Don’t cut off your nose to spite your face

This post originally appeared February 1, 2018 on CreditCards.com as “‘Can parking tickets still be reported to credit bureaus?

By Barry Paperno

Dear Speaking of Credit,
In your Aug. 31, 2017, article, “Library fines, parking tickets no longer trash your credit,” you mentioned that parking tickets or any other debt not resulting from a contract or agreement to pay should not be reported to a credit bureau.

Well, I have a situation here in which I “refused” to a pay a parking violation to University Parking Service because I felt it was not right. The university went ahead and tasked its debt collector to collect that debt, but the debt was listed as tuition debt. It is now reflected on my credit report.

My question to you is, since the parking violation of $100 dollars (plus a collection fee of $115) was not from a contract to pay, should it even be reported on my credit report?

Also, could you please send me a link that directs me to the actual ruling that applies to parking tickets or library fees? Thanks so much. – Allan

Dear Allan,
Have you ever heard the saying, “Don’t cut off your nose to spite your face?” It means don’t hurt yourself trying to hurt someone else. Or, in this instance, the University Parking Service.

The parking lot company and the collection agency hired to collect the $100 they say you owe have had the last word by tacking on fees to that parking ticket debt and adding a score-damaging collection to your credit report.

Changes to reporting rules affecting parking tickets
As you requested, you can read more about some recent credit reporting changes that could affect the collection account resulting from your unpaid parking ticket in our story “Credit bureaus tighten reporting rules: Who wins, who loses?,”and on the National Consumer Assistance Plan’s website.

Specifically, the National Consumer Assistance Plan, agreed to by the three big credit bureaus and 31 state attorneys general, prevents collections from being reported when the debt did not arise from a contract or agreement by the consumer to pay, such as traffic tickets and fines.

According to this plan, you are correct in your hunch that this collection to recover an unpaid parking fee shouldn’t be reported to the credit bureaus.

However, the agreement doesn’t define terms such as parking tickets and tuition. This means that either the University Parking Service or its collection agency have cleverly sidestepped this rule by simply calling your parking ticket “tuition,” or this is just how the university has always reported parking tickets.

Remember, however, that the National Consumer Assistance Plan doesn’t prevent the collection of this debt, only its appearance on your credit report.

Steps to take after a collection impacts your credit
To successfully challenge either the debt itself or its addition to your credit report, the burden falls on you to provide supporting documentation to either the credit bureau, the University Parking Service, the collection agency or all of them.

Should these approaches prove unsuccessful, you will need to decide what’s more important – continuing to make your case that the issuing and reporting of the parking ticket were done in error, or protecting your credit score and your pocketbook by finding some other way to resolve the matter.

To keep on fighting this fight following an initial setback, consider taking one or both of the following steps:

  • Submit a complaint with the Consumer Financial Protection Bureau, stating that the reporting of the collection violates the National Consumer Assistance Plan.
  • File a lawsuit in small claims court against the parking company and collection agency in hopes that the judge will side with you by ordering removal of the collection from your credit report and elimination of the parking debt.

Or you could simply cut your losses and move on using one of the following options:

  • Pay-for-delete, in which the collection agency agrees to remove the collection from your credit report in exchange for payment. That payment can be for the total debt or a settlement for less than the full amount. Of course, the collection agency is under no obligation to make such an agreement, but may see it as a way to get paid.
  • Pay in full or settle for a partial amount anyway. This will prevent any further collection activity or legal action against you by the collection agency. The collection will remain on your credit report for about seven years from the date assigned to the agency, but the damage will lessen over time.
  • Ignore the debt, while understanding that in addition to the collection remaining on your credit report, the agency can continue to contact you for payment and ultimately sue you until your state’s statute of limitations for such debts expires. A successful lawsuit against you would add a judgment to your credit report that could lower your score further. This judgment would remain on your credit report for seven years from the filing date – paid or unpaid – and extend the damage to your score beyond the life of the collection.

Whichever way you choose to deal with this debt, Allan, you will hopefully remember this experience the next time you’re tempted to cut off your nose to spite your face. Good luck!

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