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I was looking at apartments a year ago, and found the "perfect" apartment online. However, I couldn't go look at it until the following weekend. Unfortunately, the apartment had already been listed for a while, and I was worried that someone would grab it before I had a chance to look at it. I asked my locator agent if there was anything I could do. She looked into it and told me that I could temporarily put a hold on it until I had a chance to look at it. I agreed and put down the roughly $300.

Fast forward to the following day, I still haven't looked at it or anything, but I get a call from the property saying that my keys were ready. WTF? I explained the situation to her and she informed me that not only did I apply for the apartment, but the nearly $300 I spent were a non-refundable admin fee for applying, not a hold. Needless to say, I called my locator confused. She told me that she was sorry but that she must have misunderstood and there was nothing she could do...

I called my bank, told them the whole story, and they opened an investigation into it as a fraud case. A month or so later I got a letter from the bank saying that they agreed it was fraud and refunded the money in full.

However, that was not the end of the story. Fast forward to a few months ago, and I started getting called from a collection agency collecting the $300 on behalf of the apartment complex. I initially ignored them, big mistake, and there is now a collection for $300 on my credit profile.

Let's get the easy stuff out of the way. Yes, I am young and an idiot who doesn't understand what I'm spending money on and that's why these things happen to me. I'm not even mad or anything because I know I'm an idiot and this is all my fault.

Having said all that, this is hurting my credit and I'd like to do something about it ASAP, but I'm not sure where to begin.

Soviero
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10 Answers10

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I don't know the details of whether or not you should pay this money, or who is at fault. But clearly, you believe that you do not owe the money, and the bank investigation seems to agree with you, since they gave you your money back.

Since you have your money, and they haven't sued you, the only issue yet remaining is your credit report. Here is what I would suggest.

First, make sure you check all three credit reports, to see which reports the collection appears on. Then dispute the report with each credit bureau reporting the problem. There is an article on CreditKarma that explains the process. When you file your dispute with the credit bureau(s), they will investigate. This usually involves asking the creditor for proof of the debt, and if you didn't sign anything, they probably won't have any proof. Hopefully, the credit bureaus will come to the same conclusion as the bank did, and remove the collection from your credit reports.

In my opinion, it doesn't make sense to pay them now, if you don't believe you owe it. Paying them won't remove all the bad stuff from your credit report (but it will improve it), and you don't want to pay them and then immediately sue them.

If, however, the credit bureaus side with the landlord and leave this on your report, paying the $300 is better on your report than leaving the "unpaid debt" on there.

Ben Miller
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"[My locator] told me that she was sorry but that she must have misunderstood and there was nothing she could do." Your locator owes you $300.

Pete Becker
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All three credit bureaus allow you to file a dispute online. Some allow you to upload documentation at the same time, others will ask you to mail it to them. Send them the letter you got from your bank, they will then return to the collection company.

For $300.00 most likely they will not pursue it any further and the credit bureaus will delete the entry from your file. If the collection company want to make a case out of it they will have to view to cost of trying to get a Court Judgment against the value of the amount they are claiming. Almost certainly they will view at not cost effective and your credit rating will return to where it was prior to the negative impact

gchq
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First of all, whatever you do, DON'T PAY! Credit reporting agencies operate on aged records, and paying it now will most certainly not improve your score. For example, let's say that you had an unpaid debt that was reported as a "charge-off" to the credit bureaus. After, say, six months, the negative effect on your score is reduced. It is reduced even further after a year or two, and after two years, the negative effect on your score is negligible.

Now, say you were to pay the debt after the two years. This would "refresh" the record, and show as a "paid charge-off". Sure, now it shows as paid, but it also shows the date of the record as being today, which increases the effect on your credit drastically. In other words, you would have just shot yourself in the foot, big-time.

As others have noted, the best option is to dispute the item. If, for some reason, it isn't removed, you are allowed to submit an annotation to the item, explaining your side of the story. Anyone pulling your credit record would see this note, which can help you in some instances. In any case, these scam artists don't deserve your money.

Finally, you should check who is the local ombusdman, and report this agent to them. She could lose her license for such a practice.

Dave
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From the apartment owners perspective what was the purpose of $300? They promised they wouldn't rent it to somebody before you had a chance to see it. But lets say you did see it, and decided you didn't like the view. Would they have to give the money back? if so, why would they promise not to rent it if somebody showed up first?

I would have made it clear, as the owner, what the money was for. It was a $300 fee to delay rental. You would have essentially bought x number of days of delay. You could view it as a mini-short-term rental. Of course there should have been paperwork involved. There should have been been a receipt that at least mentioned the amount of money involved.

You may need to pay the amount owed, and may need to determine if you want to sue in small claims court. Of course your agent may have some liability based on your contract with them and any paperwork they signed when the money was sent to the owner.

The fact that the bank sided with you doesn't mean the courts will.

mhoran_psprep
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Ben Miller offers you sounds advice. However, if it comes down to it I would reach out to a lawyer to negotiate this for you. If what you are presenting is true then you could easily sue them for the damages incurred. I have been in a similar situation and unfortunately using the lawyers is what was required to get the solution resolved. Based on my previous experience a simple letter from a local lawyer office would get this dropped pretty quick and should cost you around $150. Best of luck!

Daniel Curtis
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The debt collection agency needs to see a copy of the notice from the bank that the $300 charge is a disputed and fraudulent charge. Also require them to provide proof. To reduce your stress, you should contact a lawyer to handle the debt collection agency. Disputing the information on your credit report is exactly the way to "fix" that issue. All they need to see is the bank letter stating that the charges were fraudulent. The credit reports should show that item as disputed for at least a month if not remove it entirely. The bank should be able to provide with copies although you may have to pay a research charge if the information is old enough. I recommend talking to your local branch manager to get what you need.

DroidA
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Definition

If I understand correctly you describe putting a hold on an appartment as such:

A sum of money that you give to the owner of the appartment to let them hold it for you because you are probably going to rent. In case you back out of the deal, this money can mitigate the expected loss from turning down other candidates.

Situation

After asking them to hold the appartment for you, you decided not to rent. Also, you used the bank to get back the hold sum.

Conclusion

Regardless of the legal details, it seems very clear to me that after putting down a hold and walking away, you should not get the money back.

There may have been some things that distracted/confused you (call about the key), but if you actually look at the things that happened it seems both right and practical to pay them their reclaimed hold as soon as possible.

Community
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Dennis
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STEP #1. Get a copy of whatever you have signed, this is the most important step.

STEP #2. Find a reference to the landlord/tenant laws for you city, county and or state if there are any.

STEP #3. Google for a tenants union in your city, state or county. ie, Washington State Tenants Union

STEP #4. Try get a free consultation, or an affordable consultation with a lawyer in your area who specializes in tenant law.

STEP #5. Between the tenant laws for you, and the limits of what you have signed try to negotiate a cancellation of the contract, if you are bound by it.

Cameron
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Just pay it, its not alot and it will clear up your credit report.

steve
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