Rent Recovery Service FAQs

Bill Gray, currently the Senior Director of Business Development for Rent Recovery Service, has advised landlords on solutions to collect debt owed by previous tenants for nearly 15 years. He currently sits on the advisory board of the American Apartment Owners Association. Rental associations and real estate investment groups nationwide regularly reprint his monthly blog articles, which can be found at www.thelandlorddoctor.com. You may email your questions to Bill at Bill@rentrecoveryservice.com

What are the benefits of using rent Recovery Service (RRS) to report tenant debt to the credit bureaus?

• Increases likelihood you will get paid
• Impairs the debtor's ability to obtain credit card, auto or another rental property
• Reports the debt as a collection account to Experian, Equifax and TransUnion

When can I report a debt to the credit bureaus?

• You may enter a debtor in your online account the 31st day after move out

How long does it take for the debt to appear on the debtor's credit report?

• As a part of the service, RRS sends the debtor a single letter (or series of three letters) instructing him/her to pay the amount owed directly to you. Thirty days from the date RRS sends this letter, they report the debt to all three bureaus

How long does a debt stay on the credit report?

• A debt may remain on the credit report for up to seven years from the date the debt was incurred

I do not have a court judgment; may I still report the debt?

• Yes, as long as you can substantiate the debt you may report judgments and non-judgments

How does the debt appear on the credit report?

• The debt will appear as a collection account

What do I need to report a debt?

• To report a tenant debt, you will need copies of the signed lease and move out statement, itemizing all charges. The rental application would also be helpful. To enter the debtor into your online account, you will need the debtor's name, total amount owed and his/her address. the debtor's social security number is also very helpful

What if I do not know the ex-tenant's current address?

• If you do not know the debtor's current address, use his/her last known address. This may be the address he/she rented from you. (You may also order a Trace Detail Report from RHA - this will tell you all known addresses, associates and relatives.) RRS letters are mailed First Class mail and will be forwarded if the debtor has a forward order at the Post Office (filled out a change of address). If the letter is not delivered, it will be returned to you because your address will appear in the return address window.

I have several tenants that owe me money from two or three years ago. May I report these debts?

• Yes you may report these debts - as long as you can document the debt

Who is the letter, or letters, from and what is included?

• The letters are mailed on Rent Recovery Service letterhead. RRS prints and mails the letters. They include and envelope for the debtor to mail the payment to you directly. Attached to the letter is a tear tab similar to a credit card statement.

My tenant hasn’t paid rent in over 2 months. He now owes me almost $2,000. Can you help me get paid? Iris S., Bellevue, Wa

• I am sorry, Iris, I cannot help you yet. First, you must evict the tenant, unless he happens to move out on his own. Once he is out, calculate what he owes you.  Be realistic in your charges and document everything carefully. Being fair and reasonable in your charges will make the debt easier to collect. 

A tenant who only lived in my rental two months just packed up and left. He signed a twelve-month lease. Can I recover the full ten months rent he owes me? Sandra F., Atlanta, Ga

• Sandra, charging through the lease is not a good idea. First, your previous tenant will only owe you ten months rent if your rental does not re-rent within that period of time.  If you were to charge him the next ten months rent now and then you re-rent the unit to a new tenant, you would then be charging two tenants rent for the same unit for the same months.  The best way to handle this is to calculate his charges through the day you enter him into your online Rent Recovery Service. Every month the unit goes unrented, you should log into your account and add another month’s rent to his total. Then, you should update the credit bureaus’ records with the new total.

I had a tenant who I evicted in July trash my apartment before she left. It cost me over $1,500 to get it ready to rent again. Can I report the cost of repairing and cleaning to the credit bureaus, as well as the rent I lost?  Sarah G., Elkhorn, Ne

• Yes, Sarah, you may report whatever your previous tenant owes you within the terms of your lease, including any rent, repairs, and cleaning. Also report your legal costs to evict him. Keep copies of receipts for any professional services and good records of the time you spent, if you did any of the work yourself. 
  

I began using Rent Recovery Service last month to report a terrible tenant who destroyed all the carpet in my unit. A friend told me that reporting my tenant as a collection account will do not any good because my tenant could dispute it with the credit bureaus and have it removed. Is this true?  Hal W., Atlanta, GA

• Hal, it is true that consumers may dispute errors on their credit reports, but this is only to remove or change errors in the report. Merely disputing a debt does not make it go away. If a debtor disputes a debt, as long as you are able to substantiate that you reported the right person and can substantiate the debt, it will remain on his credit report.
  

In July of 2010, I used rent Rent Recovery Service to report a previous tenant to the credit bureaus. This week, he called me and explained he is having problems finding an apartment to rent with the negative entry on his credit report. He asked me for a clearance letter so he can rent an apartment. In return for the clearance letter, he offered to agree to a repayment plan and to make monthly payments. Can I do this?  Todd W., St Louis, MO

• This is exactly the scenario you are looking for when you initially report the debt to the bureaus. The prospective landlord refuses to rent to your previous tenant until he pays you. Yes, you may accept a re-payment plan and accept payment in exchange for a clearance letter, but I don't recommend it. I hear this proposal often from debtors who are attempting to rent another apartment. While the debtor may have good intentions when he signs the re-payment agreement, more often than not, the landlord does not receive more than one payment before the debtor stops making payments. I recommend you require full payment that clears the bank before you give the debtor a clearance letter.

Does reporting a previous tenant who owes me a balance hurt their FICO score?  Mike P., Jacksonville Fl

• Yes it should.  Reporting any debt as a collection account should negatively affect the FICO and other credit scores.  A lower credit score makes finding money to borrow at the best interest rate difficult, if at all.  Often the debtor’s life situation will change for the better and he will want to improve his credit rating.  To improve his rating he will begin paying the credit granters with negative entries on his credit report.  If you have not reported your previous tenants who owe you, you have little chance of collecting what you are owed.  The importance of reporting debt to the credit bureaus can not be overemphasized.

My tenant moved out September 7th and owes me $3600.  Can I report him to the credit bureaus? Bob S., Omaha Ne

• As long as you have a signed lease and can document the charges, you may report your tenant to Experian, Equifax and Transunion.  However you must wait until the 31st day after move out to begin the reporting process.  In your case you could begin the process of reporting October 8th.

In June I reported a previous tenant who owed me 2 months rent.  How long will it remain reported? Tim Q., Houston Tx

• Normally the black mark remains on your debtor’s credit report for up to 7 years after move out, or until you are paid what you are owed.  You may close the account as “paid in full” or “settled in full” at any time using your online account.  If you receive a partial payment you may also change the amount that the credit bureaus report as the balance the debtor owes you.

Have a question of your own? Email Bill Gray at Rent Recovery Services.