Movie Gallery/Hollywood Video went bankrupt with only one real asset: enough outstanding overdue notices to make a librarian weep. Americans owed the chains something like $125,000,000, which is not a typo. These debts were sold, and the new owners zombified them and really, really want to get their paws on that money. A year and a half after we first reported that customers and even employees were receiving invoices from collection agencies for zombie debts, they’re still at it.
Friend of the site and super consumer advocate Bob Sullivan investigated the situation for NBC News in light of the fresh round of collection notices going out.
In an alert to consumers, the St. Louis Better Business Bureau pointed out something is clearly wrong here. It’s legal for collection agency to buy a defunct company’s outstanding debts and try to collect on them, but so many of the customers receiving Hollywood Video collection notices claim that they never owed the company money that it indicates a deeper problem. “The enormous number of complaints seems to indicate that something is wrong,” notes the local BBB president in the alert. There’s always some number of people who will claim that they totally never owed the money, but in this case that number is far too large.
Here’s the key takeaway from Sullivan’s investigation: if a collector tries to convince you that they can wreck your credit over the Hollywood Video collection notice, they’re lying. If you do find one of these notices on your credit report, the agency is breaking the law. The companies that purchased these debts aren’t allowed to do that. The Hollywood Video bankruptcy trustee made an agreement with all of the country’s attorneys general that these old debts could be collected on, but would not be reported to credit bureaus.
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Hollywood Video Continues To Try Collecting Debts From Beyond The Grave