Perhaps you requested a copy of your credit report and noticed an account from Midland Funding LLC that you had never seen before. Your heart sank as you realized this collections agency was affecting your credit score.
Before you have a heart attack or write them a check, you need to understand what this company is and why having them on your credit report isn't as cut-and-dry as you think.
Midland Funding LLC is a debt buyer. This means they didn't loan you the money in the first place but instead bought your debt from the original creditor for pennies on the dollar. They're attempting to collect the full amount from you, though. Here is some basic information about Midland Funding:
Address: 350 Camino de la Reina, Suite 100, San Diego, CA 92108
Phone Number: (877) 653-4161
Years in Business: Formed in Delaware in 2001
Parent Company: Encore Capital Group, Inc. (NASDAQ: ECPG)
Servicing Arm: Midland Credit Management, Inc.
It's essential to understand the corporate structure here. Midland Funding owns the debt, while Midland Credit Management handles the collections. Both are subsidiaries of Encore Capital Group, which purchased $1.35 billion in portfolios in 2024 alone.
What is Midland Funding's history with regulatory issues?
Midland Funding has one of the longest records of enforcement actions in the consumer finance industry. Since 2015, the company and related entities have paid over $85 million in penalties, consumer refunds, and debt forgiveness due to federal and state actions. We're not talking about a few isolated incidents here. There's a clear pattern of behavior.
The Consumer Financial Protection Bureau (CFPB) has brought formal enforcement action against Midland Funding twice:
In 2015, the CFPB determined the company engaged in robo-signing, attempted to collect time-barred debts, and sued consumers without documentation. The consent order forced Midland Funding to provide up to $42 million in refunds to consumers, pay a $10 million civil penalty, and stop collecting $125 million in debt. In 2020, the CFPB sued Midland Funding again for violating the terms of the 2015 consent order. The agency found the company filed about 100 lawsuits on time-barred debt accounts despite the order to cease. The 2020 settlement included an additional $15 million civil penalty.
How does debt buying affect removals?
The economics of debt purchasing
When Midland Funding purchases debt, it doesn't pay the full amount. In fact, a study by the Federal Trade Commission (FTC) found debt buyers pay an average of four cents on the dollar. So if Midland Funding is reporting you owe $5,000, they probably paid something like $200 for your debt.
This is why debt buyers often settle for less: they don't have that much invested in your debt. It's also why they might not go through the trouble of verifying smaller debts. In many cases, the cost of digging up the documentation exceeds what they paid for the debt.
According to Encore Capital Group's own disclosures, the company spent $2.1 billion acquiring 33 million customer accounts with a face value of approximately $54.7 billion. That works out to about 3.9 cents per dollar. This mismatch between what debt buyers pay for a debt and what they attempt to collect creates issues with the accuracy of what's reported.
Gaps in chain of title
When debt is sold from the original creditor to a debt buyer, the paperwork often doesn't follow. The CFPB found Midland Funding and its affiliates receive no documentation about the debts they purchase. In fact, many purchase agreements state no documentation is available.
The original creditors aren't verifying the debts, either. They aren't confirming the amount due or even if the debt is collectible. The data files Midland Funding receives contain approximate balances that might not reflect recent payments. This creates opportunities for errors.
Courts have ruled Midland Funding's documentation is often insufficient. In one case in New York, the court ruled the "totality of the evidence submitted by plaintiff was insufficient to establish the chain of title" and awarded summary judgment to the defendant for lack of standing. If a debt buyer can't establish they own the debt, you have a good case for removal.
What about robo-signing?
Mass-producing affidavits
Through an investigation by state attorneys general, we know Midland Funding employees were signing as many as 400 mass-produced affidavits a day without reading them, without knowing what they said, and without verifying the information was correct. These affidavits were then filed in court across the country as the agency attempted to get judgments against consumers.
In December 2018, a settlement involving 42 states addressed the robo-signing practices. Employees admitted signing between 200 and 400 affidavits a day without reviewing them. Each affidavit falsely claimed the signer had personal knowledge of the debt.
This is important for your credit report because a company willing to fabricate court documents might also fabricate information sent to the credit bureaus. If Midland Funding couldn't verify debts when it swore out a court affidavit, how could it verify information on your credit report?
What the courts have said
In the case of Brent v. Midland Funding, the court ruled robo-signing affidavits in debt collection actions constituted a violation of the Fair Debt Collection Practices Act (FDCPA). The case impacted about 1.5 million consumers. During discovery, the court found employees were signing computer-generated affidavits without any personal knowledge of their contents.
The Sixth Circuit Court of Appeals later ruled a proposed $5.2 million settlement was unfair, unreasonable, and inadequate. The Federal Trade Commission (FTC) filed an amicus brief in opposition to the settlement. The FTC argued class members would only get a small payment— capped at $10— in exchange for releasing their FDCPA claims.
In another case, a jury awarded $100,000 in actual damages and $623,000 in punitive damages after finding willful noncompliance with the Fair Credit Reporting Act (FCRA). Midland Funding failed to conduct a reasonable investigation of a consumer's repeated disputes of credit information over the course of two years. That's why disputing information on your credit report can get results.
Why you shouldn't pay first
The danger of paying
Many people think paying a collection account is a good idea. In reality, it's not that simple. When you pay a collection, it usually means the status is updated from "unpaid collection" to "paid collection." You still have a negative mark on your credit report, but now you've also paid them money. In many cases, that's not a great ROI.
Paying a collection can also reset some clocks in ways you don't want. Let's say you have a debt that's six years old. It will be taken off your credit report in a year. If you pay it, the "date of last activity" will be updated, and that clock starts over. Let's say you have a debt that's past the statute of limitations in your state. In some states, paying it can reset that clock and allow them to sue you again.
Perhaps most importantly, when you pay them… you've given them your leverage. Once Midland Funding has your money, they have no incentive to remove the account from your report. If you challenge first, you preserve your negotiating position— and you're testing whether Midland Funding can verify what they're claiming you owe.
The seven-year rule
Under federal law, most negative information can only stay on your credit report for seven years. The clock starts from the "date of first delinquency" on the original debt, and that doesn't change even if the debt is sold or transferred.
Midland Funding can't legally re-age a debt by reporting a newer "date of first delinquency." But consumers have reported attempts to do just that. One person said they got a letter indicating Midland Funding was going to "reopen a closed collection account and re-age it." That's illegal under federal law, and it's another reason you might dispute their claims.
If you have a debt that's five or six years old, it's probably not worth paying. It's going to come off your report in a year or two no matter what you do. But disputing? That costs you nothing, and there's a chance you can get it removed sooner if Midland Funding can't verify.
The dispute process
What happens when you challenge a debt
When you dispute something on your credit report, the credit bureau has to investigate within 30 days. They'll contact the furnisher— in this case, Midland Funding— and ask them to verify the information is accurate. If Midland Funding can't verify within that timeframe, the credit bureau has to delete it.
Given what we know about how Midland Funding purchases debt— often without documentation to back it up— verification isn't a given. The CFPB found the original creditors were explicitly telling Midland Funding the data was "approximate" and "may not reflect the consumer's current balance." But Midland Funding was collecting anyway without verifying the balance. They might not be able to verify when you challenge them, either.
According to "Big Banks, Bigger Fees," a report from U.S. Public Interest Research Groups, 79 percent of credit reports contain errors or other serious mistakes. Whenever you see a collection account on your report, you should always assume the worst. In fact, you should always challenge.
Why you need a professional
Debt collectors have the upper hand
When the debt collector is calling, it's easy to get pressured into a payment. They know the rules, they know the shortcuts they can take, and they know how to use urgency to get you to pay up. Here's how one consumer described it:
"They called my granddaughter. Told her she was my emergency contact and she immediately went into panic mode, thinking something had happened to me."
Debt collectors use psychological manipulation to create a sense of urgency. You feel like you need to respond right now, even if that means paying a debt you're not sure is valid. Midland Funding gets more than 17,000 complaints a year, and communication tactics are a big part of that. Consumers say the company makes repeated and harassing collection calls in an attempt to force consumers to pay without validating the debt.
A credit repair professional helps level the playing field. They know how to word a dispute for maximum impact. They know what documentation a debt buyer is likely to be missing. And they know how to spot legal violations that can help your case. In "Debt Deception," a study from Human Rights Watch, the authors looked at a sample of 500 debt buyer lawsuits. Of the 247 that had been resolved, only three defendants had an attorney. In cases where the defendant had a lawyer, the outcome was substantially better.
What's the bottom line here?
Midland Funding LLC on your credit report doesn't mean you owe them money. This is a company that has paid $85 million in penalties to regulators, been caught robo-signing hundreds of thousands of affidavits, and is still filing lawsuits for debts they can't verify. If they're on your report, you should scrutinize their claims, not just pay.
Disputing the debt is an option, and it's one you should consider. You have the legal right to ask a debt collector to verify a debt they're claiming. You have the right to dispute information on your credit report that you don't think is accurate. And you have the right to work with a professional to help navigate the situation.
Don't get pressured into paying because a debt collector is calling. Don't assume that just because they filed a lawsuit, they can prove their case. And don't assume you have to pay.
Contact Fight Collections today to go over your report and come up with a strategy that makes sense for your situation. The law is on your side if you know how to use it.