Is Debt Parking Ruining Your Credit?

January 18, 2021

Last month, we advised you to check your credit report throughout the year. But you are not only checking for errors. One of the things you are looking for is whether you may be a victim of debt parking, sometimes referred to as passive debt collection.

When you check your credit report, you may find it contains mistakes that indicate delinquent debts that you already paid or never owed at all. Those faulty debts are not always caused by mistakes. Unethical debt collection companies have been placing fake debts on consumer credit reports for the sole purpose of coercing payment and putting money in the companies’ pockets.

How Does Debt Parking Work?

Debt parking starts when unscrupulous debt collectors illegally place debts on consumer credit reports without trying first to communicate with the consumer as required. This would be bad enough if the debts were legitimate.

When debt collection companies put fake debts on the credit reports of unsuspecting consumers, it can ruin their lives. If you do not regularly check your credit report, you may not learn that you are a victim until you go to take out a loan, buy a car or buy a house and find out you have unpaid debt on your credit report.

Why do they do it? Unethical debt collection companies hope consumers will just pay the debts in order to clear their credit.

Millions in Fake Debt Reported by Just One Debt Collection Agency

Debt Parking has been in the news, because on November 25, 2020, the Federal Trade Commission (FTC) sued Midwest Recovery, a Missouri collection company, and its owners in federal court for using this illegal practice to collect millions from consumers. The company had been coercing consumers since at least 2015, and its practices were so blatant that they received thousands of complaints each month.

The lawsuit states the collection company collected over $24 million and reported over $98 million in fake or questionable debts to credit reporting agencies in violation of the FTC Act and the Fair Debt Collection Practices Act. The company reported a variety of fake or already-paid debts including payday loans, debts in bankruptcy, medical bills and a lot more.

An Example of Passive Debt Collection

The FTC published an example of how Midwest Recovery stole money from consumers. An unsuspecting consumer applied for a mortgage only to be informed they had a past-due medical debt of $1,500. The debt was lowering their credit score to the point it was interfering with getting the loan. When contacted, the hospital informed them that all he owed was $80 for a co-pay.

When the consumer complained to the defendants, they not only refused to remove the debt from the credit report but threatened the victims with a lawsuit if they didn’t pay immediately.  Medical bills make a likely target, because they are often extremely complex.

The Debt Collection Company’s Comeuppance

Under a settlement with the FTC, Midwest Recovery and its owners

  • Are prohibited from debt parking.
  • Are prohibited from trying to collect debts that do not have a reasonable basis in fact.
  • Must contact credit reporting agencies and ask that all the debts they reported be removed from credit reports.
  • Must pay $56,748. (The settlement includes a judgment of $24.3 million, but most of that was suspended because the defendants were unable to pay.)

In addition, one of the owners, Brandon M. Tumber, must sell his stake in the company with the proceeds going to the FTC.

And here is perhaps the part that scares debt collectors the most: Midwest Recovery must also surrender all its remaining assets.

How Can I Protect Myself?

To protect yourself from debt parking, you must remain vigilant. We described in a previous article how you can check your credit reports every month for free through April 2021. After that, each of the big three credit reporting agencies (Experian, Transunion and Equifax) allow you to check your credit report once a year without charge. You can get reports from all three at

If you do find a discrepancy, contact not just the credit agency, but also the lender or collection company listed on the report. Credit report errors are extremely common. An FTC report shows that 25% of consumers found credit report errors that were serious enough to affect their credit scores.

Don’t wait and be surprised. Check your credit report before you apply for a loan or a job.

Debt Fighters Can Help You

If you have discovered debts you do not owe on your credit report and need help, contact Michael Ziegler, PL, Attorney Debt Fighters for a free consultation by submitting this form or just call us directly at (727) 538-4188 in Clearwater, (813) 225-3111 in Tampa or (352) 600-1326 in Mt. Dora.

Don’t let unscrupulous debt collectors coerce you into paying debts you do not owe. We can help you with credit report problems, debt consolidation, debt litigation defense, and bankruptcy. The sooner you contact us, the more options may be available to you. Video and phone consultations are available as well as in-person consultations.



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Michael Ziegler
Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.