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Are You Due a Refund From 2 Major Debt Collectors?

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We recently reported on the Consumer Financial Protection Bureau action filed against two of the nation’s biggest debt collectors, Encore Capital Group and Portfolio Recovery Associates, and the nearly $60 million in refunds the firms owe to consumers.

As a result, we’ve been getting a lot of questions from readers wondering how this might affect them. Here are the answers to some of the common questions we’ve received.

Am I eligible?

Only consumers who wrongly paid certain kinds of debts declared invalid by this consent order will receive “redress,” or refunds. Not everyone who had a dispute with Portfolio or Encore is eligible. There are a few specific categories of “restitution eligible consumers” who will get relief:


  • 12,000 consumers who paid a “time-barred debt,” meaning the debt was so old that the statute of limitations had run out. They are eligible for part of a $5.3 million fund, or an average of $442 each.
  • 35,600 consumers who paid and were sued and had a “dispute affidavit” filed against them indicating the debt was valid because the consumer failed to dispute it. This group is eligible for part of a $36 million fund, or an average of $1,011 each.


  • 38,000 consumers who paid and received a call from a Portfolio representative claiming to be from the “litigation department” when the firm allegedly hadn’t initiated legal action — are eligible for part of an $18.2 million fund. That’s an average of $479 per person.
  • 837 consumers who paid a time-barred debt are eligible for part of an $861,000 fund, averaging $1,029 per consumer.

Only consumers in these categories will be contacted by Encore or Portfolio and receive monetary compensation. Another set of consumers who were victims of these categories of actions by the two firms, but did not pay, will see the two firms cease collection activities on those alleged debts – impacting thousands of consumers who allegedly owed another $128 million. In addition, the disputed debts should be removed from the consumers’ credit reports.

It’s important to note that consumers who believe they have been mistreated by Encore and Portfolio, but will not receive redress from this order, retain the right to hire their own attorney and sue under the Fair Debt Collection Practices Act or the Fair Credit Reporting Act.

How will I be notified? 

Consumers who are eligible will be notified by U.S. mail, but the specifics aren’t known yet. Both Portfolio and Encore must file what’s called a “redress plan” with the CFPB’s enforcement director. (Portfolio has 30 days; Encore has 60 days; both have additional time to satisfy any changes required by the CFPB). That plan must include details about how consumers will be notified, including what the envelope will look like, what the enclosed letter will say, etc.

How can I check to see if I am eligible?

Unfortunately, you can’t do anything. You must wait for notification from Encore or Portfolio via U.S. Mail.

What if I have moved?

This is tricky. Both firms are required to make reasonable efforts to contact you if a first letter is returned to sender, but that’s no guarantee. “Reasonable effort” is defined as: “Using the National Change of Address System, and (the firms must) promptly re-mail all returned letters and restitution checks to current addresses.” What if that doesn’t work? Consumers have 360 days to claim their check by providing proof of identity to the sender. After that, the money goes to the U.S. Treasury. So if you haven’t heard from them in about 90 days, and you are pretty sure you fit one of the categories above, you’ll have to call the debt collector yourself. 

Does this mean the debt will come off my credit reports?

Yes, but only those debts involving the specific issues explained above. Both consumers who are eligible for redress – because they paid – and consumers who did not pay but were contacted about debt items as described above should contact Encore or Portfolio to request that the credit reporting agencies “amend, delete or suppress” information. That doesn’t guarantee it will happen, however. Consumers should check their credit reports and make sure the changes actually occur.

Here’s how consumers can get their free annual credit reports, and dispute errors on their reports. Consumers can also view their free credit report summary on Credit.com, updated monthly, to watch for important changes.

I have a Portfolio Recovery or Encore debt on my credit reports. Can I get it removed?

See above. This consent order covers only specific kinds of collection incidents / disputes.

How soon will I get a check?

We won’t know until both firms file their redress plans and they are approved. That won’t happen for a couple of months, so don’t expect to see it in the mailbox next week.

I have another problem with Portfolio or Encore. Will this help?

It depends. If you are one of the consumers impacted by this consent order, yes. If not, the order still might help you, because both firms had to agree to a stronger set of processes and consumer protections going forward. The firms cannot attempt to collect debts without a “reasonable basis” for the amount owed, for example.

If you feel like reading the details yourself, the orders are here: Encore and Portfolio.

More on Managing Debt:

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  • James Crawford

    I have a judgement against me by Portfolio that they won by default. I was not present in court. They never proved anything. Can this judgement be removed from my record?

    • http://www.Credit.com/ Gerri Detweiler

      If you are part of the restitution eligible class described in the consent order (summarized above) then it may be. If not, the fact that you didn’t appear in court isn’t by itself a defense against the lawsuit. You’d have to try to get it vacated for specific reasons. We wrote about that more in this story: I Found a Judgment on My Credit Report. Now What?

    • Michele

      You have to go to the courthouse and ask for a vacate a judgement form. You will have to give a reason (if you received a court summons) why you did not show up. Then file it at the clerks office. You will have to mail 1st class copies to the collection agency. Also find out if they are legally allowed in your state to be a collection agency. They would have to subpoena you at your address to show up in the 1st place

  • Kimberly

    If I’m not mistaken, isn’t encore Midland funding? They are currently telling me they are about to take me to court on a time barred debt.

    • http://www.Credit.com/ Gerri Detweiler

      Midland is a subsidiary of Encore. If you are being threatened with a lawsuit on a time barred debt, talk with a consumer law attorney with experience in debt collection. If a debt collector is breaking the law, the consumer may be entitled to damages and the collection firm can be required to pay the attorney’s fees. Your other alternative would be to file a complaint with the CFPB.

  • Tina

    I have a civil case with PRA, with myself as the defendant. The case has gone on for a few months. Will PRA have to dismiss the case due to this order? I have not gotten a straight answer on this, but my lawyer was very happy CFPB clamped down on them and said the order would be a major help in our defense.

    • http://www.Credit.com/ Gerri Detweiler

      I don’t know. (You can read it online for yourself: PRA Consent Order.) It’s best to continue to take your attorney’s advice.

  • Michael Shapiro

    I paid two charge-offs to Midland because I had to close on a real estate deal and couldn’t wait to finish arguing my case (I didn’t owe the money because the creditor over-charged interest that I paid). Not only was I put through the ringer by them as described in the articles, I didn’t owe the funds. Am I out of luck in this case?

  • Sandi Quinn

    I am currently making payments on a debt with Portfolio Recovery. I have been telling them since they contacted me that this debt was past the statute of limitations, 10 years old. They don’t care, and the amount they are trying to collect is 5 times the original amount I owed. I’m making the smallest payment I can, because I’m pissed about the whole thing, and others have told me that since I agreed to pay it, it deletes the SOL years. PR state on their statement to me that “Due to the age of the debt, it won’t be sent to the credit bureaus or collected through a law suit.” Can I them I’m going to stop paying them this money, due to the law suit?

    • http://www.Credit.com/ Gerri Detweiler

      I am sorry I don’t fully understand your situation, but generally making payments does extend the statute of limitations. However it doesn’t affect the reporting date. We don’t suggest consumers stop making payments as the result of this settlement. However, you may want to file a complaint with the CFPB or at least consult a consumer law attorney with experience in debt collection.

  • Jay

    As a consumer having a different problem with Portfolio, based on the results of this action, is there any advice you can give me? Living in NJ i had a Paypal C.C with a last payment in 2011. Portfolio bought it in 05/2015. Just received a pre-ligation letter with payment options. Would if be a smart idea to get a debt validation (DV) from them? Along with harassment calls to me and people outside my household should I seek my DV and compliant through the BBB or CFPB? Overall, are there any steps I can take on my own before seeking counsel? -thank you

    • http://www.Credit.com/ Gerri Detweiler

      Why not talk with a consumer law attorney who regularly handles debt collection cases? If they think you have a good case (and harassment of individuals outside your home may well qualify) you may be able to get help at no out of pocket cost to you, and you may be entitled to damages as well. It’s certainly worth looking into.

      If the attorney doesn’t think you have a good case, then you can always file a complaint with the CFPB.

      • Jay

        thank you. I will do that

    • Adonis DeBolt

      File a civil claim requesting to see proof of debt. Only $50 to file. The county clerk will give you a court date and the debt collector will be served with papers too. “Collection Agencies” are not trying to collect the money for the creditor you owe, your creditors sell your debts to these [low-lifes] close to when the statute of limitations on your debt is about to expire. Hundreds of thousands of files bought for pennies on the dollar. It’s called “sewer service” and I’ve been a victim of it more than once, for the SAME debt because they resell them to other collectors. I had a $200 limit credit card in 1999 when I was young and irresponsible and I never paid it off. Ten years later I get sued by a collector for $5,500 they garnished my wages for years and when the Sept was paid off they said I still owed more so they wiped out my bank account and put a lien on it for $2,500! All of this over $200.

  • cbr0422

    Will a consumer who had a default Judgement from Portfolio have any recourse?

  • Jenna

    Hi Gerri, can you give us an update on when the letters will be sent? Thanks!

  • Jay

    Is the refund taxable income with 1099-C for 2015 tax return?

  • Jeanine Skowronski

    Usually customers affected by the firms involved in the enforcement action, but you can contact the CFPB’s consumer hotline (855) 411-CFPB (2372) for more info.



  • andy

    Has anyone received a settlement check from either one of these companies yet?

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