Your Credit Rx

Credit Repair 101–Lesson One

2018-02-19T12:27:00.000-08:00

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:

Spend less than you earn
Make your money work for you
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:

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.
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!
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???

2016-07-22T12:11:00.001-07:00

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 ...

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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

2016-07-22T08:52:00.002-07:00

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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

2014-10-24T12:00:00.001-07:00

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

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

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

2014-10-22T09:26:00.001-07:00

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.

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

2014-06-03T23:11:00.001-07:00

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

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How to Remove A Paid Tax Lien from Your Credit Report

2014-05-17T22:00:00.000-07:00

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.

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States should ban credit checks on job applicants

2014-03-28T03:11:00.000-07:00

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

2014-03-09T18:27:00.000-07:00

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

2014-03-08T19:09:00.000-08:00

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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

Consumer Financial Protection Bureau - Phoenix, AZ: Protecting Homeowners: New tools for empowering consumers and advocates

2014-02-10T17:26:00.001-08:00

Are you a homeowner? Watch this video to learn about the new mortgage foreclosure rules for Servicers, and mortgage fraud.

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Debt Collection: Your Rights, Their Responsibilities

2014-02-10T16:58:00.002-08:00

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Debt collection video from the Federal Trade Commission. This is the advice they give to businesses who collect debt from consumers The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.
Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.
Here are some questions and answers about your rights under the Act.

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:
Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

What practices are off limits for debt collectors?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

use threats of violence or harm;
publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
use obscene or profane language; or
repeatedly use the phone to annoy someone.

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

falsely claim that they are attorneys or government representatives;
falsely claim that you have committed a crime;
falsely represent that they operate or work for a credit reporting company;
misrepresent the amount you owe;
indicate that papers they send you are legal forms if they aren’t; or
indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

you will be arrested if you don’t pay your debt;
they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

give false credit information about you to anyone, including a credit reporting company;
send you anything that looks like an official document from a court or government agency if it isn’t; or
use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
deposit a post-dated check early;
take or threaten to take your property unless it can be done legally; or
contact you by postcard.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.

Can a debt collector garnish my bank account or my wages?

If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.
Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:

Social Security Benefits
Supplemental Security Income (SSI) Benefits
Veterans’ Benefits
Civil Service and Federal Retirement and Disability Benefits
Military Annuities and Survivors’ Benefits
Federal Emergency Management Agency Federal Disaster Assistance

Federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What should I do if a debt collector sues me?

If a debt collector files a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.

Where do I report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau. Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law

Employment Background Checks Must Comply with Fair Credit Reporting Act Regulations

2014-01-09T11:04:00.000-08:00

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Employers who perform background checks on potential employees must follow the rules of the Fair Credit Reporting Act. Background checks can include information from a variety of sources including consumer credit reports, DMV records, criminal records, and now even social media websites.

Employers must follow FCRA when viewing your Credit Report

Employers who make decisions resulting hiring, retention, promotion, or reassignment must comply with the FCRA. The good folks at Mondaq provided this excellent article on employer FCRA compliance. Mondaq is one of worlds most comprehensive online resources for information. These guys know what they are doing and provide expertise in Consumer Protection issues, Finance, government regulation, and much, much more. Read more here.

Seasoned Tradelines and Authorized User Accounts 2013

2014-01-01T02:27:00.003-08:00

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It has been a while since I last wrote about Tradelines and A/U accounts. I thought it would be a good idea to catch my readers up on the latest industry news and company reviews regarding this always intriguing subject. Before I wrote this article, I did an Internet search using the words: "Seasoned Tradelines+Authorized user account." The results were not surprising. Google turned up 14,900 results. Most of the hits were companies selling tradelines in one form or another, but none of the sites (except one) actually explained what tradelines are and how to distinguish between a good deal and a scam.

After about an hour of visiting sites and reading the same regurgitated information, I came across a site called Tradelinesforum.com. As the address title suggests, it is a forum of individuals discussing the subject of tradelines and authorized user accounts. And, as suspected, people are still very much interested in the so-called phenomenon of seasoned tradelines and A/U accounts. I also noticed that people are also still confused about them. To get a basic understanding of what tradelines are you should read my article here.

Tradelines are still a viable (and legal) financial instrument that can be used to improve a person's credit score. And yes, they are still somewhat controversial among some in the credit and finance industry. Some still say they provide an "artificial" increase in a person's credit score, thus are inherently wrong because the increase is not based upon an actual improvement in someones creditworthiness. Be that as it may, Tradelines are here to stay. In my search for the latest information on Tradelines, I ran across a very helpful website - one that I don't think existed a few years ago. The website reviews what they consider to be the best Tradeline companies. I trust Tradelinesforum.com, and that is where I found the link to a site called Tradelinesreview.com. This site featured reviews of several websites that offered tradelines for sale. Of the several sites they reviewed, one company called Superior Tradelines.com was given their highest rating based upon several categories like customer service, knowledge of product, and pricing.

If you are interested in purchasing a Tradeline I would suggest you give superior Tradelines a call and grill them about their product and their industry knowledge. The tradelines review website has some excellent suggestions for questions you could ask.

Foreclosure Fraud Revealed: Your Mortgage Documents Are Fake! | Occupy.com

2013-12-13T00:59:00.001-08:00

Foreclosure Fraud Revealed: Your Mortgage Documents Are Fake! | Occupy.com
Home foreclosures are still happening at record levels across the country. In some areas like Washington State, state legislatures are enacting laws that require banks to offer mediation to homeowners before they can start foreclosure proceedings. To understand why this fallout from the 2007 home foreclosure crisis has become just that – a crisis, you must understand the process of foreclosure and who stands to benefit from it. Here is the dichotomy in which the foreclosure crisis resides: Hundreds of thousands of Americans bought homes in the run up to the foreclosure crisis – many of whom were considerably irresponsible in analyzing whether they would actually be able to afford a home in the first place. They were lured by low interest rates and mortgage contracts that did not require proof of income. When the recession hit and people lost their jobs or had to come up with an exorbitant balloon payment they were sunk. When housing sales tanked and prices torpedoed downward, people all of a sudden found their homes were “underwater” and could not even sell to get out from under the mortgage. On the other hand, mortgage brokers and banks who actually knew that most of these mortgages would fail, bundled the loans, securitized them and sold them to Wall street as A paper investments. Once the loans hit Wall-Street, all hell broke loose. But let’s back up a bit. The root of the foreclosure problem has to do with who has clear title of the home and therefore who has the right to actually foreclose on the home. Here is how Occupy.com explains it:

A mortgage has two parts: the promissory note (the IOU from the borrower to the lender) and the mortgage, which creates the lien on the home in case of default. During the housing bubble, banks bought loans from originators, and then (in a process known as securitization) enacted a series of transactions that would eventually pool thousands of mortgages into bonds, sold all over the world to public pension funds, state and municipal governments and other investors. A trustee would pool the loans and sell the securities to investors, and the investors would get an annual percentage yield on their money. In order for the securitization to work, banks purchasing the mortgages had to physically convey the promissory note and the mortgage into the trust. The note had to be endorsed (the way an individual would endorse a check), and handed over to a document custodian for the trust, with a “mortgage assignment” confirming the transfer of ownership. And this had to be done before a 90-day cutoff date, with no grace period beyond that. -

Technorati Tags: MERS,Foreclosure,Robo-signing,securitization

The above video Randy Kelton clearly explains how robo-signing, MERS, corrupt judges, mortgage – note bifurcation theory and fraud are the real root of what the banks and Wall-Street is doing to consumers.

Method of Verification–A Powerful Credit Repair Tool

2013-11-22T14:28:00.001-08:00

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:

Challenge the listing in the normal way.
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!)
Give the report reference number and ask for method of verification per FCRA Section 611(a)(7) .
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.
Call OC and ask for the records.
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.
If you are sent records, review them and see how good they are. If they are not conclusive, take the next step.
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.

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’

2013-11-21T15:31:00.000-08:00

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

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.

FACTA and guidelines for an effective FRCA 623 attack based upon inaccurate information in your credit report

2013-11-21T15:16:00.000-08:00

Technorati Tags: Facta,FCRA 623,investigation,credit repair

Disputed information in your credit file must be Validated by original creditor. There have been many articles written about the FCRA and how it can be used to help consumers repair their damaged credit files. One Google search will turn up literally hundreds of articles on the subject. Much of the information is either too difficult to understand, or is woefully incomplete. Many of the authors of such articles have an ulterior motive; give the reader a tid-bit of information designed to gently lead them to their website where they then offer to give the reader the “whole story” for a price, or solicit other costly credit repair services.
While I don’t necessarily blame them for trying to make a buck, I,like other consumers of credit repair information would like to simply get the whole story without all the underhanded marketing tactics that are so abundant on the Internet. I promise all of my readers that the information in my posts is “pure” and without strings attached!! Just knowledge, no fat, no bad information, and no marketing! While I do own and run a credit repair agency, the information I post is for CONSUMPTION, not to market my credit repair services.
By its very name, the Fair and Accurate Credit Transactions Act places new emphasis on accuracy of information in consumer reports. Two FACTA sections aim to improve the accuracy and integrity of information as well as give consumers a new right to dispute data included in reports directly with the company that furnished it. These sections are:

Accuracy guidelines for financial institutions and creditors that furnish information to credit bureaus. (FACTA §312(a), FCRA §623(e)(1)). Ability of consumers to dispute information with companies that report to credit bureaus. (FACTA §312(c), FCRA §623(a)(8)).

Like other FACTA sections, the accuracy and dispute sections call for rules to be adopted by the federal banking agency and the FTC. On March 22, 2006, the agencies jointly issued an Advanced Notice of Proposed Rulemaking (ANPR), a means of gathering information prior to a rule proposal. The ANPR can be viewed at www.ftc.gov/os/fedreg/2006/march/060322accuratecredittrans.pdf Public comments received in response to the ANPR can be viewed at www.ftc.gov/os/comments/FACTA-furnishers/index.shtm

While case law has established for the past few years that the Original Creditor (O.C.) can be held liable for reporting inaccurate information (Richardson vs. Fleet, Nelson vs. Chase Manhattan ), the FACTA legislation passed recently allows the consumer to go directly to the original creditor and dispute information which the original creditor (called the information furnisher in the FCRA), has supplied to the credit bureaus. However, before disputing with the original creditor, the CONSUMER MUST HAVE DISPUTED WITH THE CREDIT BUREAUS first. Following this step is crucial.

Again, when you write the Original creditor, you are asking for an INVESTIGATION, not verification. Under the laws, the OC’s are not required to verify an account, only to conduct an investigation. If you want to get results, you must invoke the right laws. O.C.’s are NOT required by law to “verify” anything. Basically, you can dispute information placed on your credit report by an O.C. in the same way as you would with a credit bureau. An original creditor must:

Conduct an investigation of the dispute
Review all information provided by the consumer relating to the dispute
Respond within 30 days to the investigation
If the information is inaccurate, they must notify the credit bureaus of the mistake and tell the credit bureau to correct it.

Some of you might remember the very popular slogan used by one of the major parcel delivery services: “We move at the speed of Business” Well, that slogan was not only true, but it was also prophetic. Large companies in the US are constantly buying each other out, merging with larger companies, and selling parts of their departments to vendor companies. This means that information can and does get lost in “translation.” As anyone who has ever taken an economics course knows, US companies are more concerned with profits than complaints.
It has been my experience as a credit repair professional that most companies (original creditors) do not adequately staff their dispute resolution departments until they are facing a class-action type lawsuit. That’s when the lawyers are brought in to clean things up and resolve whatever dispute occurred through litigation. One consumer complaint is rarely given the attention it deserves because of the simple, yet profound fact that the man-hours to resolve every complaint cannot be justified in a profit-driven environment. Bottom line: they don’t keep their records very well. In fact, most credit card companies only keep records for 13-18 months! Fortunately for consumers, the FACT-ACT now requires any issuer of credit to validate all information it reports to the three major credit bureaus. Section 623 (a) (8) D) of FACTA which is titled: SUBMITTING A NOTICE OF DISPUTE states:

A consumer who seeks to dispute the accuracy of information shall provide a dispute notice (letter) directly to such person at the address specified by the person for such notices that:
identifies the specific information that is being disputed
explains the basis of the dispute, and
includes all supporting documentation required by the furnisher (original creditor) to substantiate the basis of the dispute.

(E) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE- After receiving a notice of dispute from a consumer pursuant to subparagraph (D),the person that provided the information in dispute to a consumer reporting agency shall–
(i) conduct an investigation with respect to the disputed information;
(ii) review all relevant information provided by the consumer with the notice;
(iii) complete such person’s investigation of the dispute and report the results of the investigation to the consumer before the expiration of the period under section 611(a)(1) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; and
(iv) if the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished the inaccurate information of that determination and provide to the agency any correction to that information that is necessary to make the information provided by the person accurate.
§ 623. (b) Duties of furnishers of information upon notice of dispute.
(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2) [§ 1681i];
(C) report the results of the investigation to the consumer reporting agency;
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1),
for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly –
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.

I won’t provide an interpretation here because that is as straight-forward as it gets. You can call up (or write) your credit card company, or any “furnisher” of credit and demand that they investigate your account for inaccuracies and by law they must comply or be found liable in a court of law. Remember what I wrote above, that the consumer must first dispute with the credit bureaus BEFORE they dispute with the original creditor. Why? Because when you dispute the debt with credit bureaus first, they will almost always verify the debt as legit and accurate (they are supposed to do this by contacting the above mentioned original creditor, but in most cases they don’t). When the debt is verified by the bureaus you then have standing to dispute with the original creditor who then will be liable for verifying a debt with the credit bureaus, but did not (could not) verify it with you - proving no investigation ever occurred!! When you write your dispute letter threatening to sue for damages they will immediately stop reporting the debt to the credit bureaus, who then in turn must delete it from your credit file.

What is E-Oscar??

2013-11-21T14:47:00.000-08:00

Technorati Tags: e-oscar

e-OSCAR is a web-based computer software that data furnishers (creditors, banks, etc.,) use to communicate with the credit reporting agencies. The system enables Data Furnishers (DFs) and Credit Reporting Agencies (CRAs) to create and respond to dispute letters.

If you are positive a mistake has been made on your credit report, it may be that the e-Oscar investigation system is the reason the mistake was verified as correct. Credit reporting agencies (CRAs) have created an automated computerized system of dealing with credit disputes.

The e-Oscar (Online Solution for Complete and Accurate Reporting) system is used even when consumers send in detailed disputes, with supporting documents. The dispute is broken down into a two or three digit code and sent to the original creditor to verify a simple code, failing the duty to investigate

e-Oscar and disputes

As of 2004 the big three CRAs; Equifax, TransUnion, and Experian-require mandated use of e-Oscar. When a dispute is sent to a CRA by a consumer it is coded from among 26 different dispute reasons such as Not his/hers, claims inaccurate and sent to the data furnisher without any human intervention. The furnisher is than suppose to investigate the dispute and respond with the dispute result to the CRA. When the furnisher conducts an investigation they will look at their files to see to assess the accuracy of the information disputed by the consumer. If they determine the information is reporting incorrectly they will send an update to the CRAs with the correct information. If the furnisher never even responds within the 30 days the CRA must delete the information.

Problems with the e-Oscar System

From the surface e-Oscar is a great idea and will enable consumers to get their dispute resolved faster. The reality seems to be quite different. Two major problems exist with e-Oscar. First, disputes are shoved into a single dispute reason code. This is unfair because often disputes have many reasons. Nevertheless it still gets put into a single dispute code by a low paid employee who is scanning the dispute letter. The second problem is very little documentation is included.

The CRAs are NOT including all relevant information like they are suppose to. The FTC’s Report to Congress on the Fair Credit Reporting Act Dispute Process notes TransUnion typically does not supply copies of consumer-supplied documentation to furnishers but added that, if the documentation can be reasonably verified as being authentic, the account is automatically updated based on the documentation, in lieu of sending an ACDV (Automated Credit Dispute Verification). So if you send a copy of an account statement or some other proof that an account item is reporting incorrectly it rarely makes it to the data furnisher. Why? Because transmitting that information is not easy or cost effective for the CRAs. It requires them to mail it or fax it which costs money. As a result, the supporting documentation is left out.

Introduction

Q: How does the CRA convey a dispute through e-Oscar?
A: The CRA will notify the data furnisher by ACDV. ACDV stands for Automated Credit Dispute Verification. The Automated Consumer Dispute Verification (ACDV) is a consumer dispute that is routed to a data furnisher (DF) from a Consumer Reporting Agency (CRA) via e-OSCAR. ACDVs are sent to the data furnisher on behalf of the consumer.
The data furnisher returns the ACDV once the proper investigation has been completed. AUD stands for Automated Universal Data form. AUDs are initiated by the data furnisher to process out of cycle modifications and updates, and are sent to the CRAs with whom the data furnisher has a reporting relationship.

Batch Interface

Large data furnishers such as MBNA or Chase get lots of disputes. Going through each dispute manually is an expensive and resource intensive process. E-Oscar’s solution is to send all the disputes over in a batch computer file. Hundreds, even thousands, of disputes can be sent from the CRA to the data furnisher at one time.
The data furnisher can then send the computer file back to the CRA with the dispute results of the entire batch. One inappropriate feature is the “reply all” function. This allows the data furnisher to select a response, saying “Account Verified” and respond to all disputes at once.

So if 20 disputes came in, the data furnisher could respond to all 20 disputes with the result “Account Verified” without even looking at any of the disputes! That’s right, the data furnisher is able to respond to all disputes with a single click without even conducting an investigation or even looking at the dispute.
In fact, this is a feature e-Oscar is very proud of and has a section on their web site all about it.

Here s a quote taken from e-Oscar’s web site:
The Batch Interface is an exciting product offering that allows Data Furnishers with large volumes of

Automated Consumer Dispute Verification (ACDV) requests to receive a batch file in an XML format

Once the file is delivered, each Data Furnisher can further automate the development of responses to

ACDVs. The development effort by the Data Furnisher to achieve the benefits of the Batch Interface, will

vary depending on the Data Furnishers internal business and compliance requirements.
For example, one Data Furnisher may choose to auto-populate the response fields automatically for staff

review prior to submission. This business plan would save your staff the time and potential errors of data

entry. Another Data Furnisher may elect to automate only certain response types.
For example, A Data Furnisher might only automate “delete” responses and require that staff review

responses on all other disputes.(emphasis added)
The FCRA states that the furnisher must perform a reasonable investigation. However if the data furnisher is able to automate the investigation process without even looking at the incoming disputes, doesn’t that seem like a violation of the FCRA? How is this considered a proper and legal investigation!?

How long does the furnisher have to conduct an investigation?

A common misconception is that the furnisher has 30 days to perform an investigation of the dispute. This is not true. The 30 day clock begins when the CRA receives the dispute letter from the consumer. The CRA then needs time to send the data furnishers’ response to the dispute to the consumer once it is complete. Therefore the furnisher has around 15-20 days to conduct an investigation.

What happens if a furnisher does not respond?

This is often a desired outcome. Depending on what type of dispute it is, the CRA might update the account in favor of the consumer, or it might delete the trade line off the credit report.

Consumer Protection Bureau Brings Lawsuit against Cash America Pay Day Loan company

2013-11-20T22:59:00.000-08:00

Revenge is a dish best served...by the CFPB! Today the Consumer Financial Protection Bureau brought an enforcement action against giant pay day lender Cash America, one of the largest short-term loan sharks in the US. Cash America agreed to pay $14 Million to 14,000 people for robo-signing practices related to debt collection lawsuits. They will also pay 5 million for the violation and other misconduct, according to a CFPB report released today.

CFPB has caught the scent of Pay Day loan sharks!!

Some of the "misconduct" mentioned in the enforcement action included destroying documents before the CFPB could examine them which is a big no-no in the legal world. “We are also sending a clear message today to all companies under our watch that impeding a CFPB exam by destroying documents, withholding records, and instructing employees to mislead examiners is unacceptable.”CFPB Director Richard Cordray said.

Within months of the CFPB discovering the robo-signing, Cash America dismissed pending collections lawsuits, terminated all post-judgment collections activities, cancelled all judgments obtained, and corrected information it furnished to credit bureaus for the nearly 14,000 wrongful cases filed in Ohio.

These guys are scum. The whole model of pay day lending is predatory in nature and promotes a vicious cycle of getting paid, paying off your loan, then not having any money so you have to get another loan. Their victims are usually those who can't afford the terms and conditions of the loan, but are forced to accept them in order to eat or put gas in their car to get to work. Once you decide you want out of the cycle, you end up on the receiving end of a lawsuit which is litigated illegally by the pay day lender - hence the CFPB enforcement action.

In the US, pay day loans are a multi-billion dollar industry. In California, pay day lender Money-Mart settled a class-action lawsuit where they agreed to pay its customers $7.5 million. The Money Mart settlement will resolve a class action lawsuit, entitled Dennis Herrera v. Check N’ Go of California, Inc., et al., that alleges Money Mart offered to California consumers CustomCash loans with interest rates that exceeded the limits set by California Law and Cash ‘til Payday loans that did not comport with the California law. Check n Go allegedly charged California customers up to 400% interest on loans which is far above what California law allows.

If you are a victims of a pay day lender, you should contact your state Attorney General's Office and file a complaint immediately. You may be entitled to money somewhere down the road because you can bet the CFPB has "released the hounds" so to speak, on pay day lenders. They smell blood and are going for the kill.

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Are You Facing Foreclosure? The Foreclosure Fairness Mediation Program can help!

2013-11-18T01:08:00.001-08:00

Technorati Tags: foreclosure,HAMP program,mandatory foreclosure mediation,Wall-street,loan servicers,foreclosure fairness mediation program,department of financial institutions

In response to the subprime mortgage foreclosure crisis of 2007, the Obama administration passed legislation to create the Home Affordable Modification Program (HAMP). The HAMP program was supposed to help homeowners facing mortgage foreclosure with loan modifications. HAMP was touted as a government ‘knight in shining armor’ for those facing foreclosure. Under HAMP, mortgage servicers (lenders) are provided with the opportunity to enter into contracts with the Federal Government to modify homeowners’ mortgage loans in a particular and uniform fashion and receive incentive payments in return.

The first big mistake of the HAMP program was that the government actually trusted the banks to participate in HAMP program almost exclusively on their own terms and by their own free will. For example, in the HAMP Handbook for Servicers of Mortgages from the US Treasury requires participating servicers to actively solicit borrowers to participate in HAMP before referring a loan to foreclosure or conducting a scheduled foreclosure sale. Of course, the banks were reluctant to go outside of their traditional foreclosure models because those models usually lead to the borrower being cheated out of a legitimate chance to refinance with affordable terms and additional earnings for the bank once the defaulted loan is securitized and sold on Wall-Street.

The second blunder of the HAMP program was that the incentives for the loan servicers weren’t enough to get them on board if they weren’t doing loan mods prior to the HAMP program. The latest mortgage news is that the government has worked out a settlement deal with the five biggest banks accused of mortgage foreclosure malfeasance. For a comprehensive report on just how ridiculous the government settlement with the banks go to here. The five banks involved in the fraudulent activities and are required to pay approximately $25 billion to states, individuals and the government are :

Bank of America
Citi-Bank
Wells Fargo
Ally/GMAC
JP Morgan Chase

The agreement settles state and federal investigations finding that the country’s five largest mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without knowing whether the facts they contained were correct.
Because of this litigation and the abject failure of the HAMP program, more than 30 states have implemented their own mandatory foreclosure mediation programs. The states that are participating in mandatory mediation are:

California
Connecticut
Delaware
WA. DC
Florida
Hawaii
Idaho
Illinois
Indiana
Kentucky
Maine
Maryland
Massachusetts
Michigan
Nevada
New Hampshire
New Jersey
New York
New Mexico
Ohio
Oregon
Pennsylvania
Rhode Island
Vermont
Washington State
Wisconsin

In Washington State, the Governor signed into law the Foreclosure Fairness Act of 2011. The law provides Washingtonians facing foreclosure the opportunity to be referred by a housing counselor or an attorney to mediation with their lender to review available options to keep their home. This mediation is mandatory for all lenders before they foreclose on any home in Washington State.

If you live in one of the state listed above, contact your state Attorney General and ask about a similar program.

Debt Settlement: Fraudulent, Abusive, and Deceptive Practices Pose Risk to Consumers

2013-11-17T17:30:00.000-08:00

Sure, we can settle your debts!

As consumer debt has risen to historic levels, a growing number of for-profit debt settlement companies have emerged. These companies say they will negotiate with consumers' creditors to accept a lump sum settlement for 40 to 60 cents on the dollar for amounts owed on credit cards and other unsecured debt. However, there have been allegations that some debt settlement companies engage in fraudulent, abusive, or deceptive practices that leave consumers in worse financial condition. For example, it has been alleged that they commonly charge fees in advance of settling debts or without providing any services at all, a practice on which the Federal Trade Commission (FTC) recently announced a proposed ban due to its harm to consumers. The Committee asked for an investigation of these issues. As a result, GAO attempted to (1) determine through covert testing whether these allegations are accurate; and, if so, (2) determine whether they are widespread, citing specific closed cases. To achieve these objectives, GAO conducted covert testing by calling 20 companies while posing as fictitious consumers; made overt, unannounced site visits to several companies called; interviewed industry stakeholders; and reviewed information on federal and state legal actions. GAO did not use the services of the companies it called or attempt to verify the facts regarding all of the allegations it found.

GAO's investigation found that some debt settlement companies engage in fraudulent, deceptive, and abusive practices that pose a risk to consumers. Seventeen of the 20 companies GAO called while posing as fictitious consumers say they collect fees before settling consumer debts--a practice FTC has labeled as harmful and proposed banning--while only 1 company said it collects most fees after it successfully settles consumer debt. (GAO was unable to obtain fee information from 2 companies.) In several cases, companies stated that monthly payments would go entirely to fees for up to 4 months before any money would be reserved to settle consumer debt. Nearly all of the companies advised GAO's fictitious consumers to stop paying their creditors, including accounts that were still current. GAO also found that some debt settlement companies provided fraudulent, deceptive, or questionable information to its fictitious consumers, such as claiming unusually high success rates for their programs--as high as 100 percent. FTC and state investigations have typically found that less than 10 percent of consumers successfully complete these programs.

Other companies made claims linking their services to government programs and offering to pay $100 to consumers if they could not get them out of debt in 24 hours. GAO found the experiences of its fictitious consumers to be consistent with widespread complaints and charges made by federal and state investigators on behalf of real consumers against debt settlement companies engaged in fraudulent, abusive, or deceptive practices. Allegations identified by GAO involve hundreds of thousands of consumers across the country.

Federal and state agencies have taken a growing number of legal actions against these companies in recent years. From these legal actions, GAO identified consumers who experienced tremendous financial damage from entering into a debt settlement program. For example, a North Carolina woman and her husband fell deeper into debt, filed for bankruptcy in an attempt to save their home from foreclosure, and took second jobs as janitors after paying $11,000 to two Florida companies for debt settlement services they never delivered. Another couple, from New York, was counted as a success story by an Arizona company even though the fees it charged plus the settled balance actually totaled more than 140 percent of what they originally owed.

Applicability of the FDCPA – It matters if the listing is from the original creditor or collection agency

2013-11-17T16:07:00.000-08:00

Technorati Tags: Consumer Protection Laws,Fair Debt Collections Practices Act,Collection agency,Credit card,Creditor,Debt buyer,Debt validation,Fair Debt Collection Practices Act,FDCPA,United States.

The FDCPA does not cover collection tactics employed by original creditors (like credit card companies who issue credit cards). It only governs the actions of a debt collector (collection agency). Let’s look at the definition of these two groups as defined by the FDCPA.

TITLE VIII – DEBT COLLECTION PRACTICES [Fair Debt Collection Practices Act]
§ 803. Definitions [15 USC 1692a]
As used in this title –
(4) The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

What does that mean? It means that, as far as the FDCPA is concerned, a creditor is the original entity which loaned money to a consumer. It is not a collection agency. The definition of a debt collector is as follows:

TITLE VIII – DEBT COLLECTION PRACTICES [Fair Debt Collection Practices Act]
§ 803. Definitions [15 USC 1692a]
As used in this title –
(6) The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

So when a collection agency is assigned, or has purchased, your debt, they are NOT the creditor. They are the debt collector and the actions they take are all governed by the FDCPA.

What if “Bob” is a lawyer?

Under the FDCPA, even if Joe hires a lawyer or law firm to collect a debt from you, the lawyer or law firm is still considered a collector and must adhere to the FDCPA.

What does a debt collector need to provide as debt validation?

Proof that the collection company owns the debt/or has been assigned the debt. (Bob is legally entitled to collect this particular debt from you.) This is basic contract law. It is very difficult to get a judgment without a direct contract between collection agency and the original creditor.
At a minimum, some account statements from the original creditor. If you really want to get sticky, you can pin them down on the amount of the debt by requiring complete payment history, starting with the original creditor. (How the heck did Bob calculate this debt? What fees/interest Bob has tacked on to this debt and how he determined these fees?) This requirement was established by the case Fields v. Wilber Law Firm, Donald L. Wilber and Kenneth Wilber, USCA-02-C-0072, 7th Circuit Court, Sept 2004..
Copy of the original signed loan agreement or credit card application. (Your contract with Joe establishing the debt between you.) However, account statements from the original can fulfill these requirements.

What Bob gets out of the deal

It use to be that in most cases, creditors assigned, not sold, its debts to a collection agency. But not any more.

Creditors hire collection companies (like Bob) to collect debts for them, because they simply don’t have the time or resources to chase down all of their severely overdue accounts. Collection agencies have cheap labor and a streamlined system to pursue such accounts. When a creditor hires a collection agency, the debt has been assigned to the collection agency. If a collection agency is successful at collecting the money on the account, they usually keep a percentage of what is collected as payment for services.

Original creditors sometimes sell debts in large portfolios to collection agencies. This is starting to be the norm, and several of these companies, called Junk Debt Buyers (JDBs), are now being traded on Wall Street. The companies do not spend much money at all for these debts, sometimes paying less than 1 cent on the dollar. Even if the debt is not a large debt, they often hire attorney to send out mass form-letters to debtors in the hopes of collecting. As you can see, even if they get a small percentage of the debtor to pay, profits are enormous. For more on JDBs, you can read our article here.

Assigned or purchased debt (How do you know Bob is the right guy to pay?)

Why should you care if a debt is purchased or assigned? In an assignment, the collection agency does not own the debt, and therefore you do not technically owe them any money. There is no way for a collection agency to prove that you owe them money because there is only an assignment of the debt and not a contract between you and the creditor.

One loophole: Some contracts have the wording “debtor agrees to be responsible for payment of this debt to creditor OR ITS ASSIGNS.” This IS a contract between you and the debt collector as well as the creditor and if they can provide you with a copy of a contract that states this (with your signature!), you are pretty much stuck and need to negotiate.

What if the collection agency (Bob) proves they purchased the debt? Is he now the original creditor and no longer subject to the FDCPA?

If they do purchase the debt, this does not make them the original creditor. They are still a debt collector and covered by the FDCPA.

Continue to treat any collection agency, junk debt buyer or law firm who says they own the debt as a collection agency subject to the FDCPA. You can still request validation and proof of the purchase, because if they can’t validate it, the collection agency can’t prove you owe the debt. Often a JDB will tell a consumer that since they purchased the debt, they are not subject the the FDCPA. It’s simply not true

The Right to Validate Your Debt

Under the FDCPA, you are allowed to validate this debt, and the creditor (in this case, the collection agency) must show you proof that you owe the debt to the collection agency (not to the original creditor.)

The specific section of the FDCPA:

FDCPA Section 809. Validation of debts [15 USC 1692g](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. There is an opinion letter from the FTC to back this up:

http://www.ftc.gov/os/statutes/fdcpa/letters/wollman.htm

Nor can they ask you to pay for digging up records of your debt:

http://www.ftc.gov/os/statutes/fdcpa/letters/krisor2.htm

So, if a creditor can’t verify a debt:

They are not allowed to collect the debt,
They are not allowed to contact you about the debt, and
They are also not allowed to report it under the Fair Credit Reporting Act (FCRA). Doing so is a violation of the FCRA, and the FCRA states that you can sue for $1,000 in damages for any violation of the Act.

The opinion letter from the FTC which clearly spells out that a collection agency CANNOT report a debt to the credit bureaus which has not been validated:

http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm

It also states that you can sue in federal or state court. So if you have them on a violation, then you have damages of $1,000 for the incident plus damages. Small claims court, anyone?

When a collection agency responds to your request for validation with a summons to appear (meaning they are trying to get a judgment against you)

1/17/2002: These sneaky collection agencies are starting to catch on to the debt validation concept. (No doubt there is some kind of collection agency newsletter going around telling these folks about the whole process.) I’ve heard from my readers that some collection agencies are starting to respond to validation requests with summons to appear in court. There is precedent which says that a collection agency cannot even file suit against you if they haven’t validated the debt within the initial 30 day period. If this happens to you, you may cite the case:

Spears vs. Brennan

The appeals court determined:

“Brennan (plaintiff collection agency attorney) violated 15 U.S.C. § 1692g(b) when he obtained a default judgment against Spears (defendant) after Spears had notified Brennan in writing that the debt was being disputed and before Brennan had mailed verification of the debt to Spears.”

This means that you have an absolute defense in court to deny them judgment if they still have not validated the debt. Once you get your FDCPA dispute letter in, the collector cannot even get a judgment until they satisfy the FDCPA law. The appeals court overturned the default summary judgment in part because the collection agency lawyer did not meet the rules of the FDCPA.

This could be grounds for getting a default judgment vacated. It’s also another violation of the FDCPA and you can collect $1,000 from them.

The Debt Validation Strategy

It might be helpful to look at our illustration of the process before you get started. You might also want to read this, sort of our own “validation” of the process given here.

Send a letter requesting validation to the collection agency (our buddy Bob in the preceding example).
If you don’t know the address of the collection agency, here is a tip to help you find it.
Dispute the collection with the credit bureaus.
Wait 30 days to hear back from the collection agency. Most likely they will not respond or they will respond saying that they received your letter. Only a letter which includes:

o Proof that the collection company owns the debt/or has been assigned the debt,

o Complete payment history, starting with the original creditor, and

o Copy of the original signed loan agreement or credit card application

is satisfactory.

5. If they haven’t sent you satisfactory proof, send a copy of your receipt for your registered mail, a copy of the first letter you sent and a statement that they have not complied with the FDCPA and are now in violation of the Act. Tell them they need to immediately remove the collection listing from your credit report or you are going to file a lawsuit because they are in violation of the FDCPA, section 809 (b).

6. Wait 15-20 days to hear back after this second letter to the collection agency. They will either remove it or not respond.

7. If they do provide a contract with a signature from the original creditor showing that you owe the debt, there is one more thing you can try: see if they are legally licensed to collect the debt in your state. Here is a good site to begin your search.

Not all states require licensing, however. Here’s a little cheat sheet (Word Doc) to see what the collection licensing laws in your state are. It’s got other handy dandy state law information as well.

If you believe that they are not licensed, and licensing is required in your state, write them another letter and tell them they are in violation of your state’s collection laws and are subject to prosecution and fines. Cite your state’s fines and procedures in the letter. This is a last ditch effort, but has worked in some cases.

8. Typically, your work will stop here, as most collection agencies will bow down to your demands and send you a letter agreeing to remove the listing. Now all you have to do is send a copy of the letter to the CRAs.
If the collection agency did not agree to remove the listing, then you need to continue to the next steps.

9. File a lawsuit in small claims court against the collection agency on the basis of violating the FDCPA.

10. Have the papers served to the collection agency. (You can find a paper server on the internet for about $25). Here is a good link. And here is another: http://www.1-800-serve-em.com/servicemap.html

11. In the meantime, in a parallel effort with your lawsuit against the collection agency:

12. If the collection comes back as “verified” from the credit bureaus, you now have proof of further collection activity from the collection agency. (The assumption is that the credit bureau contacted the collection agency to verify the debt.) Since the collection agency did not validate the debt, further collection activity is a violation of the FDCPA.

13. Contact the credit bureaus, and tell them that the creditors did not verify the debts under the FDCPA, and send copies of your proof. Request the method of verification, which is your right under the FCRA. It is crucial to contact the credit bureaus before filing a lawsuit. Make sure you state that the collection agency did not respond to your request for debt validation.

14. You can try sending them this letter to see if they will budge. They may tell you that the request needs to come from the creditor. This is baloney. If they can’t give you reasonable information on how they verified the information and the collection agency has provided you none, you can conclude there was no reasonable investigation performed. They are teetering on the edge of “willful non-compliance” under the FCRA. Tell them so.

15. File a suit in either small claims, state or federal court. The basis of the lawsuit should be that the credit bureaus could not provide a satisfactory method of verification, or did not conduct a reasonable investigation.

16. Have the papers served. (You can find a paper server on the internet for about $25). Here is a great link where you can search for the local office of the credit bureau near you. http://www.llrx.com/columns/roundup14.htm

17. Notify the bureaus that you are suing them. You can use this letter. The credit bureaus will call the creditors and find out that there is a question about whether the debt is legitimate. They should delete it immediately. If you want more legal ammo, you might also try looking up similar cases to cite. We have a list of online resources here.

I hope these tips have encouraged you. Good luck on pursuing financial freedom!

How to Raise Your Credit Score in 2-3 months

2013-11-16T02:04:00.001-08:00

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

Deposit $300 – $500.00 into your bank account.
Take out a secured loan for that exact amount.
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?

2013-11-15T16:25:00.000-08:00

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.