Credit Repair 101–Lesson One

Credit Repair 101

This is the first in a series of articles on self-help credit repair. In this article I will cover the various consumer protection laws that relate to how credit reporting agencies conduct business, and which government agencies have the legal jurisdiction to enforce those laws . I will also show you the correct way to initiate the credit repair process and how to prepare yourself before you start the process. The most popular advice you will find on the Internet with regard to repairing your own credit will go something like this: order your credit reports, study them, find errors, then write your dispute letter(s) to the credit bureaus, and hope they investigate and delete the items you highlighted. While this simplified approach can work for some, for most others it won't and will be the cause (among other reasons) that they give up before they see any results.

To initiate a solid and comprehensive credit repair program, you must have a plan, a financial plan. To start, you must be in a position to save money. If you think you are not ready or able to start a savings program, you should re-evaluate your decision to fix your credit because even if you do raise your FICO score you will end up in the same predicament in six months because inevitably something unexpected could (and usually does) happen and you won't be prepared for it. If you don't have a reserve set aside for such eventualities, you will have to spend money that was already allocated for another debt responsibility. If you are not sure, you should create a household a budget and try to stick to it. If you are able to do it successfully for a couple of months (or if you think you can) then you should consider credit repair. The point is, you MUST get into the habit of paying your bills on time, and setting a little bit aside for emergencies.
There have been thousands of books written on personal finance. According to Mint.com, every one of those books can be broken down into three principles:

1. Spend less than you earn
2. Make your money work for you
3. Prepare for the unexpected

Household budgeting information is all over the Internet. You can download a household budget spreadsheet for that very purpose from a Microsoft website here. Also, try Mint.com (see link above). They should have free budget spreadsheets as well.
Before you ever consider DIY credit repair, you must understand that the entire credit industry is regulated by several federal laws. You MUST have a basic understanding of these laws before you can hope to be successful at repairing your own credit. The object here, is to KNOW the law so you can use it to your advantage, and use it in your communication to your creditors and the credit bureaus, not just quoting the law in an ineffective dispute letter. Quoting the law in a letter never works. The list is below. Please click on each one of the highlighted listings to see the laws for yourself and study them. There are also several concepts and some industry information with which you must familiarize yourself. In lesson two, I will show you the pertinent sections of the law that specifically apply to credit repair tactics. So let's get started.

First let's get you caught up on some REQUIRED reading in order to help you gain a basic understanding of why DIY credit repair is not only legal, but very necessary for anyone to protect themselves from fraud, poor credit decisions, and in some cases, financial ruin!
The articles below will enlighten you on how vulnerable most Americans are to the big three credit bureaus and how they do business. Pay attention to the statistics on errors found in consumer credit reports. Therein lies not only your motivation, but the reason why all consumers should meticulously examine their credit reports.
http://www.usccra.com/site-content/mistakes-do-happen.html:
http://www.cutimes.com/2004/07/14/us-pirg-credit-reports-inaccurate-credit-bureaus-tolerate-mistakes
If you have read the two articles above, you should now understand why it it's important to examine your reports.

Overview of the law: Federal Trade Commission Jurisdiction
The United States Federal Trade Commission (FTC) works alone, and in concert with other federal agencies, to administer a wide variety of consumer protection laws. The overall goal is to afford consumers a deception-free marketplace and provide the highest quality products at competitive prices. The FTC is an independent federal agency with five Presidentially-appointed, Senate-confirmed Commissioners.
Created in 1914, the FTC has two principal goals:
1. to protect consumers by preventing fraud, deception, and unfair business practices in the marketplace and

2. to maintain competition by preventing anti competitive business practices.
The FTC’s Bureau of Consumer Protection aims to achieve the first goal, and is the focus of this section.

The FTC derives its consumer protection authority primarily from Section 5(a) of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.”
According to the FTC, deception occurs when there is a material representation, omission, or practice that is likely to mislead a consumer who is acting reasonably under the circumstances. Deception occurs when there is a material representation, omission, or practice that is likely to mislead a consumer who is acting reasonably under the circumstances. Unfair practices are those which cause, or are likely to cause, reasonably unavoidable and substantial injury to consumers without any offsetting countervailing benefits to consumers or competition. In addition to its authority under Section 5(a), the FTC has enforcement and administrative abilities under forty-six other statutes, thirty-seven of which relate to the FTC’s consumer protection mission.
Among these laws are credit-related acts, such as the Truth in Lending Act, Fair Credit Billing Act, Fair Credit Reporting Act, and the Equal Credit Opportunity Act, as well as continuing enforcement of industry specific acts, such as the Petroleum Marketing Practices Act, and the Comprehensive Smokeless Tobacco Health Education Act of 1986, and additional laws relating to consumer privacy such as the Do-Not-Call Registry Act of 2003.


Consumer Protection Laws
1. Fair Credit Reporting Act (FCRA) requires:

• Creditors to notify consumers of the name and address of credit reporting agencies (credit bureaus) whose reports were used as a basis for adverse credit decisions.
• Credit reporting agencies, upon request: To disclose to consumers the nature and substance of information in their credit bureau records; to re investigate disputed information and make corrections; and, to allow consumers to file their explanations if reinvestigation do not resolve disputes.
• Credit reporting agencies to notify recent recipients (as specified by the consumer) of the credit reports, of corrections that may have been made, or, in certain instances, the consumer's side of the story, and to include this material in future reports.
• Credit reporting agencies to exclude from consumer reports adverse credit records more than seven years old (ten years for bankruptcies.)
• Credit reporting agencies to furnish reports only to those who have a Permissible purposes for the information.

2. Equal Credit Opportunity Act (ECOA)prohibits creditors from:

• Discriminating against credit applicants because of sex, race, color, national origin, age, marital status, religion or because a consumer's income comes from a public assistance source (e.g., social security or disability benefits). The act does permit the use of gages as a variable in an empirically derived, statistically sound, credit scoring system provided that the age of an elderly applicant (62 or over) is not assigned a negative factor or value. In addition, creditors may not discount or refuse to consider income because it comes from retirement benefits, part-time employment or alimony/child support.
• Denying credit because the consumer, in good faith, exercised rights under the Consumer Credit Protection Act (such as disputing a credit card bill under the Fair Credit Billing Act or a credit bureau report under the Fair Credit Reporting Act.)
• Failing to provide written notice of adverse action within specified time frames when a consumer's application is denied or when certain other adverse actions are taken. The notice must either disclose the reasons for the denial or adverse action or inform the consumer of the right to obtain those reasons.

3. Fair Credit Billing Act (FCBA) (effective 1975) applies only to open-end credit transactions. Among other things, the act specifies a step-by-step procedure for error resolutions. The procedure is as follows:

• The consumer must give written notice of a billing error, in a letter, within 60 days of receiving the bill in question.
• The creditor must respond within 30 days and resolve the dispute within two billing cycles, but not longer than 90 days. Within 90 days, the creditor must either explain why the bill is correct or correct the error.
• During the resolution period no collection activity is permitted on the disputed amount and no finance charges may be collected as well. The account may not be reported as delinquent, nor can it be closed nor restricted because of the consumer's failure to pay the disputed amount, and/or related charges.
• If the consumer still believes the billing to be in dispute after the resolution period, the consumer must again notify the creditor in writing. During this period, the creditor may not report the account delinquent without also reporting that the amount is in dispute. The creditor must also report to the consumer the name and address of each person to whom the creditor is reporting information about the delinquency.
• The creditor must also report how the matter was resolved, to anyone who received a report on the delinquency.
• Creditors must include an address on periodic statements to which consumer billing inquiries can be addressed.

4. Fair Debt Collection Practices Act (FDCPA) applies to everyone who collects consumer debts for someone else, including attorneys who collect consumer debts. While creditors collecting their own accounts are excluded from the act, most creditors follow the act's mandates and prohibitions in the interest of using sound and fair business practices. Debt collection prohibitions under the act include:

• Threatening or using violence.
• Using obscene or profane language.
• Publishing a list of consumers who allegedly refuse to pay their debts.
• Causing a telephone to ring, or engaging a debtor in telephone conversation, repeatedly or continuously.

The act also places the following restrictions on debt collector contacts:

• Contacts should be limited to between 8:00 a.m. and 9:00 p.m.
• A debtor may be contacted at work unless the collector knows or has reason to know that the employer prohibits an employee from receiving such calls or that it is inconvenient for the debtor to receive debt collection calls at work.
• If a debtor is represented by an attorney, a collector cannot communicate with the debtor unless the attorney grants permission or fails to respond to the collector's communications within a reasonable time.

Note: In addition, the act specifies: which third-parties can be contacted about a debtor for debt collection; how and when collectors can communicate to third-parties for debtor location information; and, what acts are considered to be false, misleading or unfair.
How to initiate the credit repair process
Initiating the credit repair process is fairly straight forward. But before you start communicating with the credit bureaus you MUST be organized. Below is a simple list of items you will need, and steps to take in order to be most effective in your communications or phone calls with the bureaus, collection agencies, and your creditors:

1. Be prepared to make a physical or electronic record of your progress on each account, each collection agency, and each credit bureau from start to finish. Write down EVERYTHING. When you make a phone call, write a letter, answer a phone call (related to your case) or engage in ANY communication with the bureaus (CRA's), collection agencies (CA's), or original creditors (OC's) make sure you take meticulous notes!! When dealing with collection agencies, this cannot be stressed enough. They are notorious for not knowing who the person is that you spoke with last time you called. You will want to have a record of WHO you spoke to, WHAT was discussed, and WHEN you spoke to them. The best way to do this is with a word processor like Microsoft Word, or a program I use called EverNote. Also, make personal notes about things that come to you while you are working on an account- if you don't do this you risk forgetting what you were thinking about if you have to come back to that issue at a later date.
2. Be prepared to send all written communications by Return Receipt via the US Postal Service. Doing this will cost you more, but it is worth it in the long run if you ever have to go court and file a lawsuit (or threaten to file) because you will have a record of whatever you sent to them, and a record that they actually received it!
3. Get copies of your credit reports from ALL THREE credit reporting agencies (Equifax, TransUnion, Experian). If you have access to the Internet, go to www.annualcreditreport.com. Anyone can get one free copy of their persoanl credit report every 12 months by providing some personal information and following their simple directions.

Okay, that's it is for lesson one. That should be enough to keep you busy for a while!
In lesson two, I will cover the specific sections of the FCRA, and other laws that relate to the consumer dispute process.

Bob Hurt: Who to call for Foreclosure Defense???

Bob Hurt: Who to call for Foreclosure Defense???: MEMORIZE THIS NUMBER IF YOU BOUGHT A SECURITIZATION AUDIT OR HIRED A FORECLOSURE DEFENDER Moving:  Such Fun! Call  800 444 6787 ...

Share|

Foreclosures still happening ya'll. This guy apparently knows his stuff!

How to Repair Your Credit Using a Certificate of Deposit as Collateral for a Personal Loan

Share |

 

Found this information at askmrcreditcard.com. Very good information!

Step 1:

Choose a bank for your C.D. You may wish to compare interest rates online, but the easiest thing to do is to stick with the bank you regularly use. That way you can set up an automatic payment plan that will make your loan payments for you.

Step 2:

Contact a manager at the bank. Tell them you plan to take out a personal loan using a CD as collateral. Ask the manager whether or not the bank will report your loan to the three major credit bureaus (TransUnion, Equifax and Experian). They may not report every payment you make to the credit bureaus, but you need to be sure that they do report the loan itself at least twice. Once when it is opened, and once when it is paid in full. Credit Unions in particular do not always report loans to the credit bureaus, so make sure you check with your bank before you go to all this trouble!

Step 3:

Open up a CD. Some banks will allow you to do this online, while others will require you to visit a branch. This will depend on your bank.

How much money you will need to open the CD, and how long it will be tied up for will depend on your bank. Be aware that there are early withdrawal penalties when you take your money out of a CD earlier than agreed.

Step 4:

Wait at least ten days, and up to a month before you attempt to take out a loan using the CD as collateral. This gives your bank time to process the account, and get everything set up.

Step 5:
Apply for a loan. You will need to take all of the following things with you:

1.                   Copies of your pay stubs - make sure that you have at least the last month’s check stubs from your regular job. You may need to take in proof of up to six months of regular paychecks. If your check is directly deposited then print out your last few statements that show a record of the regular deposits.

 

2.                   Work up your monthly budget - You will be expected to prove that you will have the money to repay the loan each month. You will also need to be prepared to list your assets, and liabilities on the loan application.

 

3.                   Put your papers in order - Make sure you have your driver’s license, social security number, and any paperwork relating to your CD with you when you apply for the loan.

 

4.                   Call your bank beforehand - Do a quick check to make sure that your bank will not require you to bring anything else. You want to be as prepared as possible so that you don’t waste a trip, or have your FICO score pulled more than once because you weren’t prepared and had to apply for the loan twice.

Step 6:

Put the money you receive from the bank into your savings account. Be sure that you do not spend it for any reason. By letting it sit in a savings account and earn interest, it will help to offset the interest you will be charged for taking out the loan.

Step 7:

Once you have secured your loan, and put your money into savings, then the next step is to set up your payment plan to work automatically.

You can do this by visiting your bank online. Set up an automatic withdrawal from your savings account to your checking account each month in the amount of your loan payment.

Then, do another auto draft - set up the loan payment to come directly out of your checking account.

Make sure that you have at least four days in between the two automatic withdrawals! This gives your bank time to process the transaction. Otherwise, you could have an ugly surprise in the form of overdraft fees. Banks are there to make money, and this is one way that they do it. By giving the transactions time to clear your protect yourself from all of that, and you never have to think about it again.

Your loan will be repaid automatically, and your credit will go up. If you do not choose to use auto drafts, then be sure to mark the date your payment is due on a calendar each month.

Step 8:

 

Once your loan is paid in full, get a letter from the bank manager stating that you paid your loan on time, and in full. Attach copies of your bank statements to it, and keep it somewhere safe. Next time you need to apply for a loan (Home loan, car loan or personal loan) you will have that letter and payment record as proof. Put it somewhere safe, and it will be ready to go when you are!

Sample Letter of Verification: [Your Name, Address and Telephone Number] [Date] [Bank Name] [Bank Branch Number] [Bank Telephone Number and Fax Number]   To whom it may concern, This letter is to certify that [your full name] did receive a personal loan in the amount of [insert amount] on [date the loan was taken out]. They did faithfully make payments each month in the amount of [monthly payment amount] for [number of months]. The loan amount was paid in full, as agreed on [insert date of last payment]. Copies of the regular payment records concerning this loan are attached. ______________________ Branch Manager, [Bank Name]

 

That’s it! I hope that you find this to be an easy process, and that it helps you raise your credit score quickly.

 

Tim Burgess' City View : A Strong and Sensible Step for Affordable Housing

Tim Burgess' City View : A Strong and Sensible Step for Affordable Housing

Share|



This is a good step toward affordable housing in Seattle!!

Census: Seattle saw steepest rent hike among major U.S. cities

Census: Seattle saw steepest rent hike among major U.S. cities: News, weather, traffic, events and photos from the City Desk at The Seattle Times.

Share|

What Homeowners in Washington Needs to Know About Saving Their Homes | Fightforeclosure.net

Is your home in danger of going through a judicial foreclosure? Here is a very interesting and enlightening article on what options you may have depending upon your situation.



What Homeowners in Washington Needs to Know About Saving Their Homes | Fightforeclosure.net

Share|

How to Remove A Paid Tax Lien from Your Credit Report

A federal Tax Lien is the federal government's legal claim against your property when you neglect or fail or fail to pay a tax debt. Unpaid tax liens can have a devastating affect upon your credit score.  Even if you have paid the lien, it still shows up on your credit report and has a negative effect on your FICO score.  It also affects your ability to obtain new credit. Unless the IRS files a lien notice, no one knows about the lien except you and the IRS.

This article will show you the steps to take to remove a paid tax lien from your credit report.  

When you owe money to the IRS, they file a public document called a Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.  Every creditor with whom you apply for credit will see it on your credit report.  Depending upon the amount, tax liens have about the same impact on your FICO score as a mortgage foreclosure.  If you have paid the tax lien here are the steps to have it removed from your credit report.

In 2011 the IRS initiated a program called the Fresh Start Initiative. This program allows the tax payer to have the lien "Withdrawn" from public notice, meaning the IRS will remove the Notice of Federal Tax Lien document they filed internally and with the courts that you owe them money. It also allowed the tax payer to have the notice removed from their credit report. This does not, however, mean that the lien has been satisfied, or "released." The only way a tax lien can be released is if it is paid in full or the time to collect it has expired.



Documents you will need to file with the IRS:

• IRS Form 12277 (Application for Withdrawal of Notice of Federal Tax Lien)
• IRS Form 668(y) Notice of Federal Tax Lien
• IRS Form 668(z) Certificate of Release of Federal Tax Lien

If you do not have your Certificate of Release of Federal Tax Lien, click here to access instructions on how to request it. 

You will need the information on form 668(y) in order to properly complete form 12277.  On form 12277 you shouldn't have a problem completing lines 1-9 using the information from your form 668(y). On line 10, "Current Status of Tax Lien" make sure you check the box that indicates the lien has been released. On line 11, "Reason for Request Withdrawal of Federal Tax Lien" you must check the box that indicates Tax payer, or the Tax Payer Advocate acting on behalf of Taxpayer believes Withdrawal is in the best interest of the Taxpayer and the Government. On Line 12 you must give an explanation for the withdrawal request. In this section you must write, "As per the fresh-start program, I am requesting that this lien be withdrawn.  Once reviewed and approved, please forward copies of the withdrawal notice to:"

Equifax Information Services, Inc.
P.O. Box 740214
Atlanta, GA 30374

Transunion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000

Experian
P.O. Box 4500
Allen, TX 7501

Submitting your documents to the IRS

When you have completed form 12277 you will need to send it to the correct IRS office or their response could be delayed. You will find the information on your form 668(y). Form 668(y) will have the address of the IRS office that filed your Notice of Federal Tax Lien.  This location varies depending upon the state you lived in when the tax lien was originally filed. If you do not have that information, get a copy of IRS Publication 4235. It has the contact information for the IRS Collection Advisory Group for the state where your lien was filed. If you call them they can tell you to which IRS office you should submit your documents. 

Contact the credit bureaus

When you receive a response from the IRS (if it is positive) send that as an attachment with a letter to all three credit bureaus requesting the notation of the lien be removed. 

Share |

States should ban credit checks on job applicants

Re-blogged from Februrary 2013
Technorati Tags: credit report,employment credit check


Let’s face it, our economy is still in the crapper. The latest statistics from US Department of Labor and Industries says the national unemployment rate is still hovering around 8.1%. However, the real
unemployment picture is much more discouraging. Here is an excerpt from an article I read today; Jeff Cox, a reporter at CNBC.com wrote:

“While the national unemployment rate paints a grim picture, a look at individual states and their so-called real jobless rates becomes even more troubling. The government's most widely publicized unemployment rate measures only those who are out of a job and currently looking for work. It does not count discouraged potential employees who have quit looking, nor those who are underemployed — wanting to work full-time but forced to work part-time. For that count, the government releases a separate number called the "U-6," which provides a more complete tally of how many people really are out of work.”

The numbers in some cases are startling.
Consider: Nevada's U-6 rate is 22.1 percent, up from just 7.6 percent in 2007. Economically troubled California has a 20.3 percent real rate, while Rhode Island is at 18.3 percent, more than double its 8.3 percent rate in 2007.
Those numbers compare especially unfavorably to the national rate, high in itself at 14.9 percent though off its record peak of 17.2 percent in October 2009.
Only three states — Nebraska (9.1 percent), South Dakota (8.6 percent) and North Dakota (6.1 percent) — have U-6 rates under 10 percent, according to research from RBC Capital Markets.”

In these hard times, as a country, this is definitely not the time to add to the difficulties of finding work. We should be trying to remove barriers to finding work, not reinforce them. A few forward-thinking legislators are doing just that – removing barriers. In four states, legislators have created laws to limit pre-employment credit checks. Those states are Hawaii, Washington State, Oregon, and Illinois.

The laws preventing a company from making a hiring decision based upon a potential employee’s credit history have some limitations, however. For example, if a person applies for a job where he or she has to handle money like at a bank, or at an investment firm, the law still permits the employer to consider issues like theft, or fraud convictions. Sixty percent of employers recently surveyed by the Society for Human
Resources Management said they run credit checks on at least some job applicants. That compares with 42 percent in a similar poll in 2006. Employers say credit checks give them valuable information about an applicant’s honesty and sense of responsibility. But lawmakers in Missouri and at least 15 other states have proposed outlawing most credit checks, saying the practice traps people in debt because their past problems could prevent them from finding work. Under federal law, a prospective employer must get written permission from an applicant to run a credit check, but consumer advocates say most applicants feel they are in no position to refuse. Most of the bills proposed this year resemble laws in Hawaii and Washington that prevent employers from using credit reports when hiring for most positions.

On a national level, Rep. Steve Cohen, a Tennessee Democrat, introduced a similar bill last summer in the U.S. House, where it is still in committee. More companies use credit checks, but only 13 percent perform them on all potential hires, according to the most recent survey by the Society for Human Resources Management. Mike Aitken, the group director of government affairs, said a blanket ban could remove a tool employers can use to help them make good hiring decisions. Aitken cited a 2008 survey by the Association of Certified Fraud Examiners that found the two most common red flags for employees who commit workplace fraud are living beyond their means and having difficulty meeting financial obligations. The same survey estimated that American companies lost $994 billion to workplace fraud in 2008. Aitken said someone who cannot pay his bills on time may not be more likely to steal but might not have the sense of responsibility to handle a job like processing payroll checks.

While it might be tough to argue against statistics- not impossible, but tough – those statistics do not account for issues like race discrimination. It is a known fact that racial minorities, especially African Americans, tend to have more credit problems than their white counterparts as a result of higher rates of unemployment. And what about CEO’s who commit acts of dishonesty and leave the company with a golden parachute amounting to millions of dollars? Just this past Friday CEO Russell Wasendorf, SR. of PFGBest, one of the industries 10 largest brokerage firms, tried to commit suicide after leaving a note confessing to 20 years of fraud and forgery. The MSNBC.com article stated:

“In the dramatic conclusion to a week-long saga that has shaken trader confidence in the trillion-dollar U.S. futures markets, authorities released parts of a detailed statement in which one of the industry's best-known veterans explained how he used little more than a rented P.O. Box, Photoshop and inkjet printers to dupe regulators in a more than $100 million scheme.”

I wonder what Mr. Wassendorf’s FICO score is? I do not doubt that there are others out there like him who tout amazing FICO scores, have a great credit rating, and are getting away with similar acts of fraud and dishonesty. This is proof positive that a FICO score is no real indication of the content of a person’s character. And as for Mr. Aitken’s assertion regarding workplace fraud, just ask yourself: how many people do I know who live beyond their means, and have some trouble meeting their financial obligations? The honest answer is almost everyone. Not because they are irresponsible, but more because the cost of living has out-paced the average living –wage position. So does that mean almost everyone is dishonest or would commit fraud? Certainly not. I am not saying that financial pressures cannot cause a person to commit workplace fraud, but I am saying that the decision will more often come down to that person’s sense of morality no matter how intense the pressure. If committing an act of fraud was simply a function of a person’s financial condition and no other factors were relevant, our prison’s would not be able to hold all of the criminals that would be sent there. Yet, when a person applies to a job for which they are qualified, sometimes the only other relevant factor upon which they are hired or not, is their credit rating. I have personally experienced this occurrence myself so I know it’s true.

How to know if you have a legal claim under the FDCPA

Share | The ability to obtain credit is one of the most important privileges a person living in this country can have.  The so-called "American Dream" is inextricably tied to the credit industry.  If you don't have good credit, you cannot buy a home, get decent car insurance rates, get a decent credit card, or get a loan from your local bank. 

This article is about how to know if you have a Fair Debt Collections Practices Act (FDCPA) claim when dealing with your creditors and collection agencies.  For the sake of full disclosure, only an attorney can determine whether a consumer actually has a legal claim worth pursuing in the courts. The information below is only a guideline for consumers to help them understand their rights and possibly prompt them to seek legal counsel.

Activities of all collection agencies are regulated by the Federal Trade Commission and Consumer Financial Protection Bureau through the FCRA and the FDCPA.  Original creditor actions are now regulated by a new prohibition enacted when the Dodd-Frank Act was passed called Unfair, Deceptive Acts and Practices, also known as UDAAP. UDAAP also indirectly applies to third party creditors as well according to a recent CFPB bulletin.

Below are the rules and the context within which those rules create a legal cause of action:

1. A claim by a debtor that a third party debt collector has engaged in prohibited conduct in collecting or attempting to collect a consumer debt.
2. The creditor is typically not a party.
3. The validity of the underlying debt is not relevant or an issue in the action.

 The FDCPA mandates three areas of collector compliance:
1. Identifying oneself as a debt collector.
2. Advising the debtor of the right to verify and dispute the debt.
3. Refraining from harassment, false representations and third party communications.


PRIMARY SOURCES OF THE LAWA. Fair Debt Collection Practices Act. 15 U.S.C. § 1692 et seq.

Now, let's drill down to the core of what all of that means.  1. A claim by a debtor that a third party debt collector has engaged in prohibited conduct in collecting or attempting to collect a consumer debt.  The operative words of this rule are "prohibited conduct."  Prohibited conduct includes:

• Hours for phone contact: contacting consumers by telephone outside of the hours of 8:00 a.m. to 9:00 p.m. local time
• Failure to cease communication upon request: communicating with consumers in any way (other than litigation) after receiving written notice that said consumer wishes no further communication or refuses to pay the alleged debt, with certain exceptions, including advising that collection efforts are being terminated or that the collector intends to file a lawsuit or pursue other remedies where permitted
• Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously: with intent to annoy, abuse, or harass any person at the called number.
• Communicating with consumers at their place of employment after having been advised that this is unacceptable or prohibited by the employer
• Contacting consumer known to be represented by an attorney
• Communicating with consumer after request for validation has been made: communicating with the consumer or the pursuing collection efforts by the debt collector after receipt of a consumer's written request for verification of a debt made within the 30 day validation period (or for the name and address of the original creditor on a debt) and before the debt collector mails the consumer the requested verification or original creditor's name and address
• Misrepresentation or deceit: misrepresenting the debt or using deception to collect the debt, including a debt collector's misrepresentation that he or she is an attorney or law enforcement officer
• Publishing the consumer's name or address on a "bad debt" list
• Seeking unjustified amounts, which would include demanding any amounts not permitted under an applicable contract or as provided under applicable law
• Threatening arrest or legal action that is either not permitted or not actually contemplated
• Abusive or profane language used in the course of communication related to the debt
• Communication with third parties: revealing or discussing the nature of debts with third parties (other than the consumer's spouse or attorney) (Collection agencies are allowed to contact neighbors or co-workers but only to obtain location information; disreputable agencies often harass debtors with a "block party" or "office party" where they contact multiple neighbors or co-workers telling them they need to reach the debtor on an urgent matter.)
• Contact by embarrassing media, such as communicating with a consumer regarding a debt by post card, or using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business
• Reporting false information on a consumer's credit report or threatening to do so in the process of collection

In such cases, the original creditor is NOT a party in this action, has sold the debt to the collector and cannot be listed on the legal Complaint as such.  As for whether a consumer actually owes the money to the collector, it is not an issue that can be legitimately presented in court by the collector.  The legal issue is the conduct by which the collector exercised their right to collect the debt from the consumer.  If any of the three mandates I mentioned of above have been violated by the collector, a consumer has a possible legal claim. 

If you are serious about pursuing a lawsuit against a collector you must know how things work in the legal system.  First, you must have some kind of proof of an actual violation.  The truth is that some claims will require more clear proof than other types of claims.  For example, If a collector "publishes" a debt list and your name is on it in black and white - you have clear and compelling claim if you can produce the publicized list in court.  However, you may not have a claim if your lawsuit alleges that a collector called you on two separate occasions at times after the mandated 9:00 PM limit.  Even though they did break the law, it simply does not rise to the level of a legal claim because it is not egregious enough to warrant the courts' time and resources in comparison to other claims that clearly should be heard by the court.

If you receive a dunning letter (collection letter) and it does not advise you of your right to verify and dispute the debt, you may have a claim.  Don't just take it for granted that a business is always doing what it is supposed to do.  23,000 FDCPA lawsuits last year is proof that they are not. So carefully look over any communication you receive from a collector.  It's safer for you to assume there might be an error on that document than to assume there isn't.

Understanding Your Credit Report

Share |

We are all becoming more aware of how important our credit scores and reports are now that many of us are experiencing financial hardships in the wake of the harsh economic events in recent years. As more aspects of our daily lives become affected by our credit score, it has become more important that consumers understand what is actually in their credit report, how to read it and how to recognize possible errors that might be lurking.  

The three largest nationwide consumer reporting agencies (NCRAs) are Equifax Information Services LLC, TransUnion LLC, and Experian Information Solutions Inc. The NCRAs each maintain credit files on over 200,000,000 adults and receive information from approximately 10,000 furnishers of data. On a monthly basis, these furnishers provide information on over 1.3 billion consumer credit accounts or other “trade lines.” Credit reports play an increasingly important role in the lives of American consumers. Most decisions to grant credit – including mortgage loans, auto loans, credit cards, and private student loans – include information contained in credit reports as part of the lending decision. These reports are also used in other spheres of decision-making, including eligibility for rental housing, setting premiums for auto and homeowners insurance in some states, or determining whether to hire an applicant for a job. As the range and frequency of decisions that rely on credit reports have increased, so has the importance of assuring the accuracy of these reports. These three NCRAs occupy the hub of what can best be described as a national credit reporting system. They, the entities who report information about borrowers to them (furnishers), providers of public records information, and consumers all play roles which affect the accuracy of the information reported in consumer credit reports.

According to a recent Consumer Financial Protection Bureau report, inaccuracies in a credit file can happen in a variety of ways because of how the information gets there in the first place.  The reasons range from errors by the credit applicant when initially applying for credit, to lack of data base integrity within a company's record keeping systems.  Reports by the Federal Trade Commission confirm that credit reports can contain errors significant enough to cause the denial of credit. And those who are not denied credit are only offered unfavorable or 'sub prime' interest rates.  Do the math on a home loan with a 2% interest rate compared to a 4.5% interest rate over 30 years and you will quickly see the payment difference between 650 FICO score compared to a 750 FICO score!  The difference is literally thousands of dollars.  

Components of your credit report

Header or Identifying information including your name, previous names used, known addresses, social security number, date of birth and phone numbers. This information should first on your list of items to scrutinize, especially if you have a common name like John Jones or Michael Smith. An error with one single letter, or a wrong digit in the social security number could be all it takes to compromise the accuracy of the file and therefore cause a really big identity problem. The other rather self-explanatory components include the following:

Trade lines

Public Records

Collections

Inquiries

Here, we have included some of the errors consumers should look out for:

• Inclusion of accounts or records in a credit file that do not belong to the consumer, commonly called a mixed file: Credit reports can contain trade lines or public records about a consumer other than the one who is the subject of the credit report.
• Omission of accounts or records belonging to the consumer: A credit account or public record that belongs to the consumer’s file can be erroneously placed in another consumer’s file, leading to a mixed file, as described above. Alternatively, credit bureau matching algorithms or gaps in data can lead to a consumer trade line being kept separate from the rest of the consumer’s file.
• Trade line or record inaccurately represents information pertaining to the consumer’s account with the creditor: A credit file can inaccurately depict the terms and status of a valid account such as inaccurately depicting the date an account was closed, the credit limit for the account, or whether a trade line is delinquent. Similarly, a collection item on the report may inaccurately reflect the payment status of the debt or the amount of money owed.

How long can adverse information remain on the credit report?

The FCRA limits with some exceptions how long a credit bureau can communicate certain adverse information in a credit report. Many adverse items including records of late payments, delinquencies, or collection items typically stay on a credit report for up to seven years. Likewise, civil suits and civil judgments typically stay on the report for no more than the longer of seven years or the governing statute of limitations, while paid tax liens typically cannot be reported more than seven years after the date of payment. Credit reports generally cannot list bankruptcies for more than 10 years after the order for relief or date of adjudication, except that repayment plans are only reported for seven years. There are also restrictions on communicating a medical service provider’s name, address, and telephone number pertaining to medical debts in a credit report