Pay Pal Limited with negative balance - what will happen? Collection Agency?

[tiredofebay123]

I have an ebay account with my sister in law, she has a pay pal account in her name with SSN and pay pal credit card. We have been registered on ebay for a year and a half no problems. Suddenly we are restricted and all store listings ended. Seems it does not matter that we had over 1400 feedback and 99.8 rating, the detailed seller ratings were under 4.1 for shipping which they told us we had 30 days to improve, 7 days later they ended all listings.
The Pay Pal balance is in the negative, due to many customers freaking out.
Will Pay Pal report the negative balance to the credit reporting agencies? How long do we have to pay the negative balance before pay pal sends the collection agencies after us.
Frankly I do not trust Pay Pal will use the monies sent to them to refund customers.
I do not want my sister in laws credit ruined.

[Modee]

Three things happen when you leave a PayPal account in the red and walk away:

1. PayPal guns for you even harder in the future - to the extent that they will examine entire blocks of similar IP addresses in an effort to keep you from registering new accounts.

2. Any PP accounts that can be in any way linked to this negative balance PP, will also be limited.
For more details on how they link you, you will need to hire me for tech support.

3. Eventually, yes, the matter will be turned over to a collection agency and if the information attached to the account is legitimate, the credit of the person who owes the money could get dinged.

You'll need to research this forum further or hire me for tech support for more details on exactly how PP will attempt to collect to money from you, limited not just to collection efforts.

[tiredofebay123]

ok, I will not be returning to ebay. I am done done done. I just do not want her credit dinged so wondered how long we have to pay the balance before they send a collection agency after her.
Just a side note:this is not my first ebay account or pay pal and they have never reported balances on me.
Would it help to send a letter to pay pal and arrange payment?

[tiredofebay123]

One more thing, I am positive this account was not linked. I had help creating this account with you Modee and am sure it was the detailed seller ratings, which I think are just rediculous!

[Modee]

I didn't say that the account was shut down because it was linked, just that IF this shut down account is now linked with any OTHER accounts, all will go down. Yes, the problem with DSRs
Low detailed seller ratings? Low DSR - What to do? How to raise DSRs - Free EBAY, PayPal, Business and Law Forums - Ebay Suspension, PayPal Limited
is that when even one buyer dings you with a 1 or a 2, it takes a mountain of 5s to get back up there.

Both Ebay and PayPal definitely do report unpaid balances to collection agencies. Based on past information from my clients, I would say it takes a few months after they charge off the balance before this happens. One thing you CAN do is dispute the validity of the debt to the collection agency when they do contact you. There are various legitimate grounds on which to dispute in this type of situation.

I am not sure if contacting PP will help. They are not set up for payment plans. You simply have to decide whether or not you wish to pay them.

[tiredofebay123]

I didn't say it was shut down because it was linked either, I was just stating a fact, it was not linked.
My ebay account in my own name with a balance owed and with pay pal account in my name and SSN had a negative balance and was never reported by either, it has been almost 4 years. I received letters from collection agencies and disputed the amounts. I guess what I meant to say about the letter to pay pal would be like a intent to pay and state dates and amounts so they knew we do intend to pay, hoping that would avoid collection.

[Modee]

Well, then you know the score, and exactly what will happen.

No, PayPal is simply not set up for payment plans. If the balance stays in the red long enough, and the account is permanently limited, they report to collection agencies. You can of course set up payment plans with the collection agencies.

The bad thing about payments plans too is that for the most part a bad debt can be reported to a credit bureau within seven years of last payment. The rule is a little trickier than that, but in general it is seven years from last payment, unless, for example, the debt was charged off on a certain date - then a payment does not toll the seven years. But in general, if you do not intend to retire the debt in full, do not pay anything at all.

You just never know when a debt will be reported to a credit bureau. It can sit dormant with a certain collection agency, and then all of sudden it is sold to another one, that decides to get aggressive and ding your credit. Until that seven year clock has run out, you are not out of the woods.

The other clock of course is the date up until a lawsuit may be filed. In most states, that is four years from date of last payment. Lawsuits are rarely filed for sums under $5000.

[tiredofebay123]

ok, normally I would just say forgot it to pay pal and ebay, and not pay, since ebay did not allow us the month to raise the detailed seller ratings and set off the alarm by restricted the account, which caused the negative balance, BUT, this is in a relatives name, and I do not want to cause her any harm. I read on another website that the balance must be paid within 90 days or pay pal sells the account to NCO or ICS, thought you might have an idea.

[tiredofebay123]

The statute of limitations in my state is 3 years. I do intend to pay this current negative balance but it may take a good 3 months. MY source of income is gone, until I go back to work in September.(I have to renew a certification I have)

[Modee]

States Raise Limits on Creditors as Debtors Squirm

States Raise Limits On Creditors As Debtors Squirm

WINSTON-SALEM, N.C. (AP) -- With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money.

National consumer credit laws already prohibit collection agencies from harassing, deceptive, or unfair practices like telling neighbors or family about what is owed, or calling before 8 a.m. or late at night. Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit.

[fauzool]

Can paypal touch my credit score or prosecute me?

Ok. I have a paypal with a negative balance of -897. I will not pay it. They unjustly took the money from me. Can they do anything to my credit score if they don't have my SSN? Or can they prosecute me? This is a Stealth Paypal.

[Modee]

I have a client who was threatened with prosecution by PayPal if he did not cover a negative balance, but the circumstances were unique and involved a little more than just not covering a chargeback.

When you leave a negative balance on a PayPal account, there are extraordinary measures PP will go to from then on to make sure you never open a PP account again. It does not matter that the account is stealth - they will still use those measures to try to ban you from the PayPal system forever, and only the techniques of the Short List can usually save you.

As far as how hard they try to collect the money if they have no idea who you really are, they won't be able to collect it obviously if you gave them information other than your own (not so much because you did not give them your real information, but because simply to collect a civil debt they are not going to investigate further than the info given to them) - BUT, if it gets to criminal prosecution then obviously there are many ways that the government could track you down.

[fauzool]

Alright thank you, Could it actually end up going to a criminal prosecution?How? Is it very common or rarley happens? Does it take a lot for paypal to call in the government?

[Modee]

You need tech support to address this for all of the reasons I already outlined, and this is not something that should be discussed further in public anyway. Thank you.

What I CAN say - again for all the reasons I already outlined - is that it is a BAD idea to abandon a PayPal in the red and walk away from it. Much better idea to abandon an EBAY owing fees - which anyway, in my opinion when Ebay shuts you down they message all your buyers and tell them to stop dealing with you and not pay you, so typically when Ebay suspends you you do not owe them anything - whatever they allege in unpaid fees is offset by the cancellation of and interference with your auctions.

But with PayPal, in such situations usually you already got the money, so you will not be losing anything by paying PayPal back.

[Modee]

Also check out:
Ebay account Restricted - unpaid fees - what will happen? Collection Agency? - Free EBAY, PayPal, Business and Law Forums - Ebay Suspension, PayPal Limited