Established in 1953, Midland Funding is one of the oldest and largest debt buyers. It purchases portfolios of delinquent accounts from creditors for a percentage of the debt value, then pursues repayment of those debts. It’s owned by Encore Capital Group, one of the few publicly traded debt-buying companies in America and one of the largest in the world. Its sister company, Midland Credit Management (MCM), is the collection arm that contacts consumers and has managed more than 7 million accounts.
How Midland Funding is different
While in many ways their practices are like other large debt buyers and collectors, Midland Funding and MCM have set themselves apart in some ways. Like many others, Midland generally is willing to negotiate a settlement for less than the full value of the debt. However, it also offers a “grace period” during which newly acquired accounts are not reported to the credit bureaus. In their updated reporting policy, they say that if a consumer begins payment against a debt within three months of the initial notice by mail and continues to make monthly payments until the debt or settlement are satisfied, MCM will not report the account to the credit bureaus.
This is a unique practice in the industry, says Michael Bovee, co-founder of Resolve. For you, the consumer, this means that if you receive an MCM collection letter for a debt you legitimately owe and you can pull together some funds, you should contact it quickly to negotiate a settlement. This can help protect your credit.
If you don’t start payments within the initial three months, MCM will begin credit reporting. It will stop reporting only when you pay the account in full (or complete payments on a negotiated settlement) and it is more than two years since the date of delinquency for your account. Some debt buyers, such as Cavalry Portfolio Services and Portfolio Recovery Associates, are more progressive: They request that the account be removed from the consumer’s credit report 30 days after the debt is resolved, regardless of the account age.
Know your rights
Midland is the first in the industry to create a Consumer Bill of Rights, a document that outlines its practices on consumer treatment, hardship, complaints and disputes, collections, and privacy and security. It also outlines the communications process, which starts with Midland sending “a debt validation notice informing the consumer that their account has been purchased, identifying the creditor that held the debt at default, clearly stating the balance owed, and giving the consumer an opportunity to both request further information and resolve the debt.”
It also states that before sending the initial notice, MCM makes a reasonable effort to verify the current address of the consumer. This is important because sometimes it’s only after their wages are garnished that consumers learn they had a lawsuit filed against them because the court notices never reached them, says Jeremy S. Golden of Golden & Cardona-Loya, LLP.
Another differentiator for Midland, per the Consumer Bill of Rights, is that it does not resell accounts. This benefits consumers who have challenged Midland on the validity of the information on their account or who have proven that the statute of limitations has passed, because they don’t have to do so all over again when a debt lands with another company. So once you resolve your account with Midland, you should not hear about it again.
If you receive a collections letter from MCM, you have options for how to respond. You can learn more about those in our article “What is a debt buyer and why should you care?”
How Resolve can help
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