Debt collection and Credit Score for Auto Lease

[San Diego TS]

What is the name of your state (only U.S. law)? California

Hi,

A debt collection agency has contacted me regarding some fees that I did not pay when I returned my leased car (I did not agree with some of them, and customer service would not budge). I was only notified once by the car company, and the bill had no due date and appeared to be an estimate, not an actual bill, so I did not do anything.

Now that a debt collections agency has called and written to me regarding this, what should I do? I'd prefer to not pay the full amount, nor do I think it's fair to automatically hurt my credit score when I disagree with some of the fees (specifically, the wear & tear charges being much higher than their 3rd party inspection report stated).

Is there a chance it won't be reported to the credit bureaus? I've checked my credit reports, and I don't see any negative information. In fact, for my car lease account, it shows as "closed" with $0 balance, Status as Pays as Agreed, and nothing under Past Due. Do I have nothing to worry about from a credit score perspective?

Thanks,
Tyler

 

[justalayman]

you only have about 7 years to worry about whether it will be reported or not. Nobody can say whether it will be reported or not.

and the bill had no due date

why would they have to provide a due date? The debt was due and payable immediately.

Now that a debt collections agency has called and written to me regarding this, what should I do?

that's up to you but I try to pay my bills. I suggest it is always a good idea to follow such a rule. If you disagree with some amount on the bill, you can attempt to negotiate the amount claimed (why didn't you do so when first presented with the bill?).

If you cannot come to a negotiated agreement, you have a couple choices: pay the bill; don't pay the bill; pay the amount you believe you should owe. After that it is up to the rental agency to determine if they will sue you for the remainder owed if you do not pay the bill or do not pay the full amount claimed.

there is one more path; you can sue them seeking a courts determination of the amount owed (declaratory judgment) . Most people don't take this path since it costs money you cannot recover to do this.

 

[single317dad]

Is there a chance it won't be reported to the credit bureaus? I've checked my credit reports, and I don't see any negative information. In fact, for my car lease account, it shows as "closed" with $0 balance, Status as Pays as Agreed, and nothing under Past Due. Do I have nothing to worry about from a credit score perspective?

The current entry on your credit report is the original lease account, which you legitimately paid in full over the course of the lease. It's doubtful any changes will be made to that account.

What will happen if the leasing company eventually sues you and wins is that you'll have a judgment listed on your credit history. That is a much bigger black mark in most cases than a negative account, and can preclude you from receiving many loans altogether, as well as affecting your insurance rates and ability to find employment (though CA has limited employers' right to pull credit reports for employment purposes.).

There are also other "credit reports" besides the three major bureaus everyone is familiar with. There are CRAs for checking accounts, commercial credit, renters/tenants, medical bills, insurance claims, utility payments, and various other aspects of financial life. I would bet there is some sort of collection mechanism in place for auto leasing companies which anyone who doesn't pay the end-lease fees would be added and blacklisted from future leases with member companies.

All this should be considered as you move forward, negotiating a fair amount for the lease return charges, and getting this problem paid off and behind you.