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.

Method of Verification–A Powerful Credit Repair Tool

Technorati Tags: credit repair,method of verification,FCRA 611,credit dispute letter,credit bureaus

A dispute letter is easy enough to write. There are samples all over the Internet. Some of the letters you will find are good, others not so much. Disputing negative credit listings on your credit report is, so they say, the first step in credit repair. However, many people are foiled in their dispute attempts because of the way the credit bureaus actually “investigate” the disputes.

It doesn’t matter how fancy, or intelligent sounding your letter is, or how many smart references you have to the laws of the FCRA; in many cases, your letter will produce nothing more than a, “verified” response from the credit reporting agencies. This is not your fault. It is a necessary step in the dispute process. You MUST initiate the dispute process with the credit bureaus FIRST.


If you get a notice from the credit bureaus telling you the information you disputed has been verified as accurate, and in most cases you will, you can then request the method of verification, which is your right under the FCRA section 611 (a) (7). The credit bureau must give you this information within 15 days of the request.

Why the CRAs are not doing their job

Each credit reporting agency has a different process for handling credit report disputes, but all three use a similar system. The three bureaus collaborated through their trade organization to automate the entire reinvestigation process using an online computer program, E-Oscar.

Want to see the form they use for disputes? Here ya go.
All disputes received by the credit bureaus are done via written letter, the telephone or the credit bureaus online dispute service. Even if the credit bureau receives a written dispute highly detailed and with documentation, each dispute is reduced to a two-digit code - by a low wage earning employee who couldn’t care less about the actual investigation they are supposed to be doing on the trade line you disputed.

Under the FCRA, the credit bureaus are required to send the information on to the furnisher of the consumer’s account (in other words, the original creditor), but all the original creditor receives is the two-digit code produced by the E-Oscar software program.

According to testimony from Leonard A. Bennett, Testimony Before Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services Regarding “Fair Credit Reporting Act: How it Functions for Consumers and the Economy,” June 4, 2003, Leonard A. Bennett P.C. on behalf of the National Association of Consumer Advocates (http://www.naca.net):
The employees of all three CRAs operate under a quota system whereby each employee is expected to process all of the disputes of an individual consumer in less than four minutes. Worse still, the “codes” used by both the CRAs and their subscribers (the furnishers) are limited in number and rarely describe the actual basis for the consumer’s dispute.

For example, in two of my recent cases, both identical, consumers wrote dispute letters to all three bureaus. The disputes were conveyed in great detail and explained that the consumers were not responsible for the disputed accounts and that any signatures claimed to be theirs were forgeries. Each consumer dispute letter also enclosed copies of handwriting exemplars such as signatures on driver’s license, military IDs and other credit cards.had also obtained a copy of the forged note and included it in his dispute letter. When Equifax and TransUnion received the letters, their employees simplified the disputes to a code and the description “not his/hers.” The [two-digit code indicating "not mine"] was all the furnishers received.In a deposition taken in a Pennsylvania case, TransUnion’s responsible employee explained the CRA‘s “investigation procedure.”Q.[T]he dispute investigator looks at the consumer’s written dispute and then reduces that to a code that gets transmitted to the furnisher?A.Yes.Q.Does the furnisher ever see the consumer’s written dispute?A.No.Q.Are there any instances in which the dispute investigator would call the consumer to find out more about the dispute?A.No.This is consistent with CRA testimony in every other case of which I am aware. The Bureaus do not convey the full dispute or forward any of the documents to the furnishers. As an expected result, nearly all consumer disputes are verified against the consumers.
The computer-based system, described above, which all of the credit bureaus use is called eOscar. For more information on this system, here is the link.

Case in point: A real life experience:

“What is the CORRECT way to request the method of verification? I’ll tell you about an experience of someone I know, who had a bogus tax lein which had appeared on their credit report.
They were refinancing their home and their loan officer called to tell them they were approved but they would have to pay off their $5000 Florida state tax lien!! They had never lived in Florida, so they wouldn’t have needed to pay state taxes (you have to be employed in Florida for this to happen); therefore, it was impossible for this lien was theirs. They politely explained this to the loan officer (who happened to be a friend of theirs for many years). As you can imagine, they were extremely embarrassed.

The conversation with Equifax
They called Equifax (the CRA who had this listed) and disputed the tax lien. To their surprise, it came back “verified”. They then called the toll-free number listed at the top of the report sent to me by Equifax and asked for method of verification. The response: “We have documentation.”
“What kind of documentation do you have?” They asked.
“Documentation.”
Silence followed. “Who did you call? Did you call the county clerk?”
“We never call the original creditor,” the Equifax employee responded.
“Never?”
“No, Ma’am.”
Stuttering in surprise, they asked for the number and name of the court house. With disgust so palpable that it could be feel it through the phone line, they were given the name and number of the Florida courthouse.

My own investigation efforts
Naturally, they immediately called the Florida courthouse, asked for the records clerk and explained the situation. The very nice woman on the other end of the phone said, “Well, I can tell you that no credit bureau has ever called here.” She then asked for my social security number and name and after comparing them, “Honey, the social security numbers aren’t even close! This definitely isn’t yours.”
They breathed a sign of relief and asked, “Can I get a letter from you stating this tax lien isn’t mine?”
“I’m afraid we can’t do that, as this information is private. The tax lien isn’t yours.”
“Can I give Equifax your name and number and have them call you so you can tell them what you told me?” The clerk assured me that would be fine, and they wrote down the information.

Forcing Equifax to comply
They called Equifax back, and recounted what the clerk had just told me. They then insisted that Equifax call the clerk to verify what I had said. “Oh we can’t do that,” was the reply.
“You better do that, or I will sue you for willful non-compliance with the FCRA. You are required to investigate my dispute, and consider all information.”
“Does this mean you want to open up a new investigation?” My friend held back the expletive which was on the tip of his tongue, and replied that yes, he did want to open a new investigation. I gave her the clerk’s name and direct line. I was given a new confirmation number for my dispute.

The Results
10 days later he received a letter from Equifax that the account was removed from my credit report. The loan went through.

Update Feb 18, 2008: But wait! There’s more! This little item came back!

The Method
After this experience, they did a little more investigation on the credit bureau’s methods of investigation and someone pointed them to the Bennett testimony. Based on hearing my friends’experience and what he learned, I came up with the following procedure which seems to be working for people:

1. Challenge the listing in the normal way.
2. If verified, with a copy of the investigation result in hand, call the CRA at the toll-free number listed at the top of the report. (If not, you’re done, you lucky dog!)
3. Give the report reference number and ask for method of verification per FCRA Section 611(a)(7) .
4. They will have never called the OC (original creditor), but will have relied on a third party database to verify, which they may or may not admit to you. If they can’t cite solid evidence like “we called the OC and they verified”, ask for OC’s phone number.
5. Call OC and ask for the records.
6. If the OC doesn’t have them (they will typically tell you that the collection agency has them and they don’t keep them), get the person’s name and direct line. If they do have them, demand a copy under the new FACTA act.
7. If you are sent records, review them and see how good they are. If they are not conclusive, take the next step.
8. If the OC has no records

• Call the CRA back and tell them the OC has no records.
• Inform the CRA that they need to open another dispute. The new information for the disput is the name and number of the person to whom you have just called at the OC.
• If they refuse, inform them you will sue for willful non-compliance under section FCRA § 616.
• If they still refuse, send the information via certified letter along with an intent to sue letter. If not, they will give you a new confirmation number (write it down! and the date!). This acts as a new investigation, and the CRA has 30 days to get back to you.

1. If you have written records proving the OC can’t back up the negative listing(s) they are reporting on your credit report

• send them registered mail to the CRA along with an intent to sue letter if the account is not removed.

An Excellent Review of ‘Validation of Debt’

 

Technorati Tags: Collection agency,Debt validation,Fair Debt Collection Practices Act,FDCPA,Federal Rules of Evidence,Validation of debt

There is A LOT of misinformation in print and on the internet regarding how debt validation works. The following review does a great job of demystifying the whole process and provides some good legal references as well. It is a lengthy article and does reference the Federal Rules of Evidence and other legal concepts, so you’d better put on your legal thinking cap before you delve into this one! I don’t normally recommend an article unless I have thoroughly researched the author and their credentials. This one gets my full approval as it is well written, well researched and very accurate.

DEBT VALIDATION

MYTH, MYSTERY OR MIND TRAP

A presentation of Senior Outreach Ministries

2006© All Rights Reserved

http://www.senior2senior.org

Disclaimer: The material in this e-book is for information and educational purposes only. It is not intended to replace professional legal, medical or accounting advice.

Any reliance on this material by the reader is done so at his/her own discretion.

Although this material was researched from presumably reliable sources such as the US government, the reader remains responsible to perform their own due diligence.

The estimates of the amount of debt carried by Americans ranges from about $2000 per adult to $8000 per adult and this is just on their credit cards. When you add in house, car, boat, motorcycle and RV payments on top of everyday household expenses like groceries, insurance, vacations, appliance and environmental home system repairs along with a myriad of other obligations, you can see why debt is more than a 4 letter word.

This e-book does not purport to be a get out of debt plan, a credit repair plan, tell your creditor to shove it plan or any other scheme in those channels. Rather, it is an e-book that covers only one topic: Debt Validation and it covers it the way I see debt validation as it exists today. In other words, since I believe I’ve done my homework, I’m sharing my opinion of what I think I learned.

Debt Validation comes into existence only at the time a person receives a letter from a debt collector stating something to the effect they are attempting to collect a debt for XYZ, Co. in the amount of $BBBBB.CC. They tell you in the letter unless you dispute this thing they are saying is a debt within 30 days; it will be presumed you owe it.

There are two ways to react to this letter. One, answer it. Two, ignore it. Number two is not a good idea for a myriad of reasons the least of which is you actually may not owe the debt. You see, debt collectors have been criminally prosecuted for telling someone they owe a debt when in fact the person did not owe the debt. You can Google a ton of stories about such happenings so I won’t say anymore here.

You also may not owe as much as they claim. Another debt collector trick which has cost them quite a few dollars after the court suit was settled in the alleged debtor’s favor. When you Google for the above information, I feel certain you’ll read about this faux-paus as well.

To understand the composition of the letter from the collector you should understand the law behind it. The law that sets the parameters is the Fair Debt Collection Practices Act (FDCPA). It states, for example, the collector must tell the alleged debtor that they are attempting to collect a debt.

Sidebar: I once had a debt collector state in their letter they were just writing a letter for a friend who happened to be a client and they didn’t include the required wording about attempting to collect a debt. I never heard from them again after I wrote and highlighted the violations of the FDCPA they had committed. Oh that all such collectors could be disposed of so easily.

Please become familiar with the FDCPA as it could become your newest best friend. Section 1692g of the FDCPA is the paragraph addressing debt validation. It is titled: Validation of Debt. This is important because validation and verification are not the same thing in the eyes of the law. The law is codified in Title 15 of the United States Codes beginning in section 1692. Use any search engine to find this Title.

Verification, although used in the Code, is not as requiring as validation. If you care to research this point, start with a good law dictionary then move into the court cases. Unless you want to fall asleep, I’d wait until I was contacted by an over aggressive debt collector.

Here is the applicable section as printed in the Codes:

Sec. 1692g. Validation of debts

(a) Notice of debt; contents

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing -

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) Admission of liability

The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

Notice the thirty-day requirement in the Code? They must give you 30 days to request a validation. Also, look at subsection (c) right above this paragraph. Should you fail to dispute the validity of a debt, no court is allowed to construe your failure as an admission of liability. This is a very powerful subsection because you no longer are liable simply because you did not dispute the validity of the debt at the onset. You may not have done so for any number of reasons. You, in fact, may have wanted your day in court without the encumbrance of a stack of paperwork or you may wanted to short-circuit the time the dispute would normally take if you entered into a letter writing campaign. All of that is now moot per the law. That’s a good thing. Now the question is reduced to what is this animal called validation you want from the debt collector? No part of this section clearly defines validation yet it lays the requirement for such an action squarely on the shoulders of the debt collector.

Debt collectors will take the verification route and use computer print outs or copies of paper work you allegedly signed years ago or copies of microfiche documents or a letter supposedly from somebody in the credit department of the original creditor. If the debt has been reassigned or sold several times, the new debt collector uses the collection letter the former collector sent you.

As you can imagine, most consumers do not accept this slight of hand as validation. They want their original contract or the other document(s) alleging a debt be brought forward that has their signature on it. On this point, unfortunately, the courts seem to be ruling that a computer print out from the creditor alleging a debt is sufficient as validation. And, unfortunately one more time, the Federal Rules of Evidence (FRE), sections 1002, 1003 and 1004 are allowing the courts to rule this way.

Here are the rules, along with their Notes, as they appear in the FRE.

Rule 1002. Requirement of Original to prove the content of a writing, recording, or photograph, the original writing, recording, or photograph is required, except as otherwise provided in these rules or by Act of Congress. Notes on Rule 1002: Notes of Advisory Committee on Rules. The rule is the familiar one requiring production of the original of a document to prove its contents, expanded to include writings, recordings, and photographs, as defined in Rule 1001(1) and (2), supra.

Application of the rule requires a resolution of the question whether contents are sought to be proved. Thus an event may be proved by nondocumentary evidence, even though a written record of it was made. If, however, the event is sought to be proved by the written record, the rule applies. For example, payment may be proved without producing the written receipt which was given. Earnings may be proved without producing books of account in which they are entered. McCormick § 198; 4 Wigmore § 1245. Nor does the rule apply to testimony that books or records have been examined and found not to contain any reference to a designated matter.

The assumption should not be made that the rule will come into operation on every occasion when use is made of a photograph in evidence. On the contrary, the rule will seldom apply to ordinary photographs. In most instances a party wishes to introduce the item and the question raised is the propriety of receiving it in evidence. Cases in which an offer is made of the testimony of a witness as to what he saw in a photograph or motion picture, without producing the same, are most unusual. The usual course is for a witness on the stand to identify the photograph or motion picture as a correct representation of events which he saw or of a scene with which he is familiar. In fact he adopts the picture as his testimony, or, in common parlance, uses the picture to illustrate his testimony. Under these circumstances, no effort is made to 6 prove the contents of the picture, and the rule is inapplicable. Paradis, The Celluloid Witness, 37 U.Colo.L. Rev. 235, 249-251 (1965).

On occasion, however, situations arise in which contents are sought to be proved. Copyright, defamation, and invasion of privacy by photograph or motion picture falls in this category. Similarly as to situations in which the picture is offered as having independent probative value, e.g. automatic photograph of bank robber. See People v. Doggett, 83 Cal.App.2d 405, 188 P.2d 792 (1948) photograph of defendants engaged in indecent act; Mouser and Philbin, Photographic Evidence-Is There a Recognized Basis for Admissibility? 8 Hastings L.J. 310 (1957). The most commonly encountered of this latter group is of course, the X-ray, with substantial authority calling for production of the original. Daniels v. Iowa City, 191 Iowa 811, 183 N.W. 415 (1921); Cellamare v. Third Acc. Transit Corp., 273 App.Div. 260, 77 N.Y.S.2d 91 (1948); Patrick & Tilman v. Matkin, 154 Okl. 232, 7 P.2d 414 (1932); Mendoza v. Rivera, 78 P.R.R. 569 (1955).

It should be noted, however, that Rule 703, supra, allows an expert to give an opinion based on matters not in evidence, and the present rule must be read as being limited accordingly in its application. Hospital records which may be admitted as business records under Rule 803(6) commonly contain reports interpreting X-rays by the staff radiologist, who qualifies as an expert, and these reports need not be excluded from the records by the instant rule.

Rule 1003. Admissibility of Duplicates A duplicate is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original. Notes on Rule 1003: Notes of Advisory Committee on Rules. When the only concern is with getting the words or other contents before the court with accuracy and precision, then a counterpart serves equally as well as the original, if the counterpart is the product of a method which insures accuracy and genuineness. By definition in Rule 1001(4), supra, a “duplicate” possesses this character.

Therefore, if no genuine issue exists as to authenticity and no other reason exists for requiring the original, a duplicate is admissible under the rule. This position finds support in the decisions, Myrick v. United States, 332 F.2d 279 (5th Cir. 1964), no error in admitting photostatic copies of checks instead of original microfilm in absence of suggestion to trial judge that photostats were incorrect; Johns v. United States, 323 F.2d 421 (5th Cir. 1963), not error to admit concededly accurate tape recording made from original wire recording; Sauget v. Johnston, 315 F.2d 816 (9^th Cir. 1963), not error to admit copy of agreement when opponent had original and did not on appeal claim any discrepancy. Other reasons for requiring the original may be 7 present when only a part of the original is reproduced and the remainder is needed for cross-examination or may disclose matters qualifying the part offered or otherwise useful to the opposing party. United States v. Alexander, 326 F.2d 736 (4th Cir. 1964). And see Toho Bussan Kaisha, Ltd. v. American President Lines, Ltd., 265 F.2d 418, 76 .L.R.2d 1344 (2d Cir. 1959). Notes of Committee on the Judiciary, House Report No. 93-650. The Committee approved this Rule in the form submitted by the Court, with the expectation that the courts would be liberal in deciding that a “genuine question is raised as to the authenticity of the original.” Rule 1004. Admissibility of Other Evidence of Contents The original is not required, and other evidence of the contents of a writing, recording, or photograph is admissible if—

(1) Originals lost or destroyed. All originals are lost or have been destroyed,

unless the proponent lost or destroyed them in bad faith; or

(2) Original not obtainable. No original can be obtained by any available judicial

process or procedure; or

(3) Original in possession of opponent. At a time when an original was under the

control of the party against whom offered, that party was put on notice, by the

pleadings or otherwise, that the contents would be a subject of proof at the hearing, and that party does not produce the original at the hearing; or

(4) Collateral matters. The writing, recording, or photograph is not closely related to a controlling issue.

Notes on Rule 1004: Notes of Advisory Committee on Rules.

Basically the rule requiring the production of the original as proof of contents has developed as a rule of preference: if failure to produce the original is satisfactory explained, secondary evidence is admissible. The instant rule specifies the circumstances under which production of the original is excused.

The rule recognizes no “degrees” of secondary evidence. While strict logic might call for extending the principle of preference beyond simply preferring the original, the formulation of a hierarchy of preferences and a procedure for making it effective is believed to involve unwarranted complexities. Most, if not all, that would be accomplished by an extended scheme of preferences will, in any event, be achieved through the normal motivation of a party to present the most convincing evidence 8 possible and the arguments and procedures available to his opponent if he does not.

Compare McCormick § 207. Paragraph (1). Loss or destruction of the original unless due to bad faith of the proponent, is a satisfactory explanation of nonproduction. McCormick § 201. Paragraph (2). When the original is in the possession of a third person, inability to procure it from him by resort to process or other judicial procedure is sufficient explanation of non-production. Judicial procedure includes subpoena duces tecum as an incident to the taking of a deposition in another jurisdiction. No further showing is required. See McCormick § 202. Paragraph (3). A party who has an original in his control has no need for the protection of the rule if put on notice that proof of contents will be made. He can ward off secondary evidence by offering the original. The notice procedure here provided is not to be confused with orders to produce or other discovery procedures, as the purpose of the procedure under this rule is to afford the opposite party an opportunity to produce the original, not to compel him to do so. McCormick § 203. Paragraph (4). While difficult to define with precision, situations arise in which no good purpose is served by production of the original. Examples are the newspaper in an action for the price of publishing defendant’s advertisement, Foster-Holcomb Investment Co. v. Little Rock Publishing Co., 151 Ark. 449, 236 S.W. 597 (1922), and the streetcar transfer of plaintiff claiming status as a passenger, Chicago City Ry. Co. v. Carroll, 206 Ill. 318, 68 N.E. 1087 (1903). Numerous cases are collected in McCormick § 200, p. 412, n. 1.

Notes of Committee on the Judiciary, House Report No. 93-650. The Committee approved Rule 1004(1) in the form submitted to Congress. However, the Committee intends that loss or destruction of an original by another person at the instigation of the proponent should be considered as tantamount to loss or destruction in bad faith by the proponent himself. Notes of Advisory Committee on 1987 amendments to Rules.

The amendments are technical. No substantive change is intended. You can find this information simply by going to your nearest law library and opening a

copy of the Federal Rules of Evidence to Rule 1002. By the way, some people say the above rules are located in the Federal Rules of Civil Procedure. This is simply not so as the FRCP are numbered 1 through 86 and never even touch numbering into 100 and above let alone 1000 and above. Regardless, now that you know where to find the applicable rules and have their accompanying notes, you are better armed to phrase your argument. The notes are extremely important because they add clarification to the rule itself. Always look for notes or annotations to any statute or code section you are researching. They not only clarify but lay out, in some cases, the thought processes of the law makers.

You have a right to demand the original as you can plainly read. However, for one reason or another, the debt collector can weasel out of producing the original. I believe the weasel clauses were allowed in the rules because of income taxes.

The IRS puts all kinds of entries into your Master File but never produces the original document authorizing them to make any of the entries. Having been down that road with this bunch of brigands, I can state flatly the court is never on the taxpayer’s side. It always allows the IRS to use a dummied up, at least in my case, computer printout as validation/verification of taxes owed.

This e-book is also not about the IRS but I reserve the right to inject my opinion about the genesis of why the original doesn’t have to be produced. I have researched many college treatises as well as having read many books in this area and I can only come to the conclusion that the leeway allowed the IRS has spilled over into the credit arena. For me, this is a truly sad day.

Others have adeptly written about certain cases decided in the validation argument and have said the courts either didn’t address the issue of the original or agreed with the debt collector that verification/validation is completed with the presentation of a computer print out or a copy of a supposed contract.

It is immaterial what the courts said or didn’t say because the governing doctrine is laid out in the already quoted sections of the Federal Rules of Evidence. Believe me, all states have adopted the FRE in one manner or another.

Why? Because it is a well laid out schematic easily adaptable to local rules and customs. Its ease of construction is hard to argue with.

Therefore, at least in my opinion, you stand a better chance of beating the debt collector by scrutinizing their legal responsibility to follow the procedures. For example, lawyers can be debt collectors and you would think they’d be the first to follow the procedures to a T, right? Wrong!

Not only do they have to follow federal procedures, they must comply with state procedures. If you live in Nevada like I do and a debt collecting lawyer sends you one of those “I am attempting to collect a debt letter” and she is not licensed to practice law in the State of Nevada, she may have to be licensed as a collection agency. Also, the form letter she mailed you must have been approved by the State. If neither of these requirements are met, you win on procedures. That’s a good thing. A debt collector may not have reported you to any credit bureau prior to resolution of your dispute. This is a common occurrence causing untold grief for alleged debtors. OK, at the beginning of this e-book I did say this book’s focus is strictly validation and I’ve gone astray. Not much, but enough to have to stop myself.

I have a Request For Validation letter I send to all debt collectors in which I ask certain questions. These questions set the stage for a law suit should the process go that far. I do not give this letter away as it has material I haven’t seen anywhere else. I am not saying it is bullet proof simply because I don’t know how a judge will rule in any presented set of circumstances. But, I do know, this letter does a beautiful job of protecting my interests and intertwining the FRE and local statutes into the matter. It also allows me to sue in the easiest and least expensive court in any state – Small Claims Court. The highest amount I could sue for in Nevada is $5000.00. However, if I believe I have more than $5000.00 in damages, I will file suit in Federal District Court.

I think my letter pinpoints the sections in both the Federal and State Statutes the debt collector will have violated. Therefore, I believe I will win on the procedures, that is violations thereof. Procedures they, and not me, must follow since the law specifically lays the procedural requirement smack on their door step.

There you have it. My take on Debt Validation and an alternative way to at least counter sue the debt collector.

I can be reached at tom@senior2senior.org with questions, comments or critiques.

How to Raise Your Credit Score in 2-3 months

Technorati Tags: credit repair,secured loan,secured cd loan,raise your credit score

When I was a kid, my uncle told me something that I will never forget.  It was a simple truism that has stuck with me since he said it.  I came home from school one day and my uncle had come by to visit us. He lived in a different state, so I rarely got to see him as much as I would have like to. 

My mom had already gone to work because she worked swing-shift.  My Uncle was in the kitchen when I got home.  I had brought a free lunch form home from school for her to sign and needed to return it to school the next day.  Fearing she would forget to sign it, I asked my Uncle to sign it for me.  When I handed it to him he looked it over and looked back at me and said, “Kirk, there’s no free lunch.”  Puzzled at his statement, I retorted, “yes there is, all you have to do is sign the form and I get free lunch at school.”  Again, my Uncle said, "No boy, there’s no free lunch, someone is paying for this – it might not be you, but someone is paying for it.”  “Nothing in this world is free.”

I told that brief story because as I grew up and started living my life I learned that his words were very true.  Nothing in this world is free – and that includes raising your credit score.  There are lots of ways to improve your credit and all of them take time – there are no super-fast ways to increase your fico score outside of becoming an authorized user on someone else’s account (I wrote an article on that a few months ago) or purchasing seasoned trade lines.  Both methods work, and both can raise your fico score fast.  However, becoming an authorized user can be difficult if you don’t have a family member or friend who is willing to do it, and purchasing a trade line is flat out expensive. 

Furthermore it is difficult to know which companies are reputable and which ones are scams. 
The method I am going to share here will cost you approximately $500 - $1,200 but it doesn’t involve dealing with family or a shady trade line seller who might take you for a bunch of your hard-earned money.  Just follow the steps below and you will see a significant increase in your fico score in 2-3 months, possibly even sooner!

Step one: Purchase a CD for $1000.00 –$1200.00. A Certificate of Deposit allows the owner to deposit a certain amount of money, (usually a minimum of $1000) as an investment for a fixed length of time, ranging from three months to five years. CDs are federally insured and pay higher rates of return than simple savings accounts.

Step 2: Ask the loan officer how long it will take them to process the CD.  Once you find out, come back to the bank after the CD has been processed and ask for a loan using the CD as collateral.  The bank will cut you a check in the amount of the Cd. Deposit the check into your saving account and arrange with the loan officer to allow for automatic withdrawals in the agreed upon monthly payment for the term of the CD. That’s it. 

Rates vary, but typically, the borrower will pay a premium of several percentage rates to borrow their own money. In other words, if the CD is paying 6 percent, for example, the cost of borrowing might be 9 percent.

Secured loan method

1. Deposit $300 – $500.00 into your bank account. 
2. Take out a secured loan for that exact amount.
3. Either deposit the money immediately into a saving account and arrange for automatic monthly withdrawals to pay back the loan or take the money and make monthly payments on your own (if you trust yourself to make the payments on time every month).

OR. Take that money from the first loan and go to another bank and do the exact same thing, taking out another secured loan.  Do this with as many banks as you can manage. I suggest no more than three or four.

Remember, you absolutely must be disciplined and organized enough to make your payments on time each month or this will blow up in your face.  I suggest you organize it so the money your using to do this is exclusively for this and this ALONE.  This is going to raise your fico score fast.  In six months you are going to see big jump in your score. 

Know and understand the factors that affect your FICO score. 

 

·         Payment History: 35% Capacity/Utilization

·         Amounts Owed: 30%

·         Length of Credit History: 15%

·         New Credit: 10%

·         Types of Credit in Use: 10%

Look at the factors listed on the pie chart above.  The chart represents the factors that generally make up how your credit file is scored.  You will see that your payment history makes up the highest percentage (35%).  In any analysis of the fico algorithm, payment history usually carries the most weight of all the factors that make up your score. It is important to point out that these figures provided by Fair Isaac are supposedly for the “General Population,” and because there are different score cards, as mentioned above, the relative importance of each category can be different depending on where the fico system categorizes you. 


Each of these categories also represents some very typical thresholds for disbursement of better or worse interest rates and for approval. For example, a person with a 400 credit score would probably not be approved for any kind of loan, whereas a person with a 775 would not only be approved for most any loans, but they would also probably not require much (if any) documentation and would get the best market interest rates available. Some lenders will vary the above categories, but the concept is almost universal: the higher your score, the better your interest rates and the increased likelihood you will be approved—because your score represents a numerical figure that indicates how likely it is that you will repay a credit obligation. 


So, what goes into a score? Obviously if you've ever seen a credit report, the bureaus have lots of information about your finances and credit history, as well as personal information. Still, many people are unfamiliar with how each of these items weighs in with respect to credit scoring, and for a very long time consumers were left COMPLETELY in the dark about how FICO scores are calculated then, due to many FTC complaints by customers, FICO released a little bit of information. While this information is vague, there is a great deal of research that has expanded upon this knowledge base. A basic breakdown of how FICO Scores are calculated is as follows:

Another important point to make on this subject is that score cards can change. For example, if someone right out of bankruptcy pays their bills on time for two full years, they may see their score as high as 720+, but a few months after that their score could significantly drop as they are placed back among people who pay their bills on time always, since now they will seem relatively worse than the others in their score card. Over time as one's financial circumstances remain static and their payment behaviors remain the same, the likelihood of score card 'jumping' is significantly reduced.  Because of the different impact of each category, and because different score card profiles will often result in varying credit scores, the cleanest credit report is not always the highest scoring one. 

 

What is Debt Validation and does it actually work?

Technorati Tags: debt validation,fdcpa section 803

Most people who try to fix their own credit will sooner or later run across information on debt validation. The first mistake people make when trying to validate a debt is to confuse it with debt “verification.” Let’s get this confusion clarified before we actually get into what validation actually is and how it can be used to repair a credit report.

• Debt validation refers to the process of a COLLECTION AGENCY providing a consumer with proof that a debt actually belongs to that consumer.

• Debt verification refers to the process of a CREDIT REPORTING AGENCY verifying with an original creditor or a collection agency that a debt actually belongs to a consumer.

Now that we know who the debt validation process refers to – collection agencies and NOT CRA’s (credit bureaus), we can now find out how the process works with credit repair.

The debt validation process can be found in Section 803 of the Fair Debt Collection Practices Act (FDCPA). It provides:

Section 803 (b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

Plus, they must show proof positive that you owe them this debt. It’s not enough to send you a computer-generated printout of the debt. They must prove in writing that they actually purchased the debt from the original credit grantor. In addition to that, they must also foot the bill for the cost of obtaining the information from the original creditor.

One way of looking at it is like this: Suppose you borrowed $50.00 from your best friend Lisa, then her friend Brian came up to you and said he bought your debt from Lisa and you now owe him the money you once owed to Lisa. These might be some of the thoughts you would have:

1. How do you know that Brian is actually collecting for Lisa? What legal documents does Brian have to prove that he is legally authorized to collect?

2. How much is the actual debt? What payments have already been made on the account? Where is the accounting of the debt, including all interest and fees? Are these fees and interest amounts legit?

3. Do you really owe Brian the money? Or was it actually a third party, James? Where is the contract showing that you made a deal with Brian and not James?

4. How do you know if you pay Brian, Lisa won’t come back and ask for the money you originally owed her?

It works the exact same way when a collection agency sends you a letter stating that you owe them a debt you once owed an original creditor. They must prove you owe them the debt. Their word on official looking letter-head or a phone call is not enough. If the collection agency cannot provide legal proof, they are in violation of the FDCPA and can be sued. Further, they cannot continue to report the debt the CRA’s, who in turn cannot continue to list the debt on your credit report. The listing must be immediately deleted. You have this right as a consumer and the law is on your side should you choose to use it.

Self-help credit repair 101 Lesson 2



Credit Repair 101

As I considered writing this second credit repair lesson I must admit I had some problems getting started.  I didn’t want to write the same old information that is already all over the Internet because much of it is false and not very well researched.  And while the principles of credit repair are much easier talked about than they are to put into practice, it is still quite challenging to write a generic article about credit repair when the process depends so much on knowing a client’s particular circumstances.   Therefore, this lesson is not going to include any strategic information on how to restore your credit.  It will include information about how the credit industry works, when you should consider consulting a consumer rights attorney, and how to organize yourself before you begin the dispute process.  It makes no sense to me to include any information on particular FCRA or FDCPA laws when you will not need to use them at this stage of the dispute process.  That information will become more useful when and if you decide to file a lawsuit.  However, if your situation is complicated, the above stated laws and others are required reading if you want to be as effective as possible in dealing with the credit bureaus and collection agencies.

Many of the theories you hear or read about simply do not work all the time in the real world of credit repair.  Original creditors are difficult to contact by phone, and they rarely call you back.  Collection agencies lie to you and mis-quote the law.  Credit reporting agencies pretend to care about customer service, but really don’t care about their customers at all.  Most business, (generally referred to as original creditors or issuers of credit by the FCRA) and everyone in the credit reporting business is out to make as much money as they can off of your unfortunate circumstances.  Collection agencies, credit card companies, and all other original creditors make it difficult for anyone trying to restore their credit as they have a vested interest in keeping consumers’ FICO scores as low as possible.  If everyone had an 800 FICO score and always paid their bills on time, collection agencies would have no business, original creditors could not charge exorbitant interest rates on late pays, and everyone would be eligible for a near zero APR on everything they bought on credit.  There would be no sub-prime loan companies because there would be no sub-prime credit.  Take a look at these statistics from a report by the non-profit, National People’s Action:

The nation’s largest payday loan companies have earned a record $1.5 Billion in combined annual revenues from high-cost payday loans.

• The nation’s major banks including Bank of America, JPMorgan Chase, and Wells Fargo finance approximately 42% of the entire payday loan industry nationwide.

• State regulators report that payday loans cost borrowers a minimum of $3.4 Billion in fees annually.

• Every year an estimated $3.1 Billion in wealth is “stripped” from the pockets of needy borrowers directly into the coffers of the nation’s payday lenders.

• The segment of the payday loan industry funded by the big banks results in a minimum of $1.5 Billion annually in wealth-stripping from excessive fees paid by payday loan borrowers nationwide

My point is that when you decide to actually start doing something about your bad credit, or investigate errors you might find on your credit report, you are up against an army of vile, unscrupulous vultures not unlike the creatures from the movie, "Lord of the Rings."  The good news is that you have the law on your side.  The biggest challenge for the layman trying to restore their credit rating is understanding their legal rights, and effectively communicating it to the bureaus and collection agencies.  The ideal solution is to hire a consumer protection attorney, but not everyone can afford to do that.

Not everyone will need an attorney.  Thousands of laymen deal with the bureaus and collection agencies effectively all the time and get their credit file fixed or raise their FICO scores.  However, be warned that if your credit situation is complicated, it is likely you will need assistance from a legal professional who specializes in consumer rights law, because it also likely you will have to sue to get your credit report restored and corrected.

Credit repair, at its core, is the ability to recognize errors on your credit report, communicate those errors to the powers that be in such a way that clearly demonstrate that you have a VERIFIABLE LEGAL CLAIM.  Therefore, you must be ready and willing to take your case to the courts of law if necessary.  I say this because that is really the only thing that will get their attention and compel them to act.  All of the credit reporting bureaus, collection agencies, credit card companies and other original creditors know their business practices can usually be characterized under what the Federal Trade Commission calls “unfair and deceptive practices” but they count on the average person being too intimidated or too poor to do anything substantial about being treated that way.  Most people can scarcely handle keeping food on the table, and making the house payment.  And because of the current economic recession, thousands are not able to that anymore.

In lesson three I am going to first cover the legal claims that can be made by a consumer in a civil lawsuit as opposed to the legal claims that must be initiated by federal regulatory agencies such as the Federal Trade Commission, the Consumer Financial Protection Bureau, or the Office of Comptroller of the Currency.  Because the laws that regulate the credit industry are federal laws, when the FTC initiates a law suit against a company like Experian, the legal caption says: The United States v. Experian, and the case is litigated by the US Justice Department in federal district court.  And the Justice Department usually wins because of the egregious business practices of the many businesses that control our credit information and issue credit in this country.
It has only been since the very recent creation of the Consumer Financial Protection Bureau that companies that are investigated by the CFPB for unfair and deceptive business practices have been required to pay extreme penalties and fines (similar to Punitive damages in civil lawsuits) for their actions as well having to pay back the money they received from consumers.  For example, in July of this year, the Consumer Financial Protection Bureau tacked on a $35 million restitution penalty in addition to the $150 million settlement with credit card company Capitol One for violating section 5 of the Federal Trade Commission Act for unfair and deceptive business practices.
Now, let's discuss the consumer dispute process and how to write an effective dispute letter to the credit reporting bureaus, collection agencies, (CA) and original creditors (OC).

Before you Begin
The entire re-investigation process is initiated by the consumer disputing the accuracy of information in their credit report, but before you even think about writing a letter or making a phone call to anyone, you MUST get organized.  Below is a brief list of the items you will need to prepare for the dispute process:

1. A notebook (s) to write down all conversations with creditors, credit bureaus or whomever you call about your credit report
2. A computer with word processing software like Microsoft Word so you can transfer what you write in your notebooks to an electronic or digital format
3. A monthly calendar to make appointments, record dates of phone conversations, and keep up with time deadlines
4. A postage budget to send everything via certified mail
5. Full copies of the FCRA, FDCPA, CROA, and the FACTA

Sending your first dispute letter
Opinions vary on what constitutes an effective dispute letter.  Some believe a consumer should send a letter that indicates their knowledge of their rights under the FCRA.  Others believe a consumer should adhere to the “kiss”(keep it simple, stupid) rule.  The truth is, both are equally effective if done correctly.  Personally, I believe if a consumer is writing the dispute letter a simple letter works best. Credit bureaus do not like, nor do they care if you know the law.  They only care if you are going to utilize it.  Complicated dispute letters that quote the FCRA don’t compel anyone to do anything.  Remember, you are not going to intimidate anyone with a letter that has all kinds of quotes from the FCRA.  The minimum wage worker at a credit bureau who receives your fancy letter is not going to care about you quoting the law.  It certainly will not further your cause at that point in the dispute process.  Moreover, they have lawyers who deal with lawsuits all the time.  Believe me, it doesn't impress or intimidate anyone.  Reserve that language for when you actually intend to sue.  That is what the, “intent to sue letter” is for.
Your first letter to the credit bureaus should be simple.  Below is a list of information that you should include in your letter:

1. Full legal name
2. Current address (include a utility bill for proof)
3. Social security number (include a photo-copy of your ss#)
4. A photo-copy of your legal picture ID
5. Phone number
6. List of accounts (include account #’s) you want to dispute.  Highlight those same items on the copy of your credit report you send with the letter
7. Brief explanation why you think the accounts are inaccurate (with supporting documentation if possible)

Remember to send everything by US Postal Service with Return Receipt so you have documented proof they received it. Document what you did in your notebook or on your computer.  As for the number of items you can dispute, some say don’t dispute too many at once.  I believe a consumer should dispute everything that is inaccurate on their report.  That includes identity information like a wrong letter in their name, a wrong number in their address, a wrong past address – anything and everything that is inaccurate!
A few points to remember
Always be professional when dealing with creditors, credit reporting agencies and collection agencies.  Be nice, but don’t be naïve! They are often dishonest and won’t think twice about lying to you.  That’s why they get sued so much.

• Don’t ever initiate a dispute by filling out a form over the Internet at the the credit bureaus’ website.  You might loose important rights by doing this, and it legally extends their time to re-investigate the dispute.
• Don’t write an overly aggressive letter.  It doesn't help your cause to be nasty to anyone.
• Don’t make threats to sue if you don’t intend to follow through.  If you intend to sue, send a “intent to sue” letter and be prepared to file you claim with the courts.

I have included a link to a sample dispute letter from the Federal Trade Commission website that you can use as a guide along with all of the information in this lesson.  There is other information on the FTC website that you might find useful, including the link to annualcreditreport.com where you can get a free credit report from all three credit bureaus.  You will find information on how they think a consumer should start and manage the dispute process.  They also have contact information for all three credit bureaus.

The FTC and credit repair

In 1914, Congress passed the Federal Trade Commission Act (FTCA), thereby creating the Federal Trade Commission (FTC). The commission was given the mission of preventing "unfair methods of competition" (Pub. L. No. 203, 1914), and was designed to complement the antitrust laws. As such, the FTC originally was conceived as a protector of business and competition, with no direct responsibility to protect consumers.

The FCT is the governing body of the entire credit industry. It has enforcement and regulatory power given to it by Congress. It wasn't until 1938 that Congress amended the FTCA to include protections for consumers as well as businesses (Pub L. No. 447). It was given power over "unfair or deceptive practices." The division of the FTC which actually enforces the laws and regulations is the Burueau of Consumer Protection.

The Division of Enforcement litigates civil contempt and civil penalty actions to enforce federal court injunctions and administrative orders in FTC consumer protection cases; coordinates FTC actions with criminal law enforcement agencies through its Criminal Liaison Unit; develops, reviews, and enforces a variety of consumer protection rules; coordinates multi-pronged initiatives to address current consumer protection issues; and administers the Bureau of Consumer Protection's bankruptcy program.

Your Fair Credit Reporting Act Rights





Do you know your FRCA rights?

Before you dispute anything on your credit report it is a good idea to know your rights according to the Fair Credit Reporting Act. They are:

1. The right to have your dispute investigated
All bureaus are required by law to investigate your dispute, usually within 30 days by contacting the creditor, collections agency or other information provider that supplied the data that is in question. Any information provider contacted in this way must launch its own investigation and report results back to the bureau.

There is a major exception to the 30-day rule. If the credit bureaus decide your dispute is frivolous they might tell you so and refuse to investigate. This is what happens if you repeatedly demand investigations into information that has been previously been verified. Needless to say this discretionary right of the credit bureau to name your complaints as frivolous can be very frustrating for people who are dealing with a creditor that refuses to correct its mistake.

2. The right to have erroneous information corrected
If the provider says the information is indeed inaccurate it is required to notify not just the bureau that originally contacted it but all the other major credit bureaus as well so that the error can be fixed and the item deleted. If the provider can’t verify the information it must be deleted from your credit report.

The bureaus can however reinsert the deleted information or undo the correction later on if the provider later verifies that the original item was in fact complete and correct. This exception can frustrate consumers who think they have clean reports only to see the negative information reappears on their report again after just a few months. However, you will have a clear cause of action if you know the information is wrong and you continue to tell them after it is posted again to your credit report.

3. The right to a written response
After completing its investigation the bureau must give you a written report of its findings and a free copy of your credit report if the investigation changed anything on our file.
Furthermore if the bureau later restores the information that was deleted or changed it must notify you in writing and provide you with the name, address and information of the provider who resubmitted the information.

4. The right to have a statement included in your file.
If the dispute doesn’t turn out the way you want you are entitled to insert a 100-word statement inserted into your credit report explaining your side of the story.
However as you read in the previous chapter these statements have no actual effect on your credit score and most lenders will not see it while assessing your loan. All most lenders see is that three-digit number that is your credit score.

5. The right to sue.
If a creditor or collection agency violates your rights by reporting inaccurate, unsubstantiated information or by failing to respond to your dispute you can sue the creditor or agency instate or federal court. Some people have even pursued these claims successfully in small claims court.
Hopefully you can solve all of your credit problems with having to involve a judge. However sometimes it takes the threat of a lawsuit to get results with a very difficult or unresponsive creditor or credit bureau.


Organizing a Plan of Attack
At this point you should divide all of the errors you’ve discovered into two major categories.
The first category should include:

• Errors in unpaid debts that belong to you
• Debts that you suspect may have been illegally re-aged (old debts that have been submitted by vengeful lenders to look like new debts see the Chapter 6 on Vengeful re-Aging in this section for more clarity about this.)
• Errors in collection accounts
• The second category should include:
• Accounts that aren’t yours
• Wrong information about paid up accounts
• Debts that were included in a bankruptcy and were not listed that way
• Anything in the second category can be disputed right away.

With your letter or email of dispute make sure to include copies of any documentation that you have that supports your assertion. Needless to say you should never send originals. After you have noticed the credit bureaus follow up by sending a letter with that certified receipt requested to the creditor that supplied the mistaken information. This puts the creditors and the bureaus on notice that there is a problem. Failure to act on their part regarding these mistakes is a violation of the Fair Credit Act and gives you grounds for a lawsuit if they don’t at least send you a letter l notifying you that they are launching an investigation within thirty days.

In many cases creditors and bureaus will correct legitimate errors with no resistance. However you are highly advices to monitor your credit reports at least every sic months to make sure the information does not pop up again in the future. If that does happen resubmitting the paperwork and correspondence you sent to the bureau in the first place can help you get the errors removed more quickly and permanently the second time around.

If the creditor or information provider insists that its information is accurate then you might need to dispute the information with them again or if you feel so inclined you can hire a lawyer. Sometimes all it takes is one letter from a lawyer to get a creditor to stop giving you’re the run around.
If you need a good lawyer to represent you in a credit report matter a good resource where you can find one is the National Association of consumer Advocates that can be found at www.naca.net. This organization provides referrals to attorneys as well as links to many sites devoted to do it yourself credit repair.

When it comes to collections you have a very important right as outlined in the Fair Debt Collection Practices Act of 2003. This most important of rights your right to have a collection account validated.
The right to have a collection account verified refers to your right to ask a creditor to verify information. There are reviews of its records and any information supplied by the consumer and the lender then decides if the information on your credit report is right or not.

Sometimes when a collection agency is asked to validate a debt the process can get pretty complex. The collector must prove to the credit bureau that the debt is your responsibility and also that they have the legal right to collect it from you. This also means that the collector has to cease all collection activity until they provide this evidence to you. If the agency can’t validate the debt it must end its attempts to collect on the debt and stop reporting the collections account to the credit bureaus.

Note that your right to validation applies specifically to collection agencies and not the original creditor. Collection agency records are notoriously less reliable than those kept by the original lenders. As this is so, the validation process is intended to protect consumers from creditors that go after the wrong people or misstate the amounts of money owed on a credit report.

To validate a debt, the collector needs to provide current documentation obtained from the original creditor proving that you do indeed owe the money. This process of validation can be a powerful weapon in your battle to clean up the collection actions on your credit report. This is because more often than not collectors really don’t have the accurate documentation required to verify your debt. This is especially true if the debt has been passed around from one collection agency to another. Frequently they have little more than a computer printout to back up their claims and the Federal Trade Commission as made it clear that a mere itemization isn’t sufficient proof to constitute a validation of a debt.

The flaws in this validation process can work greatly to your advantage. Not only help you eliminate collection accounts that don’t belong to you but it can also help you get rid of some debts that do belong to you too. Surprisingly you can get accurate harmful information removed from your file simply because there is no trail of documentation attached to it.

Sometimes the collection agency won’t bother to verify the account especially if it’s too old or really small. If that’s the case the collection is usually dropped from your report without much fuss.
In essence, if a collector fails to respond or can’t provide sufficient evidence that you owe a debt it’s supposed to remove the collection form your report. If that doesn’t happen you can bring that matter to the attention of the credit bureaus and ask for reinvestigations. Make sure that you make it clear to the bureaus that this is not a repeat of your earlier request but rather let them know that you are contacting them because the collector did not comply. If the account is not removed at this point you have both the credit bureau and the collection agency on the hook for credit reporting violations and can pursue a lawsuit.