National Skip Tracing Month

Required Documentation for Buying or Selling Debt

  • Written by Mark Naiman and Jan Stieger

Due to the lack of formal proposed rules from the CFPB, which would provide much-needed clarity in the receivables management industry, the Receivables Management Association (formerly DBA International) is forced to look for guidance elsewhere. This must be done to provide industry participants with guidance to ensure compliance with regulators and policymakers at both the state and federal level. It is the philosophy and guiding principle of RMA to work with the entities that oversee the industry to achieve appropriate consumer protection without putting up artificial barriers to the collection of legitimate contractual obligations (debt).

This article provides guidance on documentation. At the most basic level, the purpose of documentation is to ensure that one is collecting a debt from the right consumer and for the correct amount. While there are many ways to ensure these two items, standards are both needed and desired.

To this end, developing the documentation standard for the RMA certification program included scouring state laws and regulations, CFPB consent orders, as well as guidelines from the Office of the Comptroller of the Currency (OCC) and the Federal Trade Commission (FTC) to glean their expectations. The current standard includes items that must be obtained as well as items that are desirable. The standard has gone through many changes, but today, in version 5.0, it requires:

Required Data & Documents for Receivable

When purchasing or selling receivables, a Certified Company shall obtain or provide at the time of the transaction the following account-related information:

1. The consumer’s first and last name.

2. The consumer’s Social Security number or other government issued identification number, if obtained by the creditor.

3. Consumer’s address at Charge-Off.

4. The creditor’s name at Charge-Off.

5. The creditor’s address at Charge-Off.

6. A copy of the signed contract or other account level document(s) that were transmitted to the consumer while the account was active that provides evidence of the relevant consumer’s liability for the debt in question. Other documents may include, but are not limited to, a copy of the most recent terms and conditions or a copy of the last activity statement showing a purchase transaction, service billed, payment, or balance transfer.

7. The account number at Charge-Off.

8. The unpaid balance due on the account, with a breakdown of the post- Charge-Off Balance, interest, fees, payments, and creditor/owner authorized credits or adjustments.

9. The date and amount of the consumer’s last payment, provided a payment was made.

10. Sufficient information to calculate the dates of account delinquency and Default.

11. The date of Charge-Off.

12. The balance at Charge-Off.

13. A copy of a statement that reflects the Charge-Off Balance.

14. A copy of each bill of sale or other document evidencing the transfer of ownership of the debt from the initial sale by the Charge-Off creditor to each successive owner that when reviewed in its totality provides a complete and unbroken chain of title documenting the name, address, and dates of ownership of the creditor and each subsequent owner up to and including the Certified Company.

In addition to the aforementioned required items, purchasers should use commercially reasonable efforts to obtain, if available:

1. If there was a legal change in the consumer’s name during the life of the account, the prior name(s) used on the account.

2. The consumer’s date of birth. 3. The consumer’s last known telephone number.

4. Consumer’s last known email address.

5. The store or brand name associated with the account at Charge-Off.

6. The opening date of the account.

7. Pre-Charge-Off account number(s) used by the creditor (and, if appropriate, its predecessors) to identify the consumer’s account if different than the Charge-Off account number.

8. Such other information it deems necessary to substantiate in a court of law the legal obligation, the identity of the person owing the legal obligation, and an accurate balance owed on the legal obligation.

While the standard is written for the purchase and sale of debt, it should be noted that anyone collecting on behalf of a Certified Debt Buyer needs to either be Certified or meet the standards of Certification (Vendor Management Standard) and quite frankly, it is best practice. Therefore, it is truly an industry standard that, when universally adopted, will undoubtedly go a long way to clean up the industry and provide necessary consumer protection.

Mark Naiman is President/CEO of Absolute Resolutions Corp., an active debt-buying company, and currently serves as President on the Board of Directors for Receivables Management Association.

Jan Stieger, CAE, serves as Executive Director of Receivables Management Association the trade association representing nearly 550 member organizations in the accounts receivable industry.