Fair Debt Collection Practices Act (FDCPA)
The FDCPA is the consumer protection act designed to prohibit abusive practices by debt collectors. The FDCPA specifically defines a collector as any person that collects debts owed to others, and may include attorneys that collect debts on a regular basis. Note that the language indicates “debts owed to others”, and therefore excludes original creditors from its scope.
Getting Started
When a debt collector initiates a collection effort they must send you a written notice indicating: 1) How much you owe, 2) The name of the creditor to whom the debt is owed, 3) Notice that unless you, within thirty days after receipt of the notice, dispute the validity of the debt or any portion thereof, the debt will be assumed valid by the debt collector, 4) That if you dispute the debt in full or in part within thirty days, the debt collector will obtain verification of the debt and mail it to the consumer, and 5) Upon written request within thirty days, the debt collector will provide you with the name and address of the original creditor, if different from the current creditor.
Exercising Your Rights
Your rights under the FDCPA, as indicated above, allow you to dispute the validity of the debt in full or in part within 30 days of receiving written notice. Your legal rights, as in all credit repair efforts, are the tools that you will use to establish the facts. An extra benefit of disputing the validity of the debt is that the collector must cease all communication until they have furnished the documentation that you have requested. In many cases, especially with older debts where documentation could be hard to obtain, you may never hear from the collector again.
Bringing an Attorney into the Picture
If you have an attorney, the debt collector must contact the attorney instead of you. This is a good way to put an end to abusive collection calls. The collector will undoubtedly be on best behavior when communicating with an attorney and a good deal of grief may be avoided. In many cases unscrupulous collectors sense weakness in the consumer and take advantage, often acting illegally to extort payment. We highly recommend hiring an attorney for anyone that feels out of their depth and uncomfortable when speaking with a pushy collector.
Cease Communication Letter
If you would like the debt collector to stop contacting you altogether you can send a letter asking them to stop. Once they receive your letter, they are allowed to contact you only one additional time for the purpose of telling you that they intend to take a certain specific action. This strategy is often recommended by credit repair companies, but be aware that in some cases, especially with recent or large collections, your letter may push the collector into taking legal action to recover, such as filing a lawsuit.
Statue of Limitations
Many collections efforts are not legitimate. Statutes of limitations for collecting debt are typically far less than the statutes of limitation for reporting debt on your credit report. Debts may be collectable for as little as three years. It is crucial to understand that the statute of limitations clock starts with the original creditor. For most states the statute of limitation starts on the day you made your last payment on the account. This date can not be reset by the passing from creditor to collector, or from one collector to another. But beware that in some states partial payment can reset the statute of limitation clock. Check your state statutes of limitation, easily found on the internet, or speak with a credit repair expert before assuming anything.
Bad Behavior
The FDCPA prohibits a wide range of specific inappropriate behavior by collectors. Prohibited practices include contacting you before 8 a.m. or after 9 p.m., calling you at work if you tell them that your employer does not approve, use of threats, obscene language, repeated calls designed to scare you into making payment, implying affiliation with the government, or implying that you have could be arrested for not paying a debt. In the credit repair business we are regularly asked about specific collection practices. Many of the stories we hear detail outrageous and illegal behavior...
Pick up the Phone
If you feel that a collector is behaving in an improper or illegal manner, the ultimate resource for answers is the FTC. If you find yourself on the telephone with a collector in such a situation it is entirely appropriate for you take careful notes: Ask their name (the FDCPA prohibits the use of false names), ask them to repeat anything that you are uncomfortable with, and then call the FTC. They welcome phone calls. The toll-free number is (877) FTC-HELP. That’s easy!
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Friday, August 31, 2007
Friday, August 24, 2007
Credit Repair: Try This!
Do you have a past due credit card that is hurting your credit scores? Would you like the creditor to make it current, and even eliminate your entire record of late payments? It can be done. Credit repair expert Jim Kemish explains a neat little trick that may be as easy as picking up the phone.
An Overview of Re-Aging
Credit card issuers have the ability to bring your account current and wipe out your entire record of late payments using a procedure called “re-aging”. Re-aging, if managed properly, can be a fantastic credit repair tool. The re-aging guidelines were set by the Federal Financial Institutions Examination Council (FFIEC) in June of 2000 for the purpose of helping “borrowers overcome temporary financial difficulties, such as loss of job, medical emergency, or change in family circumstances like loss of a family member”.
The Policy Background
The FFIEC is a formal interagency body empowered by the Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and others, to prescribe principles and standards in the supervision of financial institutions. The re-aging guidelines are observed by all credit card issuers with the understanding that they can take a more “conservative” stance at their discretion. Credit Unions did not opt to adopt this policy, but if you have a credit card with a credit union it does not hurt to ask if they have a re-aging policy.
Some Plain English
It sounds great so far! But how does it work? Re-aging is defined as “returning a delinquent, open-end account to current status without collecting the total amount of principle, interest, and fees that are contractually due”. And it means what it says. If you meet certain, very reasonable, guidelines your credit card issuer will wipe out your bad credit. What are those guidelines?
Nuts and Bolts
There are a few basic rules. The account has to have existed for at least 9 months, you have to offer to make three on-time payments or an equivalent lump sum payment before the re-aging will be finalized, you cannot re-age an account more than one time in any 12 month period and no more than 2 times in any 5 year period. Working on credit repair? Please note that there is no limit on the number of accounts that you can re-age. But I suggest you complete one effort first to get comfortable.
Your Part of the Deal
Just so you understand, this process is designed for cardholders that have a renewed willingness and ability to make payments in a timely manner. Like any credit repair effort there is no point if you fall behind again. It is also designed for cardholders that have experienced a financial hardship. Remember the list of hardships that constitute acceptable causes of past financial problems: loss of job, medical emergency, and change in family circumstances like loss of a family member. There may be other equally acceptable events. But since the re-aging process is taken seriously you should not expect that your request be honored if you say that you just didn’t want to pay your bills!
Getting Started
Are you ready to get started? Call the credit card issuer and ask them to explain their re-aging policy. Some issuers use the term, “curing”. If the person on the phone does not know what you are talking about you should ask for a supervisor. You will want to organize your thoughts in advance. Remember that you need to communicate the reasons for your past delinquency and your renewed willingness and ability to pay on time from now on.
The Deal
Re-aging deals can differ from one issuer to the next. You will want to make sure that all derogatory information will be deleted from your account. It is also a good idea to get the details in writing. Anyone who has made a credit repair effort knows that verbal agreements with creditors have a pretty poor record of success. If they won’t put it in writing, at least take careful notes including the name and direct phone number of the person that you are speaking with.
A Caution
Removing derogatory information from your credit is a great thing. It is the goal of every credit repair effort. But it is important to keep your FICO score in mind as well. If the issuer resets the opening date on your account when they remove your derogatory information you may lose points, depending on the number and age of other accounts on your report. Ask the issuers specifically if they will reset the open date. Some do and some don’t. If they will, you’ll want to consider the impact on your scores. FICO loves old accounts. If you have plenty of accounts with many years of history there is no problem. But if your credit is young and limited resetting an older account could be a set back, at least temporarily.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
An Overview of Re-Aging
Credit card issuers have the ability to bring your account current and wipe out your entire record of late payments using a procedure called “re-aging”. Re-aging, if managed properly, can be a fantastic credit repair tool. The re-aging guidelines were set by the Federal Financial Institutions Examination Council (FFIEC) in June of 2000 for the purpose of helping “borrowers overcome temporary financial difficulties, such as loss of job, medical emergency, or change in family circumstances like loss of a family member”.
The Policy Background
The FFIEC is a formal interagency body empowered by the Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and others, to prescribe principles and standards in the supervision of financial institutions. The re-aging guidelines are observed by all credit card issuers with the understanding that they can take a more “conservative” stance at their discretion. Credit Unions did not opt to adopt this policy, but if you have a credit card with a credit union it does not hurt to ask if they have a re-aging policy.
Some Plain English
It sounds great so far! But how does it work? Re-aging is defined as “returning a delinquent, open-end account to current status without collecting the total amount of principle, interest, and fees that are contractually due”. And it means what it says. If you meet certain, very reasonable, guidelines your credit card issuer will wipe out your bad credit. What are those guidelines?
Nuts and Bolts
There are a few basic rules. The account has to have existed for at least 9 months, you have to offer to make three on-time payments or an equivalent lump sum payment before the re-aging will be finalized, you cannot re-age an account more than one time in any 12 month period and no more than 2 times in any 5 year period. Working on credit repair? Please note that there is no limit on the number of accounts that you can re-age. But I suggest you complete one effort first to get comfortable.
Your Part of the Deal
Just so you understand, this process is designed for cardholders that have a renewed willingness and ability to make payments in a timely manner. Like any credit repair effort there is no point if you fall behind again. It is also designed for cardholders that have experienced a financial hardship. Remember the list of hardships that constitute acceptable causes of past financial problems: loss of job, medical emergency, and change in family circumstances like loss of a family member. There may be other equally acceptable events. But since the re-aging process is taken seriously you should not expect that your request be honored if you say that you just didn’t want to pay your bills!
Getting Started
Are you ready to get started? Call the credit card issuer and ask them to explain their re-aging policy. Some issuers use the term, “curing”. If the person on the phone does not know what you are talking about you should ask for a supervisor. You will want to organize your thoughts in advance. Remember that you need to communicate the reasons for your past delinquency and your renewed willingness and ability to pay on time from now on.
The Deal
Re-aging deals can differ from one issuer to the next. You will want to make sure that all derogatory information will be deleted from your account. It is also a good idea to get the details in writing. Anyone who has made a credit repair effort knows that verbal agreements with creditors have a pretty poor record of success. If they won’t put it in writing, at least take careful notes including the name and direct phone number of the person that you are speaking with.
A Caution
Removing derogatory information from your credit is a great thing. It is the goal of every credit repair effort. But it is important to keep your FICO score in mind as well. If the issuer resets the opening date on your account when they remove your derogatory information you may lose points, depending on the number and age of other accounts on your report. Ask the issuers specifically if they will reset the open date. Some do and some don’t. If they will, you’ll want to consider the impact on your scores. FICO loves old accounts. If you have plenty of accounts with many years of history there is no problem. But if your credit is young and limited resetting an older account could be a set back, at least temporarily.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Wednesday, August 15, 2007
Credit Repair: Statute of Limitation Tips
Statute of Limitation Violations
The Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACTA) amendment to the FCRA of 2003, is the federal legislation that governs the credit reporting industry. Statutes of limitation for reporting time limits are provided by this legislation. Knowing how these time limits work is essential to any effective credit repair effort.
In Plain English
Let’s try to put some of this jargon into plain English. The term “statute of limitation” in the case of your credit reports, simply refers to the maximum amount of time that a derogatory item can continue to be reported. When the statute of limitation passes for any negative item on your credit report, that item should vanish. There are an amazing number of violations of these time limits that may appear on your report. Some violations are intentional as in the case of many of the collection accounts that we see, and others are due to a simple failure of the highly complex credit reporting system. A careful credit repair effort can eliminate these violations.
An Interesting Point
In a moment we will review statutes of limitation for the most common types of derogatory information. But you might find it interesting to know that the Federal Trade Commission permits the credit bureaus to delete information at any time at their discretion. There is no requirement that the bureaus wait until the passing of a statute of limitation date to stop reporting.
Collections and Charge Offs
Collections and charge offs must cease reporting seven years plus 180 days from the initial delinquency that led to the collection status or to the charge off. The initial delinquency is the date of the first 30 day late status that led to the collection or charge off. This period of time cannot be reset by any subsequent payment or for any other reason. The clock starts with the original creditor. Collectors such as assignees, attorneys, or collection agencies must abide by the same original statue of limitation expiration date. Neither the original creditor nor collectors can extend these reporting limits. Any attempt to do so is illegal. Unfortunately this law is often ignored. Effective credit repair efforts require a very exacting examination of these dates.
Bankruptcy
Chapter 7 bankruptcies can report for 10 years from the discharge date. Chapter 13 bankruptcies can report for 7 years from the filing date. But be aware that if the Chapter 13 is not completed the reporting limit is extended to 10 years. I mentioned above that the credit bureaus are allowed to delete information from your report prior to the expiration of statute of limitation. Any credit repair effort should take this flexibility into consideration. Bankruptcy is a case where we highly recommend requesting removal. If you are five or more years past discharge your request may be honored.
Tax Liens
Paid tax liens can report for 7 years from the date of payment. Unpaid tax liens can report for as long as they are in effect. Please be aware that most unpaid tax liens are released by the IRS after 10 years. The IRS will usually provide a lien release upon request after the 10 year limit has past. When you provide the release to the credit bureaus they will cease reporting. There are cases that allow the IRS to re-file. Please speak to your CPA or tax attorney for clarification before contacting the IRS!
Judgments
Generally, unpaid judgments will cease reporting 7 years after the filing date. However, unpaid judgments are a case where state statute of limitation will overrule federal statute. Your state may allow unpaid judgments to report for longer than 7 years. State statutes of limitation are easily found on the internet. Paid judgments may be reported for 7 years from the filing date. No state statutes may overrule federal limits for paid judgments.
Gone but Not Gone
Derogatory information that falls off of your credit report due to an expiration of the statutory time limit does not get deleted. This obsolescent information should not continue to appear on your credit report, but it is not gone. If you apply for a loan for over $150,000, life insurance with a death benefit over $150,000, or a job that pays over $75,000, your potential lender, insurer, or employer has the right to view your prior history. This fact adds some additional support to the case for credit report vigilance. If you are attempting credit repair and have erroneous info on your report it is best to dispute it now. Waiting for the statue of limitation to pass may not produce the clean result that you want. Disputed items that get deleted are literally removed from your credit report.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
The Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACTA) amendment to the FCRA of 2003, is the federal legislation that governs the credit reporting industry. Statutes of limitation for reporting time limits are provided by this legislation. Knowing how these time limits work is essential to any effective credit repair effort.
In Plain English
Let’s try to put some of this jargon into plain English. The term “statute of limitation” in the case of your credit reports, simply refers to the maximum amount of time that a derogatory item can continue to be reported. When the statute of limitation passes for any negative item on your credit report, that item should vanish. There are an amazing number of violations of these time limits that may appear on your report. Some violations are intentional as in the case of many of the collection accounts that we see, and others are due to a simple failure of the highly complex credit reporting system. A careful credit repair effort can eliminate these violations.
An Interesting Point
In a moment we will review statutes of limitation for the most common types of derogatory information. But you might find it interesting to know that the Federal Trade Commission permits the credit bureaus to delete information at any time at their discretion. There is no requirement that the bureaus wait until the passing of a statute of limitation date to stop reporting.
Collections and Charge Offs
Collections and charge offs must cease reporting seven years plus 180 days from the initial delinquency that led to the collection status or to the charge off. The initial delinquency is the date of the first 30 day late status that led to the collection or charge off. This period of time cannot be reset by any subsequent payment or for any other reason. The clock starts with the original creditor. Collectors such as assignees, attorneys, or collection agencies must abide by the same original statue of limitation expiration date. Neither the original creditor nor collectors can extend these reporting limits. Any attempt to do so is illegal. Unfortunately this law is often ignored. Effective credit repair efforts require a very exacting examination of these dates.
Bankruptcy
Chapter 7 bankruptcies can report for 10 years from the discharge date. Chapter 13 bankruptcies can report for 7 years from the filing date. But be aware that if the Chapter 13 is not completed the reporting limit is extended to 10 years. I mentioned above that the credit bureaus are allowed to delete information from your report prior to the expiration of statute of limitation. Any credit repair effort should take this flexibility into consideration. Bankruptcy is a case where we highly recommend requesting removal. If you are five or more years past discharge your request may be honored.
Tax Liens
Paid tax liens can report for 7 years from the date of payment. Unpaid tax liens can report for as long as they are in effect. Please be aware that most unpaid tax liens are released by the IRS after 10 years. The IRS will usually provide a lien release upon request after the 10 year limit has past. When you provide the release to the credit bureaus they will cease reporting. There are cases that allow the IRS to re-file. Please speak to your CPA or tax attorney for clarification before contacting the IRS!
Judgments
Generally, unpaid judgments will cease reporting 7 years after the filing date. However, unpaid judgments are a case where state statute of limitation will overrule federal statute. Your state may allow unpaid judgments to report for longer than 7 years. State statutes of limitation are easily found on the internet. Paid judgments may be reported for 7 years from the filing date. No state statutes may overrule federal limits for paid judgments.
Gone but Not Gone
Derogatory information that falls off of your credit report due to an expiration of the statutory time limit does not get deleted. This obsolescent information should not continue to appear on your credit report, but it is not gone. If you apply for a loan for over $150,000, life insurance with a death benefit over $150,000, or a job that pays over $75,000, your potential lender, insurer, or employer has the right to view your prior history. This fact adds some additional support to the case for credit report vigilance. If you are attempting credit repair and have erroneous info on your report it is best to dispute it now. Waiting for the statue of limitation to pass may not produce the clean result that you want. Disputed items that get deleted are literally removed from your credit report.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Tuesday, August 7, 2007
Credit Repair: Quick Identity Theft Solution
An Unpleasant Possibility
Are there entries on your credit report that do not belong to you? These may be the result of a file merger error on the part of the credit bureaus. Or they may be the result of a more nefarious case of identity theft. The Fair Credit Reporting Act (FCRA) gives you very specific and powerful tools to correct cases of identity theft and to quickly block the erroneous information from appearing on your credit report and impacting your credit scores.
Section 611
Most disputes are governed by FCRA Section 611 procedures which rule that “if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file, before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute.”
A Powerful Credit Repair Tool
Section 611 procedures are normally fine, but if you have a pending transaction that requires your credit report to be in top form and time is of the essence you should consider getting out the big guns. The FCRA remedy for identity theft is the most powerful and quick acting tool available. But before you utilize this powerful credit repair tool you need to determine that the erroneous information on your report is something more than a file merger problem.
Assess the Situation
Many of the erroneous entries that appear on consumer’s credit reports are due to annoying file merger problems resulting from deficiencies in the credit bureau’s data management systems. These are altogether too common and do not fall into the category of identity theft. If you examine your credit report and discover an account that does not belong to you it is essential to take action immediately. The first step is to call the creditor that is furnishing the data to the credit bureau and ask them if the account is truly under your name. In many cases victims of file mergers discover quickly that these mysterious accounts belong to someone with similar identifying characteristics, like a similar name. In this case your credit repair efforts will fall under Section 611 as indicated above. But if the creditor says that it is your account and verifies your name and address, and you know that this is an account that you never personally opened it is time to act.
The Dispute
An Identity Theft Dispute must include an Identity Theft Report which may be obtained from an authorized agency including, but not limited to, your local police department, the FTC, the States Attorney General Office, and The United States Post Office. In addition to the Identity Theft Report you must include clear proof of your identity, identification of each suspect account on your report, and a statement that the suspect information is not related to any transaction made by you. Don’t make the mistake of providing speculation about the disputed items. The credit bureaus only want the simple facts. Many credit repair efforts are foiled by too much information. Don’t muddy the water.
Immediate Results
Once you have properly submitted an Identify Theft Dispute to one of the credit bureaus they are required to take immediate action. The FCRA (Section 605B) mandates that a credit bureau block the reporting of any information that you have identified as having resulted from identity theft within four business days of the receipt of your dispute. The blocking of information means that it cannot be included on your credit report nor have any impact on your credit scores. To further accommodate your dispute the three credit bureaus, Experian, Equifax, and TransUnion must refer your dispute to each other. This eliminates the burden of dealing with your credit repair project in triplicate. Other rights related to identity theft include Fraud Alerts and Credit Freeze which may or may not be appropriate for your situation.
Contact a Credit Repair Professional
If you feel in doubt about the process and want clarification contact a credit repair professional. Most reputable credit repair companies will offer a free consultation and take the time to clarify any concerns that you may have. If you would rather hire someone instead of doing it yourself, a competent credit repair professional can perform the work for you in an efficient and careful manner.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Are there entries on your credit report that do not belong to you? These may be the result of a file merger error on the part of the credit bureaus. Or they may be the result of a more nefarious case of identity theft. The Fair Credit Reporting Act (FCRA) gives you very specific and powerful tools to correct cases of identity theft and to quickly block the erroneous information from appearing on your credit report and impacting your credit scores.
Section 611
Most disputes are governed by FCRA Section 611 procedures which rule that “if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file, before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute.”
A Powerful Credit Repair Tool
Section 611 procedures are normally fine, but if you have a pending transaction that requires your credit report to be in top form and time is of the essence you should consider getting out the big guns. The FCRA remedy for identity theft is the most powerful and quick acting tool available. But before you utilize this powerful credit repair tool you need to determine that the erroneous information on your report is something more than a file merger problem.
Assess the Situation
Many of the erroneous entries that appear on consumer’s credit reports are due to annoying file merger problems resulting from deficiencies in the credit bureau’s data management systems. These are altogether too common and do not fall into the category of identity theft. If you examine your credit report and discover an account that does not belong to you it is essential to take action immediately. The first step is to call the creditor that is furnishing the data to the credit bureau and ask them if the account is truly under your name. In many cases victims of file mergers discover quickly that these mysterious accounts belong to someone with similar identifying characteristics, like a similar name. In this case your credit repair efforts will fall under Section 611 as indicated above. But if the creditor says that it is your account and verifies your name and address, and you know that this is an account that you never personally opened it is time to act.
The Dispute
An Identity Theft Dispute must include an Identity Theft Report which may be obtained from an authorized agency including, but not limited to, your local police department, the FTC, the States Attorney General Office, and The United States Post Office. In addition to the Identity Theft Report you must include clear proof of your identity, identification of each suspect account on your report, and a statement that the suspect information is not related to any transaction made by you. Don’t make the mistake of providing speculation about the disputed items. The credit bureaus only want the simple facts. Many credit repair efforts are foiled by too much information. Don’t muddy the water.
Immediate Results
Once you have properly submitted an Identify Theft Dispute to one of the credit bureaus they are required to take immediate action. The FCRA (Section 605B) mandates that a credit bureau block the reporting of any information that you have identified as having resulted from identity theft within four business days of the receipt of your dispute. The blocking of information means that it cannot be included on your credit report nor have any impact on your credit scores. To further accommodate your dispute the three credit bureaus, Experian, Equifax, and TransUnion must refer your dispute to each other. This eliminates the burden of dealing with your credit repair project in triplicate. Other rights related to identity theft include Fraud Alerts and Credit Freeze which may or may not be appropriate for your situation.
Contact a Credit Repair Professional
If you feel in doubt about the process and want clarification contact a credit repair professional. Most reputable credit repair companies will offer a free consultation and take the time to clarify any concerns that you may have. If you would rather hire someone instead of doing it yourself, a competent credit repair professional can perform the work for you in an efficient and careful manner.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
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