Is Capital Management Services calling you? Are you getting letters from them? Are they showing up on your credit report?
If you answered yes to any of these questions, keep reading to learn more about this debt collection agency and what your rights are.
What is Capital Management Services, L.P.?
Capital Management Services, L.P. is a third-party debt collection agency that was founded in September of 2000. They don't buy debt accounts; instead, they're hired by the original creditors to collect on accounts.
Here's what we know about the company:
Address: 698 1/2 South Ogden Street, Buffalo, NY 14206-2317
Phone: (716) 871-9050 or 1-800-457-8220
Years in Business: 25
Founded: September 28, 2000
Website: cms-collect.com
Consumer Payment Portal: cms-trans.com
Alternate business names: Capital Management Services of America, LP; CMS; CMS, LP
They collect many different types of debts, including credit card debt (CitiCard, Capital One, Discover Bank, Barclay, PNC Bank), student loans, auto loans, telecommunications, healthcare, and commercial accounts. They don't own the debt they collect; they simply represent the original creditor.
What kind of complaints have been filed against Capital Management Services?
Despite having an A+ rating with the Better Business Bureau, Capital Management Services has a long history of complaints filed against them. In the last 10 years, there have been approximately 450 complaints filed with the Consumer Financial Protection Bureau. This puts them in the top 5% of collection agencies with the most complaints.
The real story, however, is in how they respond to those complaints. Of the 33 complaints filed with the BBB in the last three years, only 15% were resolved. The remaining 85% were considered answered but not resolved, meaning the consumer was not satisfied with the response they received from CMS.
CMS was also involved in a class action lawsuit in which they were one of many vendors who participated in making illegal robocalls. The lawsuit was filed against Capital One, alleging that they (and their vendors) used automatic telephone dialing systems to call the cell phones of 21 million customers without their consent. The suit settled for $75.5 million and was given final approval in December 2014.
What is a collection account and why is it on my credit report?
The credit reporting agencies process billions of pieces of data every month. When it comes to credit reporting, speed is much more important than accuracy. When a debt collector like Capital Management Services reports a collection account to the credit bureaus, they don't verify the information. They simply accept what the collector tells them as the truth.
It's no surprise then that a staggering 79% of credit reports contain errors or inaccuracies, according to a study done by U.S. PIRGs. This isn't a rare occurrence; it's simply the way the system is set up.
Here's how it works: a debt collector provides a batch of data to the credit bureaus, who don't scrutinize the information before accepting it. Your credit score is then lowered, possibly before you've even realized there was a problem.
How do debt collectors take advantage of consumers?
Debt collectors understand that consumers are at a disadvantage when it comes to knowledge of debt collection laws, credit reporting laws, and even the documentation process. Most consumers can't keep up with the nuances of debt collection.
This imbalance of power creates opportunity for the debt collector. They use the fact that you're in a rush and maybe even scared to negotiate a payment from you. They know you won't take the time to request debt validation or ask questions about your rights.
In fact, Capital Management Services was the subject of a recent federal lawsuit in which the Consumer Financial Protection Bureau and Federal Trade Commission filed an amicus brief stating that, "The CFPB and the FTC therefore submit this brief to inform the Court of their view that collection letters like the ones CMS uses to collect time-barred debts could violate the FDCPA."
What happens if I pay a collection account?
It seems intuitive that if you pay off a collection account, it will be removed from your credit report. Unfortunately, that isn't the case.
When you pay a collection account, the "collection" status changes to "paid collection." The account isn't removed; there is simply a notation that it's been paid.
A paid collection is still a derogatory item on your credit report, and it still affects your credit score. In fact, many credit scoring models still consider a paid collection just as negative as an unpaid one.
Not only does paying a collection account not remove it from your report, but in some cases, it can actually re-age an old debt, starting the clock ticking all over again.
That's why many experts recommend disputing a collection account before paying it.
What is debt validation and why is it important?
Debt is often bought and sold many times over before landing in the hands of a collection agency like Capital Management Services. Along the way, documentation is lost or destroyed. Sometimes account numbers are changed or balances miscalculated. By the time a debt collector contacts you, they may not have the documentation necessary to validate that the debt is yours.
We've seen several complaints against Capital Management Services for failure to validate debt. One complainant noted, "I asked for validation of debt. The woman said, 'We don't send that out. We don't do that anymore'." Of course, that's not true, as federal law requires a debt collector to validate a debt upon consumer request.
Another consumer reported, "I called CMS and spoke with Mr. [redacted], who told me he was the lawyer. While I was explaining to him that I had received a phone call, he interrupted me and said, 'why are you being so rude?'" This kind of confrontational response to a consumer request calls into question the company's commitment to dealing fairly with its customers.
Why should I dispute a collection account?
If you dispute a collection account with the credit bureaus, the collector has approximately 30 days to verify the account. If they can't provide adequate documentation within that time period, the account must be deleted.
This isn't a loophole or trick; this is simply your right under the Fair Credit Reporting Act. FCRA states that the information contained in your credit report must be accurate and verifiable.
Debt collectors operate on very thin margins. They collect thousands and thousands of accounts every year. They often don't have the documentation or wherewithal to respond to every dispute. When they can't verify within the allotted time period, the account is deleted. It's not cheating; it's simply holding them accountable.
Why do I need to communicate only in writing?
If you get a call from a debt collector, don't engage. Instead, ask for a call back number and hang up. The phone number on every collection letter is provided so you can call and request they verify your debt. It's not for negotiating a payment or explaining your situation. It's not for setting up a payment plan.
When you communicate on the phone with a debt collector, you're giving them all the power. They're taking notes and gathering more information about you, which they can use later.
All communication should be in writing. If you do accidentally get on the phone with a debt collector, get off as soon as possible.
We've seen this scenario play out in consumer complaints against Capital Management Services. One consumer reported, "Someone called from a county office saying I would be arrested if I didn't contact CMS." This kind of immediate pressure only works when you're on the phone with someone. If you communicate in writing, you have time to research, consult with a third party, and craft a well thought out response.
What kind of collection accounts can I get removed from my credit report?
You can dispute any collection account that contains inaccurate information, any account that isn't yours, any account that the collector can't verify within the required time period, or any account that contains errors in balance, dates, or other information.
When it comes to Capital Management Services specifically, we know the federal courts have determined the company has a problem with documentation and communication. In the Heredia v. Capital Management Services case, the court found the dunning letters sent by CMS that contained "potentially deceptive statements about IRS Form 1099C" to be misleading.
If a debt collector has a history of misleading communication, any information they place on your credit report should be viewed with skepticism.
Over 920 federal court cases have been filed against Capital Management Services for their collection practices. That's a remarkable number, demonstrating a clear pattern of behavior rather than one-off mistakes. That makes disputing their collection accounts a no-brainer.
What about time-barred debt?
Each state has its own statute of limitations for different types of debt. Once the statute of limitations runs out, a debt collector can no longer sue you over the debt.
Capital Management Services has been sued in federal court for their practice of collecting time-barred debt.
One consumer reported, "This company is pursuing a debt which has been removed from my credit report due to the statute of limitations. The debt is very old. They continue with degrading comments and harassment." Not only is attempting to collect a time-barred debt illegal, but threatening the consumer in the process is also against federal law.
If you think Capital Management Services is attempting to collect a time-barred debt from you, that's an excellent reason to dispute the account.
Should I hire a professional to help me with Capital Management Services?
Debt collectors are professionals who spend all day every day dealing with consumers and credit reporting agencies. They understand the laws and know all the ins and outs of dealing with people like you.
You probably don't have that kind of expertise, which puts you at a disadvantage. If you send a dispute letter, you may forget to cite the right law. You might miss a deadline that could have worked in your favor. You might give them more information than you have to, which can only make their case stronger.
Credit repair experts deal with these laws every day. They understand which strategies work in which situations. They know how to document everything and preserve evidence. They know when to push back and when to back off.
Why is it important to work with someone with experience with Capital Management Services?
Capital Management Services has proven through their history and their federal lawsuits that they're an aggressive debt collector who pushes the limits of what's right. Employee reviews of the company describe a culture in which collectors are pushed to the limit and not given the training they need. This can lead to violations like the ones we've described here.
If you're going to deal with a debt collector like that, you need to understand their patterns and practices. We know how Capital Management Services operates. We understand their strengths and weaknesses. We know what kind of documentation they respond to and how they respond to disputes. We have extensive knowledge about this agency that you cannot replicate on your own.
The stakes are high. A collection account can stay on your credit report for seven years. It can affect the loans you're approved for and the interest rates you're offered. It can increase your insurance premiums and might even keep you from getting a job.
In some cases, the cost of hiring a professional is less than the cost of trying it on your own.
Conclusion
Having a Capital Management Services account on your credit report is a pain, but it's something you can deal with.
The company has a history of federal lawsuits, consumer complaints, and failure to validate debt. Before you pay them a single penny, make sure you understand your rights and how the system works.
Don't ever communicate with a debt collector over the phone if you can help it. Don't give them any more information than you have to. And always ask for written verification of any debt they claim you owe.
Do you have Capital Management Services on your credit report?
We can help you challenge questionable collection accounts from companies like Capital Management Services.
At FightCollections.com, we understand how companies like Capital Management Services operate. We understand the laws that govern what they can and cannot do. We'd like to evaluate your credit report and give you guidance on how to proceed. Contact us for a free consultation today.