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What Is A Parked Debt On Your Credit Report

  • April 8, 2021

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credit report


Reviewing your credit report is a must. It’s recommended by the Federal Trade Commission (FTC) and is always a talking point in blogs about taking care and building your credit score - and for good reason. Creditors or collection agencies will sometimes park debt in an attempt to collect old or even non-existent debt.

This brings into question, what is a parked debt? 


According to the FTC, debt parking happens when a creditor doesn’t get in touch with you before reporting you to a credit reporting agency. Creditors engage in debt parking, also known as passive debt collection, in an attempt to collect old debt they can't sue you over or to fraudulently collect non-existent debts. 

Creditors or collection agencies may issue parked debts as new delinquencies or change the date of your account. This will surely put you in a bind if you’re planning to get a loan or mortgage any time soon. Having a debt in collection show up in your credit history may potentially lower your credit score and will alert banks and other lending institutions that you might default on a payment.

While the Fair Debt Collection Practices Act (FDCPA) is a federal law that protects you from unlawful collection activities, recently creditors and collectors seem more willing to report fake and old debts. In November 2020 for instance, the FTC reported that Midwest Recovery collected over $98 million in parked debt despite the fact that 80% to 97% of the disputed debts were inaccurate. The collection agency was required to pay $24.3 million in settlement, however, this was suspended as Midwest was unable to pay. 

“What should I do if there’s parked debt on my credit report?” 

To prevent debt parking or resolve a potential one, stay up-to-date with your credit activities. Equifax, Experian, and TransUnion will provide you a free copy of your credit report every 12 months. With the pandemic, however, all the credit reporting agencies are offering free weekly online reports to help you detect inaccurate marks on your credit report. 

Acting timely on suspicious debts on your credit report should help you prepare for available courses of action. Keep in mind that most people find out about parked debts when applying for a mortgage, a car loan, or even for a job. By this time, some people will be too caught up to dispute and would choose to settle to secure their transactions or employment. 

If the debt is already in your credit history, make sure the debt is yours. You’re legally entitled to know about the debt in question. The collector is required to tell you the name of the creditor; the amount you owe; and if the debt is still within the statute of limitations. 

“What are my rights under the law?

The best solution if you have questionable debts on your credit report is to dispute the debt in writing.  If the creditor, debt collector, or credit reporting agency does not fix what’s inaccurate on your credit report, you have rights under various federal laws.  In addition to the FDCPA, you are also protected under the Fair Credit Reporting Act (FCRA). The FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information.   

If a credit reporting agency violates its obligations under the FCRA, you may be entitled to statutory damages up to $1,000.00, plus the credit reporting agency will be required to fix the error. The FCRA also has a fee-shift provision. This means, the credit reporting agency pays your attorney’s fees and costs.   

About Agruss Law Firm

Agruss Law Firm was founded in March 2012. Since then, they have quickly grown to include four lawyers, a paralegal, and several legal assistants. They are an entirely paperless operation, instead using digital case management software. The firm’s consumer rights practice helps consumers with  debt collection harassment, robocalls, credit report problems, and deceptive business practices.


Michael Agruss

Agruss Law Firm, LLC

4809 N. Ravenswood Ave, Suite 419, Chicago, IL 60640

Tel: 312-462-4112

Email: [email protected]