, or that the new company hires someone else to collect from you. If the original creditor can’t get you to pay the debt, it makes sense that the lender would want to sell the account in an effort to minimize its losses. The new buyer understandably doesn’t want to pay full price for the account, which is why these debts are sold at such steep discounts.
When a debt gets sold, there are certain documents that should be transferred from the seller to the buyer. Such items include:
  • The original agreement, including the terms and conditions under which the original lender agreed to extend credit;
  • copies of statements showing how the borrower incurred the debt, including the dates of transactions;
  • A complete accounting that shows how interest and other charges were calculated, as well as how payments were apportioned;
  • Proof that the buyer actually purchased this specific account; and
  • The terms and conditions of the sale of the account.
Midland Funding, however, buys billions of dollars worth of debt each year. To cut its costs, Midland wants to pay as little as possible for each account. The credit card companies, however, want to get paid as much as possible so that they take less of a loss on their unpaid accounts.
To compromise, Midland Funding (as well as just about any other debt buyer out there) buys nothing more than an electronic file of names, addresses, and amounts due. The company doesn’t ordinarily receive copies of agreements, statements, or anything else that would prove the amount or ownership of the debt.
The agreements covering these transactions allow Midland Funding to get more information, but it’s going to cost them more money – as much as $50 per account. That may not sound like much of an investment, but when you consider that Midland Funding is buying tens of thousands of accounts you can easily see how it can add up and cut into their bottom line.

The Midland Funding Business Model:

Midland Credit Management will usually try to collect on a debt once Midland Funding buys the account, hoping that the consumer will voluntarily make a payment. Some people will pay the debt, others won’t.
If you don’t pay the debt when Midland Credit Management comes calling, then Midland Funding will take back the account and send it to a law firm. In California Midland’s primary outside law firm is Hunt & Henriques, though sometimes they keep the account in-house and use one of their own attorneys.
That happens a lot – in fact, during November 2014 alone Midland Funding and Midland Credit Management filed 193 collection cases in Los Angeles Superior Court alone.
In the vast majority of those cases (well over 90% of the time, in fact), Midland Funding gets a judgment for the entire balance they claim to be due.

Why Midland Funding Get's Judgments So Often:

Most of the time, when someone is sued by Midland or another debt buyer, they fail to defend the case or show up in court.

With no opposition to the lawsuit, the judge grants a judgment in Midland’s favor. Once that judgment is issued, Midland can collect through wage garnishment, bank account levy, and other tactics.
That judgment, in California at least, can be renewed indefinitely. And once the judgment is issued, it’s difficult to get it lifted.

States Have Notices Midland's Shoddy Practices.

I’m not the only one who’s noticed how shoddy Midland is when it comes to filing credit card lawsuits with little or no proof.
In January 2015, New York State Attorney General Eric Schneiderman sued Encore (Midland’s parent company) over shoddy practices and forced Encore to pay a $675,000 penalty and vacate more than 4,500 court judgments against borrowers.
In 2012 the West Virginia Attorney General sued Encore “for using false affidavits when obtaining default judgments against West Virginia consumers and for failing to include information required by law when suing a consumer in magistrate or circuit court for an alleged debt.”
In 2011, the Minnesota Attorney General launched an inquiry into an Ohio class action against Encore for debt collection abuses after filing a lawsuit against Encore.

If You're Contacted or Sued By Midland...

It’s not hard to see why it makes sense to defend any credit card lawsuit that’s brought against you by Midland Funding, Midland Credit Management, or Encore. The company has a long history of playing fast and loose with the debt collection process, and there’s no reason to expect that your case would be any different.
Defending the lawsuit gives you the chance to force Midland to prove up the case, including answering the following questions:
  • are you responsible for payment of the account?
  • does Midland rightfully own the debt they claim they own?
  • is the amount they claim to be due actually accurate?
  • has the lawsuit been filed within the appropriate statute of limitations for collection of a debt?
It’s about making sure that you pay the proper people the proper amount of money, and not one dime more.

About the Author, Jay Fleischman

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.

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Wednesday, October 31, 2018

Experian is Eeeerrilllyy Ironic

I know that this is an advertisement intended for companies who buy customer data (marketing lists) from Experian for marketing purposes.

But, as a credit repair profressional, I find it very ironic that Experian is pointing out the obvious in the errors that are all over the data that it sells to financial institutions in the form of Credit Reports.

The FCRA demands 100% accuracy in the data that is sold to financial institutions - Banks, Credit Unions, Dealerships, any entity who "pulls credit". These entities are buying a credit report every time they use the term "pull credit". In the credit repair industry, our clients in the Mortgage and Automotive space are able to share the original credit reports that they "pull" from Experian. There are errors all over the reports. Missing information primarilly. How can a credit item be 100% accurate if anything is missing? Missing dates of last activity, missing payment history, there is rarely any account listed, good or bad that is displaying information 100% accurately.

How can this be? Eerie Errors Hidden in the Data?

This looks to me that Experian earned 4.335 Billion $ Dollars (USD) of revenue in 2017.

If a company earns 4.335 BILLION dollars, then one would assume that there are safeguards, systems, policies and procedures in place that would demand compliance with United States Federal Laws, mainly the Fair Credit Reporting Act which demands 100% accuracy in the data that it is selling.

Go figure ....

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Monday, September 24, 2018

ECMC screws up: Couldn't prove Mr. Rowe owed on his daughter's student loan

Educational Credit Management Corporation [ECMC]  is the Department of Education's premier student-loan debt collector.

ECMC has appeared in literally hundreds of student-loan bankruptcy cases, and it knows all the legal tricks for defeating a student-loan borrower's efforts to discharge student loans in bankruptcy. And most of the time ECMC wins its cases.

But not always.

 Last June, Judge Catherine Furay, a Wisconsin bankruptcy judge, ruled in favor of Thomas Rowe, who sought to discharge a student loan he said he didn't owe. ECMC claimed Rowe signed a student loan on behalf of his daughter. Rowe said he didn't sign the loan and that any signature appearing on the loan document must be a forgery.

Rowe declared bankruptcy and filed an adversary proceeding to discharge the student loan ECMC claimed he owed. A trial date was set, but neither Rowe nor ECMC filed the disputed loan document with the court.

Judge Furay ordered the parties to file briefs on the burden of proof and concluded the burden was on ECMC to prove Rowe owed on the student loan. Since ECMC did not produce the loan document, Judge Furay discharged the debt.

What the hell happened?

How could ECMC,, the most sophisticated student-loan debt collector in the entire United States, not produce the primary document showing Rowe had taken out a student loan?

I can think of only two plausible explanations. First, ECMC may have had the loan document in its possession but didn't produce it because the document would show Rowe was right-- he hadn't signed the loan agreement.

Second, the loan document may have gotten lost as ownership of the underlying debt passed from one financial agency to another.

Here is the lesson I take away from the Rowe case. If you are a student-loan debtor being pursued by the U.S. Department of Education or one of  DOE's debt collectors, demand to see the documents showing you owe on the student loan.

 Most times, the creditor will have the loan document, but not always.  And, as Judge Furay ruled, the burden is on the creditor to show a loan is owed.

And so I extend my hearty congratulations to Thomas Rowe, who defeated ECMC, the most ruthless student-loan debt collector in the business. Thanks to Judge Furay's decision, Mr. Rowe can tell ECMC to go suck an egg.

Link to source article:


Rowe v. Educational Credit Management Corporation, No. 17-0033-cf ( Bankr. W.D. Wis. June 28, 2018) (unpublished).

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Credit Report Security Freezes Are Now FREE

WASHINGTON, D.C. — The Federal Trade Commission (FTC) issued a reminder that, starting today, consumers who are concerned about identity theft or data breaches can freeze their credit and place one-year fraud alerts for free.

 Credit Repair Security Freeze

Under the new Economic Growth, Regulatory Relief, and Consumer Protection Act, consumers in some states — those who previously had to pay fees to freeze their credit — will no longer have to do so. The new law also allows parents to freeze for free the credit of their children who are under 16, while guardians, conservators, and those with a valid power of attorney can get a free freeze for their dependents.
In addition, the new law extends the duration of a fraud alert on a consumer’s credit report from 90 days to one year. A fraud alert requires businesses that check a consumer’s credit to get the consumer’s approval before opening a new account.
As part of its work to implement the new law, the Federal Trade Commission has updated its website with credit bureau contact information, making it easier for consumers to take advantage of the new provisions outlined in the law.
To place a credit freeze on their accounts, consumers will need to contact all three nationwide credit bureaus: Equifax, Experian, and TransUnion. Whether consumers ask for a freeze online or by phone, the credit bureau must put the freeze in place within one business day. When consumers request to lift the freeze by phone or online, the credit bureaus must take that action within one hour. If the request is made by mail, the agency must place or lift the freeze within three business days.
To place a fraud alert, consumers need only contact one of the three credit bureaus, which will notify the other two bureaus, according to the FTC.
“Credit freezes and fraud alerts are two important steps consumers can take to help prevent identity theft,” the regulator stated on its website. “Identity theft was the second biggest category of consumer complaints reported to the FTC in 2017 — making up nearly 14 percent of all the consumer complaints filed last year. Consumers who believe they have been the victim of identity theft can report it and receive a personalized recovery plan at”

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Thursday, July 12, 2018

NACSO Washington Update: Equifax Hearings

Today there was a hearing in DC regarding an over of the credit bureaus and the FCRA. We thought you may want to listen in so below is a button that links to the replay. 
You can skip the first 18:40 of the replay.
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It is expensive to be a legitimate, legal, licensed and bonded credit repair company. Be careful of working with any company or individual to repair your credit who chooses to not get all of the proper licensing. 
To work with a legitimate licensed professional to assist in repairing your credit to help you and your family get "Mortgage Ready", please call our office today: (804) 823-9601. 

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Wednesday, January 3, 2018

A Fight Over the Credit Score that Lenders Use for Your Mortgage

from: The Wall Street Journal:

Banks and rival lenders are butting heads over the credit scores used to decide millions of mortgage requests by U.S. home buyers.
Now, a federal agency is weighing whether to step into the fight, which revolves around a longtime requirement for lenders who sell mortgages to Fannie Mae and Freddie Mac to gauge most borrowers using FICO scores. The Federal Housing Finance Agency's ultimate decision could have wide-reaching ramifications for the mortgage market and home buyers across the U.S.
Many nonbank lenders, which in some recent quarters have accounted for more than half of the mortgage dollars issued in the U.S., want the ability to use a credit score provided by a company owned by credit-reporting firms Equifax Inc., Experian PLC and TransUnion. These lenders argue the alternative score would open the mortgage market to a greater number of people and lead to more mortgage approvals, helping to boost home sales and the economy.
Banks generally want to stick with the current system that uses FICO scores, which have been around for decades and are created by Fair Isaac Corp. Ditching the status quo, they say, could lead to an increase in consumers with riskier credit profiles getting mortgages and a subsequent rise in defaults.

The FHFA, which oversees Fannie and Freddie, is weighing whether to change the requirement to allow for the use of another credit-scoring system. In late December, the agency asked lenders and others for formal input on the issue.
In doing so, the FHFA acknowledged concerns about a "race to the bottom" where credit-scoring systems would compete to offer metrics that make the most loans rather than aspire to be the most reliable.
Credit scores help determine who gets a mortgage and on what terms. They played a role in the last housing boom and bust as lenders lowered credit-score requirements, extending hundreds of billions of dollars of mortgages to subprime borrowers.
After the financial crisis, lenders tightened requirements for potential home buyers. As part of this, they required higher credit scores, making it more difficult for borrowers with spotty credit histories to qualify for a mortgage.
That is why some lenders, mostly nonbank firms, want a change in the kind of scores that can be used. They would like to increase mortgage volume by expanding the pool of borrowers.
These lenders view FICO scores as an impediment since they tend to be more conservative than alternatives.
Nearly half of mortgage dollars made in the U.S. go through Fannie and Freddie, according to Inside Mortgage Finance, so their requirements have huge sway over the mortgage market.

Nonbank lenders argue the current system shuts out borrowers who don't use credit either out of personal choice or because they went through a bankruptcy or foreclosure. That is where VantageScore Solutions LLC, the scoring firm that Experian, Equifax and TransUnion launched in 2006, says it can step in.
The company says it can assign a credit score to about 30 million more consumers than FICO. Roughly 7.6 million of those consumers would potentially be eligible for a Fannie or Freddie mortgage, VantageScore says.
VantageScore, for instance, says it will assign credit scores to consumers if they have a credit card or a loan for as little as one month. FICO requires six months. Separately, FICO creates scores for consumers as long as lenders or other entities update information on their credit reports within the last six months. VantageScore says it will go further back than that.
Banks aren't convinced, even if some big ones have begun to experiment with VantageScore for small pools of applicants whose FICO scores aren't high enough for a mortgage approval. "We've got so much experience using the system we're using now," said Gerard Cuddy, CEO of Beneficial Bancorp Inc., a Philadelphia community bank.

The banks' trade group, the American Bankers Association, says the current system allows for strong underwriting standards. Introducing a new scoring model could put that at risk, said Joe Pigg, senior vice president of mortgage finance at the ABA.
It also could open up mortgage lenders to legal liability, the group says. One feared scenario: If one scoring model is found to approve some borrowers, banks could be accused by regulators of discriminating if they use the other model, Mr. Pigg added.
Nonbank lenders counter that the current system is too rigid and unfairly excludes deserving borrowers. Sanjiv Das, CEO of a major nonbank lender, Caliber Home Loans Inc., said VantageScore could open up homeownership to customers including millennials who don't have a credit history because of their age.
"I strongly believe that a large number of customers are being excluded because of the slavish reliance on FICO," Mr. Das said.
Mat Ishbia, CEO of another major nonbank lender, United Wholesale Mortgage, said he was enthusiastic about a possible change. "Doing something just because you've always done it that way isn't a good enough reason," Mr. Ishbia said.
Both sides agree that Fannie and Freddie's credit-score requirements need an update, partly because lenders using credit scores must employ an old version of the FICO score.
But the FHFA appears to have doubts about adding a new credit score into the mix. When asked during a congressional hearing in October about new credit-scoring models that can assign scores to people with limited credit histories, FHFA's Director Mel Watt said, "The notion that there would be substantially more people credit scored and that would increase access if we had competition is probably exaggerated."
The FHFA has several options as it weighs the debate, including: requiring lenders to check credit scores either from FICO or VantageScore; requiring lenders to check both; or allowing lenders to choose between the two scores.
Not all nonbank lenders are urging change. Stanley Middleman, CEO of the large nonbank lender Freedom Mortgage Corp., supports the continued use of FICO, partly because he doesn't see the point of adapting a whole new system.
"I don't think people are getting boxed out of homeownership," Mr. Middleman said. "And I don't feel like we're guilty of something by asking people to have a credit history."
Write to AnnaMaria Andriotis at and Christina Rexrode at
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