5 Biggest Mistakes People Make in Credit Repair

SCOTTSDALE, AZ--(Marketwire - February 22, 2011) - Credit Repair is not difficult, but you can shoot yourself in the foot if you don't pay attention to a few little things. Here are common mistakes people make which can be easily avoided: Failing to dispute with the credit bureaus FIRST. Don't first send disputes to the credit card, collection agency or mortgage companies. Always dispute your negatives with the credit bureaus before doing anything else. In the first credit bureau dispute, 10-20% of all items fall off. Get the easy stuff first. Disputing items online. Never do this! You will not have any written records of your dispute (the return receipt). You will not be able to send documentation backing up your dispute. If you are disputing errors in your name, SSN or address, you have to send your request in writing any way. Failing to document your efforts. The credit bureaus must respond to you within 30 days or the item must come off. If you don't keep track of when the time is up, you are missing an important advantage. Keep track of when you send and receive letters. You should also make sure you send your disputes certified mail, return receipt requested. Being unrealistic. If your credit report is in bad shape, there isn't a quick fix. Credit repair takes time, usually from 6 months to a year. Patience is required to see results. Giving up. The process seems overwhelming at first, especially if you are new to credit repair. Take one step at a time. You don't have to do everything at once. Do things a few days or a week apart. Don't spend more than an hour at a stretch doing anything. The information provided on this page is intended to help you fix ERRORS on your credit report and clean up those "questionable" items. While no one can legally remove accurate negative information from a credit report, the law does allow you to request an investigation of information in your file that you dispute as inaccurate or incomplete. On the other hand, *nudge* *nudge*, *wink* *wink*, it is perfectly legal to challenge ANYTHING on your credit report. Anything at all. There is no charge for requesting an investigation. The whole key to the credit repair procedure is that if the credit bureaus cannot verify information on your credit report, they must remove it. For instance, if a credit bureau cannot contact a collection agency which is reporting a collection on your report, they cannot verify the information, and the credit bureau must delete the entry. Let's meet Edouardo. Edouardos Story Edouardos car, a hand-me-down from his father, is ready to give up the ghost. His girlfriend, Charisse, suggests he try to buy a newer car, though he is reluctant to spend the money. Although Edouardo makes a great living, his credit is in terrible shape due to a large number of unpaid medical bills, the result of an accident. Edouardo has seen advertisements in the local paper for credit repair services, and wonders how easy and how expensive it would be to fix his credit. Charisse makes a few calls for Edouardo looking into credit repair agencies and is suspicious of them. Besides, she once successfully disputed a late payment on her credit report. Edouardo and Charisse decide to see what they can do on their own to fix Edouardos credit. That's all there is to it. Seems easy enough but you must have patience, because the credit bureaus are not always very cooperative. They make their money by providing credit reports to lenders not by fixing bad information in their databases. 1. Get Your Credit Report To obtain free copies of your report, read our article, "Getting and Reading Your Credit Report". Please note: when you get a free report, you are not going to see your credit score, which is a crucial tool in getting your credit in shape. Here is a comparison chart of online credit score purchase options. Edouardo ordered his credit report and score from Experian, TransUnion, and Equifax with a free trial period. Note: This service was $29.95/month after the free 7-day trial period and came with a credit report monitoring service which he used during his credit repair efforts to monitor his progress.

2. Analyze Your Credit Report You can analyze your credit report using our article, "Decoding Your Report" as an excellent reference tool. Once paying for his credit reports & scores online, Eduardo downloaded his report and saved it to his computer. Eduardo used the free credit report analyzer which came with his credit report order to figure out which items on his report were damaging. After reviewing his credit reports, he printed them out and then highlighted everything he saw as a negative listing along with what the computer analysis pointed out. Most of them were medical collections, and were easy to spot. However, he does notice that one of the bureaus is reporting a late payment on one of his credit cards, and he knows he paid it on time. In addition, Edouardo has read that as part of the FACTA legislation protecting consumers from identity theft, he was supposed to have been notified of the negative mark. He is sure he was never notified.

3. Rank Questionable/Negative Items In Step 2, we covered how to identify items on your credit report as being either positive or negative. Now that you have your list of negative items, you should rank each item according to the amount of damage it is doing to your overall credit picture. Rank the most damaging first, followed by the next most damaging, followed by those items which are neutral. Do this for each credit report, and remember, they may not all have the same information on them. They may even have duplicate information on them. If this is the case, you will need to write to each credit agency individually for each duplicate item. The items here are listed in order of "most damaging" to "least damaging" to your credit: Bankruptcy Foreclosure Repossession Loan Default Court Judgments Collections Past due payments Late Payments Credit Rejections Credit Inquiries

Also, if your creditor has NOT notified you of negative information they have recently placed on your credit report, they are currently in violation of the Fair Credit Reporting Act. You can use this to pressure the original creditor to remove the listing by reminding them they are in violation of the FCRA by not notifying you.

4. Requesting Corrections and Disputing Your Credit What should you challenge? Everything - and you should always shoot for a complete deletion. In your initial challenge, don't dispute the information within a collection listing, charge-off, court record, repossession, foreclosure, or settled account. Save disputing the information within the listing for the NEXT ROUND OF DISPUTES. Start off the reason for your dispute on a negative listing whenever possible as "not mine". Here is a list of the most common dispute reasons. What items are the toughest to get off your report? You will have the toughest time getting bankruptcies, judgments, child support and foreclosures off of your credit report as these things are so easy for the credit bureaus to verify electronically through e-Oscar. In the case of a bankruptcy, you most likely will have a few trade lines saying "included in bankruptcy". If you want to challenge your bankruptcy, you need to clear off all credit lines mentioning a BK FIRST. Edouardo decided to challenge each and every one of his collections, as well as his credit card late payment. He wrote a letter to each of the credit reporting agencies. He listed each of his negative listings by name, collection agency and amount of the delinquency. Under each of the list accounts, he said he was disputing the accuracy. He included his name, social security number , address, and a copy of his driver's license with each letter. He sent each letter via express mail, which gives him a receipt for the mailing, and guarantees delivery. Total expense: $36. He used one of our example credit dispute letters.

5. Mail All Letters Registered or Certified This is important, as you must be able document when the letters were sent and received. This gives you some leverage with the CRAs if they don't respond in the time frame required by law. Here are some certified mail tips. DON'T USE THE ONLINE DISPUTING SERVICE PROVIDED BY THE CREDIT BUREAUS. You need to be documenting everything, and you want to make sure that you have a complete record of your disputes.

6. Document Your Credit Repair Efforts As soon as you have ordered your credit reports and photocopied your order letters and checks, you must create a precise organizational system to track your correspondences with the credit bureaus and your creditors. Why is this necessary? Unfortunately, credit items you have worked so hard to remove mysteriously reappear. If this happens, it is usually easy to have the items deleted permanently if you show your complete records on the first removal. Why take a chance?

As you proceed through these steps, keep copies and records of all correspondence you send and receive. Copies of all correspondence are a must, as well as notes on all telephone conversations! Also, if you should encounter any special difficulty and would like help in repairing your credit, you will need these records to proceed. Every time you have a telephone conversation with a creditor, you must document the conversation by recording the name of the person to whom you spoke, his or her position, the date and time of the conversation, what was said in the conversation, and what was agreed upon. Edouardo used one of his smart phone applications to record when he sent his letters, and put his mail receipts and copies of his letters in a safe place. If you don't like the technology approach, you can purchase our credit repair workbook, which includes a credit repair log book.

7. Wait for the Credit Bureau to Investigate Once the credit reporting agency has received your dispute letter, they are obligated to investigate. This obligation is not contingent upon you having been denied credit. According to the Fair Credit Reporting Act, the credit bureaus must take the following steps: The credit reporting agencies must resolve consumers' disputes within 30 days limit, unless you have used the services of annualcreditreport.com, then the bureaus can take up to 45 days. In response to consumers' complaints that documentation in support of their disputes was disregarded, the credit bureaus have to consider and transmit to the furnisher all relevant evidence submitted by the consumer the first time. Consumers will receive written notice of the results of the investigation within five days of its completion, including a copy of the amended credit file if it changed based on the dispute. Once information is deleted from a credit file, the credit bureaus can not reinsert it unless the entity supplying the information certifies that the item is complete and accurate and the credit bureau notifies the consumer within five days.

The Federal Trade Commission says that inaccurate credit reports are the number-one source of consumer complaints, and it is quite common for problems to take six or more months to be resolved. All of the big-three agencies are working on making sure that all disputes are handled within 30 days. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the last six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years. However, this is unlikely to repair any damage done when your credit report was first pulled, so dont waste your time or energy on this approach.

8. Analyize the Results You did save the original credit report your ordered, didn't you? And each item you challenged? Good, you will need them to evaluate how well you did. Its all part of Step 5 above, documenting your efforts. When you get your "repaired" credit report back from the credit bureaus, they will summarize what changed on your credit report due to your challenges. You can compare this report to your notes or to the previous credit report. The results of each item will have been resolved in one of the following ways: 1. If the listing is not mentioned in the results list, you must have forgotten to include it, or your request was not sufficiently clear. You will need to dispute that item again in your next dispute letter. The bureaus are legally obligated to respond in writing within 30 days, so if they don't, it is highly unlike they are ignoring you. 2. The disputed item was investigated but verified. If the item was not removed, most likely, the credit bureaus just gave you a cryptic reason like "item verified". We know the credit bureau never actually talked to the information furnisher, but has used eOscar. The law states the bureaus can accept any proof you would like to submit and they will pass this documentation on to your creditor for consideration. So, be sure to send any and all documentation, if you didnt do it the first time. I would also hit them up with the Method of Verification technique, which is going to force them to expose the fact that they are using eOscar. You could also try disputing the listing again at a future time. Who knows, you may get lucky, and a different employee of the creditor may not be able to verify the item. If the account does come back as "verified", I recommend you try Disputing Listing With Original Creditor immediately. 3. The disputed listing was investigated as to the correctness of the information within the listing (such as late pay notations) and the listing was found to be inaccurate or unverifiable. Remember, if the creditor doesn't respond to the bureau at all, this is the same as the listing being unverifiable. In this case, the negative listing will now show up as a positive listing, or it will be deleted from your report all together. This is the best possible outcome.

9. Repeat Your Credit Bureau Dispute Keep disputing negative listings with the credit bureaus. If you hit on the right dispute, the listing could get completely removed from your report. For instance, if you dispute the date the account was opened, and the credit bureaus can not verify this information they delete the entire listing. You will need to change the reason for the investigation so the credit bureaus will have something new to investigate. The order of the reasons should be: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Not mine or not my account. I didn't pay late that month. Wrong amount. Wrong account number. Wrong original creditor. Wrong charge-off date. Wrong date of last activity. Wrong balance. Wrong credit limit. Wrong status - there are about 20 of these. Wrong high credit - the highest amount you used.

For example, the first time you challenge a listing, you might say the account is "not mine." The second time through, you could say "never late." Tips for resubmitting your credit dispute Be Persistent - Become more insistent, but not more threatening, with each dispute. Make sure your letters are clear and to the point. Remember, an employee at one of the credit bureaus has about 4 minutes to enter the dispute into the computer for analysis by e-Oscar. Remember if you call the company, this resets the clock on how long they have to get back to you. If you are on day 29 of the 30 days they have to get back to you and you call, the clock resets and they have 30 more days because you "provided them with more information". Be Creative - Create and utilize other techniques that may help further the idea the dispute letter is from a truly wronged and disadvantaged consumer. The checker is only interested in investigating disputes which are truly are erroneous and damaging. Do Not Bombard the Credit Bureaus With Disputes (about the same listings, that is) - Sending one dispute right after another is wasteful and counterproductive, even if you do use a different reason in your dispute. Again, you must remember to change the REASON for the dispute each time you submit. Otherwise, the dispute can be deemed frivolous and the credit bureau is under no legal obligation to take action. Also remember, credit repair is a time consuming operation requiring great patience. The rule of thumb is to wait 60 days between disputes of the same listing WITH A DIFFERENT REASON FOR DISPUTING. Be Assertive - If you feel the credit bureaus are ignoring your disputes or handling them incorrectly, you can mention that you are thinking of hiring an attorney. For instance, if your request for an investigation goes longer than 30 days, the credit bureau is in violation of the law. Educate yourself on other possible violations of the law you may encounter during the credit repair process.

10. Specialized Techniques Depending on the type of listing, you may also want to try these specialized techniques:

Collections - This is actually an easy type of listing to deal with. We recommend five different methods for removing collections. Charge-Offs - Try disputing the information within the listing, like the date the account was opened, the high balance, the amount owed, etc. If any of the information is incorrect, you have a good chance of getting the whole thing deleted off of your report. Judgments - If you were never served for a judgment, you may have a chance of getting it vacated (voided), or there may be other technicalities that you can use. Check out our article, "Vacating Judgments" on how to do this. Dispute Directly with the Original Creditor - If well-spread out disputes with the credit bureaus does not work, use our Disputing a Listing With the Original Creditor method.

Edouardo receives his responses from the credit bureaus within the time allowed by law and eagerly rips open the envelopes. He was pleased to see that half of the collections were removed from his credit report and the late payment on his credit card has been corrected. On 3 of the collection accounts on his Equifax report, the results of the investigations were listed as "verified". Trans Union deleted all of the collection account listings, but Experian only deleted one of them. The rest of the listing investigations were listed as "verified".

11. Should I Dispute Personal Information? Absolutely! Making sure your name and address are correct is critical and prevents getting someone else's information on your report. Getting someone else's information on your report is called merging. The chances of having your credit report merged with another person's is higher than the bureaus will admit. It's happened to me. The reason for this mix up? A credit bureaus matched your wrong information (like a misspelled name or address) with someone else's and their items suddenly appear on your report. The other reason you should clean up your personal information as it can gain you an advantage in credit repair. For example, sometimes a disputed account will have an address (like your old address) that does not appear on your report any longer. This can be reason enough for the bureau to delete the disputed account. Some Helpful Tips:

You should make sure only your current address is shown on your report. I had someone else's information appear on my report because their current address matched my former address. Only your full legal name should be on your report. This is especially important if your name is a common one. Check to make sure your social security number is correct. Incorrect SSNs are the number one reason reports get merged. Your current employer only should appear on your report, not your full employment history. When disputing this information, use words like "I've never lived here before", "This is not my address", "I've never worked here", or "My Social Security is not correct".

12. Use One of Our Free Sample Letters

Requesting Removal of Inaccurate Information Follow-Up Letter to Send to the Credit Bureaus Removing Inquiries From Your Credit Report Complete List of Sample Letters to Use to Repair Your Credit

13. What if a Removed Negative Item Comes Back on my Credit Report? Ok, youve removed a negative listing and are breathing a deep sigh of relief. Then you get a letter in the mail from a credit bureau telling you the item has been added back on. What happened? Reverified Listings Unfortunately, this is actually becoming more common. Since the new credit laws require that the bureaus investigate and resolve your disputes within 30 days, they will sometimes remove the negative information temporarily until they get the information verified as true. Then they will put back any information verified to be true and notify you of this. By law, they can do this, but they have to notify you in writing. If they DO NOT notify you in writing, it is an instant violation of the FCRA with a $1,000 fine PAYABLE TO YOU. Many of our readers have had great success earning some easy cash by suing the credit bureaus for reinserted listings. Not only do you earn thousands, but the listing is removed from your report as well! 14. What if I Get Stuck? Are you stuck and have a quick question? Make an appointment to talk to one of our counselors. You may also visit our discussion boards free of charge. 15. Edouardo's Results After 3 total submissions to the bureaus, Edouardo succeeds in removing all of his collection accounts except for one on Experian. He recorded each transaction in his Palm Pilot, and the entire process took him 4 months. Each submission cost approximately $36 in mailing fees. He could have done the mailing cheaper by sending regular registered mail (about $10 instead of $36), but decided he wanted to save time by sending his disputes by Next Day Mail. Edouardo's total costs: $132 Time it took to remove the negative listings: 4 months 16. Feeling Overwhelmed? Think you don't have the time? You do! Here is a sample time schedule for repairing your credit yourself. You can also watch this video on

manging your time to fix your credit.

What To Do if a Credit Bureau Refuses to Investigate

Last Updated - June 1, 2010

You have pulled your credit report and now you are disputing some of the negative items on your report. You have sent all three credit bureaus a letter advising of the inaccuracies and you are starting to get responses back from them. What may happen when disputing inquiries, the credit bureau may tell you they cannot investigate your claim. That is pure nonsense. Unfortunately, this also happens when they designate a dispute as "frivolous". You may get a letter like the following: Re: Your TransUnion Credit Report We recently recieved a dispute regarding your credit report from a third party that we believe operates as a credit repair organization. According to the Federal Trade Commission, credit reporting agencies are not required to process disputes submitted by third parties. In addition, our experience shows that many credit repair organizations dispute accurate information or submit irrelevant disputes. We have reasonably determined that the dispute submitted on your behalf is frivolous or irrelevant. For these reasons, we will not take action on the dispute. Under federal law, if you believe any item on your credit report is inaccurate or incomplete, and you notify us directly, we will reinvestigate the information at no cost to you. If this is the case, please submit your dispute directly to us and identify the item(s) you believe is inaccurate and describe specifically why you believe it is inaccurate. Please complete the enclosed Request for Investigation form and return it to us at the address below. Upon recieving your request, we will reinvestigate the item(s) and respond to you in writing within 30 days. Please note that we do not accept disputes from third parties unless accompanied by a notarized power of attorney that authorizes a licensed attorney or a family member to represent you, or if the power of attorney is unlimited and irrevocable. If you believe the credit repair organization misrepresented its services to you, and would like to be referred to the appropriate law enforcement agencies to file a complaint, let us know and we will provide a referral. If you have any additional questions or concerns, please contact TransUnion at the address shown below. When contacting our office, please provide your current file number *********. P.O. Box 4000 Chester, PA 19016-4000 If you have any additional questions or concerns, please contact TransUnion at the address shown below, or visit us on the web at www.transunion.com for general information. When contacting our office, please provide your current file number *********. P.O. Box 4000 Chester, PA 19016-4000

What You Can Do

1: Do NOT respond to the form letter--it grants them an extension, which is what they want. 2: After the 30 days from date of receipt is over, call their offices, and ask the status of the dispute. They will probably tell you that they didn't investigate because they sent a request for more information. Hang up on the operator without another word. 3: Wait 5 days after the 30 days is expired(just in case they DID investigate). If they don't send you an updated credit report, advance to..... 4: Make copies of your certified mail receipt, a copy of the dispute letter you sent to TransUnion, and a copy of their "3rd party agency" letter. Draft a VARIATION of the following letter yours truly just wrote out a few minutes ago(don't verbatim it...they'll just figure it's a form letter if you do...jazz it up some) 5: Shoot the copies and this letter off to them certified mail, give them 16 days from the date they receive it, and pull a copy of your credit report. 6: If the tradelines aren't deleted, go file a suit against them for FCRA violations, and any state laws you can come up with...maybe include a little request for punitive damages for stress, embarassment, degraded social standing and credit obtaining ability, etc. 7: Wait for them to call and settle up with you. Grab a little little money (always nice) and get your tradelines deleted. That's all you need to do...it's a very simple procedure, really.

Comments They should be telling you what specifically you need to provide in order to cause them to reinvestigate. If they stated certain pieces of information that you can submit that would convince them that the dispute is coming from YOU, then it would swing in their favor. If you sue the credit bureau for this, can remove it to federal court, which could be expensive. However, in general, most bureaus have a "cost of doing business" lawsuit fund for situations like this. They will usually settle out of court. TU phone numbers provided by someone who went after TU aggressively: Harry Gambill (President) 1-312-258-1717 ex3200 Chris Laverty (Admin Asst to Harry) 1-312-258-1717 Ex 7711 David Wolf (Vice President of Customer Relation) 1-312-258-1717 ex 3266 Shaun Walker (Customer Relation) 1-312-258-1717 David Emerald ( I dont know his title , but he was the one who called me back after leaving voice mails. 312-466-6724 Jennifer Buckstein ( I dont know her title but, she was the one who call the collection companies and deleted it off of my report.) 610-5464736

Slow or No Response From a Credit Bureau

Last Updated: October 17, 2011

One of the most basic and important steps in credit repair is sending credit dispute letters. Let's say you've mailed your credit report dispute to the credit bureaus. You've sent it certified and return receipt requested. You've kept a copy of the letter for your records as well as the return receipt when you received it in the mail. Now the waiting begins.

Fast forward 30 days from when the credit bureau received your letter (as dated on your return receipt postcard), which is the maximum amount of time the credit bureau has to respond to your dispute. You've gotten no response or maybe you've gotten a perplexing response and you want to understand what it means. Credit Bureau Dispute Responses You will receive one of these types of responses to your dispute: 1. 2. 3. 4. 5. 6. No response at all. A rejection letter on the grounds that the dispute is "frivolous or irrelevant". A rejection based on the grounds the credit bureau believes that you are manipulating the system. A letter announcing your investigation has begun. A letter announcing your dispute has been forwarded to the appropriate credit bureau. A new credit report showing the results of an investigation.

You should keep in mind the credit bureau is a for-profit company with employees trained to respond in a limited number of ways to any dispute that comes in. They are not considering each dispute independently for a unique solution. If you stamp out a ferocious counter-letter in response to the credit bureau's rejection, the credit bureau employee has seen it all and will not change their position. Usually, it is better to simply write the dispute again. What do These Responses Really Mean? Here are the basic guidleines for reacting to the results of your dispute request:

1.

No response at all. If it's been 30 days after you've sent in your dispute, the credit bureau is in hot water. According to federal credit law spelled out in the Fair Credit Reporting Act (FCRA), a credit bureau is required to respond to you and complete their investigation within 30 days. If they do not respond within the 30-day time frame, they must remove the negative listing disputed. If they do not, they are in violation of the FCRA. This is good news for you, for you can pressure the credit bureau to remove the listing immediatly. You now need to send them a follow up letter, reminding them of their legal obligations. Here is a sample letter to use and be sure to send it certified or registered and return receipt requested. Again, retain a copy of the letter, as well as the return receipt when you receive it. A rejection based on the grounds that the dispute is "frivolous or irrelevant". If this dispute request is the second, third or even forth dispute for a negative listing, you can't use any dispute that you've used in the past. If you used a "duplicate reason", the credit bureau has every right to classify your dispute "frivolous". Re-dispute the listing giving a different reason in this case. If you are truly surprised at the "frivolous or irrelevant" designation, you can write them a letter requesting why they have refused to investigate. However, the best and most expedient thing to do would be to re-dispute giving a new dispute reason. Credit bureau thinks a credit repair company submitted the dispute. The credit bureau believes that you are manipulating the system by using a credit repair company, and rejects your dispute. Reject this implication and insist in another dispute, that the credit bureau is shirking their responsibilities and that they are taking a very unwise risk in rejecting your dispute. All you want is for your credit report to be properly corrected. A letter announcing that an investigation has begun. TransUnion will usually send these letters as a clever way of extending their 30-day investigation period. You really have no choice but to accept their timetable. Don't respond to this letter, it will allow them more time to investigate. Just place the letter in the file and watch closely for their response. A letter announcing that your dispute has been forwarded to the appropriate credit bureau. If there is a local credit bureau involved in your dispute, the main credit bureau will forward your dispute to that bureau for verification. Count on an additional two week delay when this occurs. A new credit report showing the results of an investigation. This is the desired result. When you receive your new report, you should copy and carefully analyze the credit report for deletions or changes.

2.

3.

4. 5. 6.

Restoring your credit takes months. There really isn't an quick way to do credit repair. If you decided to restore your own credit, you should know from this text that you will encounter delays. If you need to clean up your credit quickly to secure a loan, you may encounter lots of frustration while you wait.

Sue Your Creditors - You Could Earn Back $1,000s!

Last Updated: May 28, 2010

Learn all about the secret profitable weapon to use in repairing your credit. Consumers are being hurt right and left by the carelessness of creditors, credit bureaus and unethical practices of collection agencies. By pointing out these violations, you can make them back down and

remove negative entries. Fight back! The law specifically allows you can take these losers to court and win money! Wouldn't you like to use the money you win from your creditors to pay off your debts?! One man won $9,000 from debt collectors using our eBook. Another just won $1,500. Another won a little over $5000. Look at the case that the Federal Trade Commission used against the collection agency CAMCO. Many of the violations we list here were cited! Suing in Small Claims Court is often called the "Poor Man's Lawsuit" You know the old sayings, "money talks" and "vote with your dollars". Well, most companies (the credit bureaus and creditors included), are not going to change their ways unless it is in their best interest to do so. All of these companies have stockholders to report to, so if one of their practices is costing them a better bottom line, you better believe they will act to change their ways. One of these ways is for you the consumer, to take action legally against these companies when your rights have been violated. Profit While Helping Others The best news is that typically, each violation can be a $1,000 fine, so it's money in your pocket. In addition, you are going to help make someone else's life better by suing someone who has broken the law. If everyone took action when their rights were violated, the credit bureaus would lose a fortune in legal disputes. It's time to protect your rights as a consumer as well as protecting the rights of your fellow United States citizens.

So Who Can You Sue and What Can You Sue For?
Who Creditors if they report your credit history inaccurately Why Defamation, financial injury Precedent/Law US Court of Appeals, Ninth Circuit, No. 00-15946, Nelson vs. Chase Manhattan Fine Extent of damages incurred by the wronged party as deemed by the courts

Creditors, if you dispute a debt, and they fail to report it as disputed to the credit bureaus Creditors if they pull your credit file without permissible purpose

Protection under the FCRA

FCRA Section 623. FCRA Section 604 (A)(3) FCRA Section 623

$1,000 $1,000 Extent of damages incurred by the wronged party, as deemed by the courts

Injury to your credit report and credit score

Credit bureaus if they refuse to correct Defamation, willful injury information after being provided proof

CUSHMAN, v. TRANS UNION CORPORATION US Court of Appeals for the Third Circuit Court Case 115 F.3d 220 June 9, 1997, Filed (D.C. No. 95cv-01743).

Credit bureaus if they reinsert a removed item from your credit report without notifying you in writing within 5 business days. Credit bureaus if they fail to respond to your written disputes within 30 days (a 15 day extension may be granted if they receive information from the creditor within the first 30 days) Collection Agency can NOT be BOTH purchaser and 'assignee' it's one or the other Misrepresentations by the collector about themselves or the debt are actionable regardless of intent

Consumer protection afforded by the FCRA

FCRA Part (A)(5)(B)(ii)

$1,000

Consumer protection afforded by the FCRA

FCRA Section 611 Part (A)(1)

$1,000

Protection under the FDCPA

Gearing v. Check Brokerage Corp 233 F.3d 469 (7th Cir. 2000)

$1000

Protection under the FDCPA

Gearing v. Check Brokerage Corp Cacace v. Lucas, 775 F. Supp. 502, 505 (D. Conn. 1990)

$1000

Creditors or collection agencies, and Consumer protection credit bureaus if they try and Re-age afforded by the FCRA your account by updating the date of last activity on your credit report in the hopes of keeping negative information on your account longer If you dispute a debt, the collection Protection under the FDCPA agency fails to report it disputed to the credit bureaus Collection agencies if they do not validate your debt yet continue to pursue collection activity (file for judgments, call or write you) Consumer protection afforded by the FDCPA

FCRA Section 605 (c) Running of the reporting period

$1,000

FDCPA Section 807(8) FDCPA Section 809 (b), FTC opinion letter Cass from LeFevre

$1,000 $1,000

Collection agencies if you have sent them a cease and desist letter and they still call you

Consumer protection afforded by the FDCPA

FDCPA Section 805 (c)

$1,000

Collection agencies if they have not Consumer protection validated your debt and they still afforded by the FDCPA continue to report to the credit bureaus

FDCPA Section 809 (b),

$1,000

FTC opinion letter Cass from LeFevre

Collection agencies if they: - Cash a post-dated check before the date on the check - Cost you money by making you accept collect calls or COD mail - Take or threaten to take any personal property without a judgment If a collector calls you after 9 PM at night or before 8 AM

Consumer protection afforded by the FDCPA

FDCPA 808 Section

$1,000

Consumer protection afforded by the FDCPA

FDCPA Section 805. (a)(1) FDCPA Section 805. (a)(3)

$1,000 $1,000

Calls you at your place of Consumer protection employment if the debt collector afforded by the FDCPA knows or has reason to know that your employer prohibits the consumer from receiving such communication. Calls any third part about your debt Consumer protection like friends, neighbors, relatives, etc. afforded by the FDCPA However they can contact your attorney, a consumer reporting agency, the creditor, the attorney of the creditor, or the attorney of the debt collector. The collection agency can not use any kind of harassment or abuse** Consumer protection afforded by the FDCPA

FDCPA Section 805. (b)

$1,000

FDCPA Section 806 FDCPA Section 807

$1,000 $1,000

Collector cannot claim to garnish your Consumer protection wages, seize property or have you afforded by the FDCPA arrested *** Collector must you in a county in which you lived when you signed the original contract for the debt or where you live at the time when they file the lawsuit Consumer protection afforded by the FDCPA

FDCPA Section 811 (a) (2)

$1,000 Also a good grounds for getting a judgment vacated

** (1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person. (2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader. (3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting (4) The advertisement for sale of any debt to coerce payment of the debt. (5) 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. (6) Placement of telephone calls without meaningful disclosure of the caller's identity. ***If the collection agency get a judgment against you, then they will be able to garnish your wages and seize property, but until that time, no.

Disputing a Listing With the Original Creditor - 623 Method

Last Updated: October 14, 2011

If you have tired the conventional methods of disputing an inaccuracy on your credit report but these attempts were met with failed results, the 623 dispute method may be a viable alternative to getting erroneous or unconfirmed information removed from your credit report. The 623 dispute method allows you to dispute any inaccurate information on your credit report directly with the original creditor.

How Does the 623 Dispute Method Work? A 623 dispute does not work in the same way as a traditional dispute because you are not asking for "verification" of the debt, but for an "investigation" as to the accuracy of the records on that debt. If you creditor does not have accurate records pertaining to that debt, then they must remove the negative information on your credit report. Will a 623 Dispute Really Fix Your Credit? You think to yourself - "Hey, the Original Creditor must have great records, they will be able to show me proof in a heartbeat, right?" Wrong. There are a few creditors who keep decent records, but most credit card companies only keep records for 13-18 months. And if that's the case...and if you have lates on your credit report prior to this period...they won't be able to prove you were late...and they need to remove negative information if they can't prove it, per the law. With all of the bank consolidations in recent years, many of the credit card and some other mortgage lending companies haven't been good about keeping their acquisition's records in the best of shape. As an information technologist who specializes in databases, I know it costs LOTS of money to import data from one system to another. Apparently, there are many companies who didn't spend the money. This is not speculation. I've talked to many clients who have placed calls to their creditors, and the companies have NO RECORDS at all for them, let alone records of specific late payments, yet these creditors continue to report negative information on my client's credit reports. This is illegal! Case Law Reference While case law has established for the past few years that the original creditor 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. We'll see why later.

-cont. The Verbiage in the Law

Here is the exact statute in the FCRA:

 623. (a)(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY WITH FURNISHER (A) IN GENERAL The Federal banking agencies, the National Credit Union Administration, and the Commission shall jointly prescribe regulations that shall identify the circumstances under which a furnisher shall be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer report on the consumer, based on a direct request of a consumer. (B) CONSIDERATIONS - In prescribing regulations under subparagraph (A), the agencies shall weigh-(i) the benefits to consumers with the costs on furnishers and the credit reporting system; (ii) the impact on the overall accuracy and integrity of consumer reports of any such requirements; (iii) whether direct contact by the consumer with the furnisher would likely result in the most expeditious resolution of any such dispute; and (iv) the potential impact on the credit reporting process if credit repair organizations, as defined in section 403(3), including entities that would be a credit repair organization, but for section 403(3)(B)(i), are able to circumvent the prohibition in subparagraph (G). (C) APPLICABILITY Subparagraphs (D) through (G) shall apply in any circumstance identified under the regulations promulgated under subparagraph (A). (D) SUBMITTING A NOTICE OF DISPUTE- A consumer who seeks to dispute the accuracy of information shall provide a dispute notice directly to such person at the address specified by the person for such notices that-(i) identifies the specific information that is being disputed; (ii) explains the basis for the dispute; and (iii) includes all supporting documentation required by the furnisher 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. (F) FRIVOLOUS OR IRRELEVANT DISPUTE-

(i) IN GENERAL- This paragraph shall not apply if the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including-(I) by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or (II) the submission by a consumer of a dispute that is substantially the same as a dispute previously submitted by or for the consumer, either directly to the person or through a consumer reporting agency under subsection (b), with respect to which the person has already performed the person's duties under this paragraph or subsection (b), as applicable. (ii) NOTICE OF DETERMINATION - Upon making any determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the person. (iii) CONTENTS OF NOTICE - A notice under clause (ii) shall include-(I) the reasons for the determination under clause (i); and (II) identification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information. and 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.

This Law in Layman's Terms Now that your head is spinning with all that law, here is what is really means. Basically, you can dispute information placed on your credit report by an original creditor 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.

However, the creditor can also determine the dispute is frivolous just like a credit bureau can. Reasons a dispute is frivolous: You just disputed the same thing without changing the reason for the dispute. You haven't provided enough information for the creditor to conduct an investigation. At the minimum, you need to identify the account by account number and provide a reason why you are disputing.

If the creditor DOES determine the dispute is frivolous they MUST notify you in writing by any other means available to the person within 5 days. If the Creditor Fails to Comply with the Law If the original creditor fails to comply with your dispute, they are in violation of the FCRA, but you can't sue them unless you have disputed with the Credit Bureaus FIRST. Disputing with the credit bureau FIRST is not something you can shortcut or forget. In order to place the liability of reporting accurately squarely on the shoulders of the creditor, you must have disputed the listing with the credit bureaus. This means you have either online, via the telephone or in writing, disputed a listing with the credit bureaus and then WAITED FOR THE RESULTS OF THE INVESTIGATION. Here is the law which enforces the fact that you must dispute with the credit bureau first: 623. (c) LIMITATION ON LIABILITY- Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of-(1) subsection (a) of this section, including any regulations issued thereunder; (2) subsection (e) of this section, except that nothing in this paragraph shall limit, expand, or otherwise affect liability under section 616 or 617, as applicable, for violations of subsection (b) of this section; Sections 616 and 617 of the FCRA talk about how much the fines are for violations of the FCRA (the willful and negligent non compliance), typically $1000. What the above section of the FCRA 623. (c) means is that if you dispute with the original creditors first, without having disputing through the credit bureaus, and they refuse to answer you, or provide you with proof, yes, they are in violation of the FCRA, but you as a private citizen cannot take them to court and sue them; only your state authorities (like your state attorney general) or federal authorities (like the FTC) can sue them. However, if you have disputed the information with the credit bureaus FIRST, they are supposed to have talked to the original creditor, even though we know that doesn't happen, and the original creditor is supposed to have at that time conducted an investigation, under FCRA 623 (b), under which you, as a private citizen CAN sue them. When you go to the original creditor under FCRA 623 (a)(8), you are just merely asking for the OC's proof that they must have (hear the sarcasm in my voice here) provided to the credit bureaus during the OC's thorough (there's that sarcasm again) investigation. If they have no proof of negative information, but the credit bureau says that the results of the investigation show the negative information is accurate, then you have the OC on an actionable, sue-able (by you) offense. Once again, YOU MUST DISPUTE WITH THE CREDIT BUREAUS FIRST - Have we said this often enough??

-cont. Steps to Dispute with Original Creditor

What is the exact procedure when you want to dispute things with the original creditor (or any other information furnisher)? The Steps:

1.

Dispute the listing with the credit bureau. 2. Wait for the results of the investigation. 3. If the listing is deleted or modified per your desires, you're done! If the information furnisher does not get back to you within 30 days: 1. You need to send a letter to the company's legal department informing them they are in violation of the FCRA and you intend to sue if they do not remove the listing. 2. If they do not remove the listing, you will have to sue if you want to get it off. If the information furnisher says the results of the investigation is "verified", then: 1. Call up the credit card company and ask them what kind of documentation they have to prove the negative mark. Many times they will have nothing. 2. If they admit to having nothing, send this letter to their legal department

Dear Legal Department: Re: Acct #XXXXXXXX This letter is in regards to a phone call I placed to your company regarding the account listed above on <Date >, 2008. I called to inquire about this account that is listed on my Credit Reports. I spoke to a Customer Service Representative named "X" her employee number is 000, as provided by her. She informed me that your company does not have any information on this account that it was all sent to a collection agency. How did you investigate this account with out any documentation? I contacted the collection agency your rep told me about and they could not validate the debt. This collection agency subsequently removed all information regarding this account from my credit reports. If this incorrect information is not removed from my credit reports I will file suit against your company. Sincerely,

Debt Validation - The Ultimate Weapon Against the Collection Agencies

Last Updated: March 8, 2011

If a collection account comes into your life, you've heard about it in one of three ways: 1. It came up as a listing on your credit report, or 2. You received a telephone call from a collection agency, or 3. You got a letter in the mail. You could try to use debt settlement methods to deal with a collection agency, but you might want to try debt validation first - the best defense against these collections is often debt validation. Why? Because the collection agency may not even be legally entitled to collect the debt from you. A Tale of You, Joe, Bob and Money Borrowed Let's say you borrowed money from your friend Joe. Joe would be the creditor of this debt, the original creditor. And, let's say some time has gone by and you think you might still Joe money, though you're not sure how much. One day, a guy named Bob comes up to you and says he is collecting the money you owe Joe. Bob is acting just like a collection agency for a credit card company would. Think about it - having never met Bob before, would you just hand over the cash to him? No. Or at least I hope you wouldn't. You should have these questions for Bob: 1. How do you know that Bob is actually collecting for Joe? What legal documents does Bob 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 still really owe Joe the money? You remember borrowing money from someone else, your friend Sam, at the same time. You also remember paying one of them back the next day. Is this debt the one you borrowed from Sam or Joe? Where is the contract showing the terms of the loan with Joe and the one from Sam? At the very minimum you should call Joe or Sam on the phone to ask about the loan. You should have the same thoughts about a collection agency who sends you a bill for a debt you may or may not owe. Don't Panic If you receive a phone call or a letter from a collection agency, your first reaction may be to panic. Calm down and analyze the situation. Keep all the fancy language and legal terms out of the attempts by a collection agency to collect. Think of what you would ask Bob in our example. If you do, you'll know exactly what to ask a collection agency (Bob in our example) to validate a debt. (If you are wondering how a collection got on your credit report in the first place, read this).

The Fair Debt Collection Practices Act Debt Validation is a legal procedure which is spelled out by the Fair Debt Collection Practices Act, or FDCPA. It matters if the listing is from the original creditor or collection agency 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 the person asking you for the money, "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 does 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 formletters 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. Read our article on JDBs for more information. 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 the debt.

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. So, if a creditor can't validate 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? What to do if a collection agency responds to your request for validation with a summons to appear 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 our article on the validation process. 1. Dispute the collection with the credit bureaus.

2.

Look up the Statute of Limitations (SOL) on the debt. If the debt is past the statute of limitations, send them a letter informing that they are trying to collect "zombie debt". This is debt which is too old to have any legal liabilty for a consumer. Here is a sample letter for this.

3. If the collection agency does not remove the listing after you point out the SOL, sometimes your only remedy is to sue them.

4.

If the debt is not past the statute of limitations, 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.

5. 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 one of the following: Proof that the collection company owns the debt/or has been assigned the debt. Copies of statements from the original creditor. Copy of the original signed loan agreement or credit card application. 6. If they haven't sent you satisfactory proof, and are still reporting this on your report, 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). 7. Wait 15-20 days to hear back after this second letter to the collection agency. They will either remove it or not respond.

8.

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.

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. 9. 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.

10.File a lawsuit in small claims court against the collection agency on the basis of violating the FDCPA. 11.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:
http://www.1-800-serve-em.com/servicemap.html

12.In the meantime, in a parallel effort with your lawsuit against the collection agency.
13. 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.

14.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.

15.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. Theyare teetering on the edge of "willful non-compliance" under the FCRA. Tell them so.

16.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.

17.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

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

How to Erase Credit Inquiries on Your Credit Report

Last Updated: October 17, 2011

In the middle of reviewing your credit report, you notice at the very end a section labeled "Credit Inquiries" or "Regular Inquiries". These inquiries were made by companies who received or "pulled" your credit report and these inquiries will remain on your credit report for two years. You may not recognize their names and you have no idea why they pulled your credit. It may seem a bit unnerving and there is something you can do about it. How Important is the Removal of Inquiries? Many people tend to over focus on removing inquiries when their reports are full of lates pays, collection accounts or even a bankruptcy. In these cases, you might want to hold off on your efforts to remove inquires until after you have successfully removed some of the bigger problems on your credit report. But, if you are tackling your other credit issues, it doesn't hurt to tackle this problem, too. How do You Get Inquiries? Every time you apply for credit and the credit grantor checks your credit report, a credit inquiry is placed on your file. Even if you receive a credit offer in the mail and you respond, your credit will almost certainly be checked and a credit inquiry will be added to your credit report. Types of Inquiries

Hard pull inquiries occur when you applied for new credit, like a credit card, submitted a loan application for a car or home. Hard pull inquires can affect your credit score. Soft pull inquiries occur when an existing credtior pulls your credit to see what your credit situation is. Soft inquiries also occurs when you pull your own credit report. Soft inquiries do not affect your credit score.

Does an Inquiry Affect Your Credit Score? Credit inquiries are bad because too many of them can indicate to a creditor that you're "credit hungry" and may be in financial trouble. Worse yet, the creditor has reason to believe that you received many of the credit lines that are showing as inquiries, and that many of those credit lines have not yet appeared on your credit report. Too many recent inquiries indicate to a potential credit grantor that your debt-to-income ratio may be much higher than you say.

You can read our full article on how inquiries impact your credit score. Step-by-Step Procedure for Removing Inquiries All credit inquiries should come off your credit report after two years. If you're not willing to wait, you may take these steps: Step 1 First, find out which credit inquiries are getting in your way by ordering all three of your credit reports. When your reports arrive, look toward the end of your credit report to find the inquiries. Some of the inquiries are only promotional and will not be shown to prospective credit grantors. You need not worry about those. Identify only the inquiries that are shown to credit grantors. You should recognize some of these as places where you applied for credit, but others may be a complete mystery to you. Step 2 Find the addresses for each credit inquirer. Your Experian credit report will list addresses for each - TransUnion and Equifax reports will not include addresses. Match your Experian with your TransUnion and Equifax reports. You should be able to use the same addresses on the inquirers that are listed on Experian. If some of the inquirers don't show up on Experian but do show up on either Trans Union or Equifax, you will have to call the credit bureau to get their address. It is almost impossible to get a live body on the telephone at TransUnion, but Equifax has an 800 number listed at the top of their reports. If you have a inquirer on your TransUnion report and you can't reach them by phone, you might try calling the 800 directory (1-800-555-1212) and request the 800 number for the inquiring creditor. Once you have collected all of the addresses for each inquiring creditor on each credit report, you are ready for step three. Step 3 Prepare letters to each inquiring creditor asking them to remove their inquiry. The Fair Credit Reporting Act allows only authorized inquiries to appear on the consumer credit report. You must challenge whether the inquiring creditor had proper authorization to pull your credit file. Use our sample letter to remove inquiries. Step 4 Some of your creditors may provide documentation that a credit inquiry was authorized by you. Read the authorization that you signed very carefully. If there is any ambiguity, you can write back and argue that the inquirer's authorization form was too complicated and not easily understood by the layman. You can threaten to contact the State Banking Commission and complain about a deceptive and unclear

authorization form if they don't remove your inquiry. Some creditors will try to ignore your challenge. Be sure to send each letter Certified Mail Return Receipt Requested and keep close track of the time that you sent the letter. If the inquiring creditor doesn't respond within about thirty days, you will have ample grounds to call the inquiring creditor and demand some action. At that point, it's almost irrelevant whether or not you authorized the inquiry. Now the issue becomes the creditor's lack of response to a consumer dispute. Be sure to hold your ground. Demand that the inquiry be removed immediately or you will complain to the State Banking Commission or similar authorities. Many of your inquiring creditors may simply agree to delete the inquiry as a courtesy or because they cannot (or will not) verify your authorization. That's the goal! Remember, it is not likely that you will need all of your credit inquiries removed -- just enough of them to keep you from being denied credit.

Five Methods of Dealing With Collections on Your Credit Report

Last Updated: October 17, 2011

Don't be afraid of collections on your credit report or having to deal with the collection agencies. If you have recently pulled your credit report only to find some of your deliquent accounts have been sold to a collection company, fear not! In actuality, collections are the easiest things to get off your credit report. Why? Because generally, collection agencies have poor documentation and they are not actually

authorized or licensed to collect on the debt. As a result of the shaky status of collection accounts, there are many techniques you can use to attack the collection agency and eventually get that collection record off your credit report. Here are the top 5 techniques we recommend.

1. 2. 3. 4. 5.

Pay for the Delete Settle the Debt Debt Validation Dispute with the Original Creditor Dispute with the Credit Bureaus

Pay for the Delete This situation is best for small collection amounts, $500 or less, like medical collections or utility bills. You get the collection agency to agree to remove the listing from your credit report if you pay the debt amount. This is a very successful technique. To read up on the expanded version of this technique, read the pay for delete method here. Settle the Debt This technique is much like the pay for delete method, except this method deals with collection amounts that are over $1,000. This method involves more negotiating with the collections agency to reduce the amount of the debt to an amount that you will be able to pay in one lump sum. Like the pay for delete method, as part of the settlement agreement, you get the collection agency to agree to remove the listing from your credit report. To read up on the expanded version of this technique, read the settling your debts method here. Debt Validation This method involves leveraging the protections of the Fair Debt Collection Practices Act to force the collection agency to provide documentation that the debt is valid. It's one of the more aggressive techniques against the collection agency. It involves writing a letter to the collection agency, but if the collection agency is non responsive, it requires the threat of filing a lawsuit. To get more information on this technique, read the debt validation method here. 623 Dispute with the Original Creditor This method involves leveraging the protections of section 623 of the Fair Credit Reporting Act which allows consumers to dispute a negative listing directly with the company reporting it on your credit report. The consumer merely requests an investigation of the account, and is required by law to respond within 30 days. In order to use this technique, you must have first disputed the negative information on your credit report with the credit bureaus. This is actually a very effective technique, especially since the collection agencies will not have any documentation to back up their reporting. To read up on the expanded version of this technique, read the disputing listing with original creditor method here.

The Importance of Documenting Your Correspondence with Creditors

Last Updated: September 28, 2011

If you are going to handle repairing your credit on your own, there are some tried and true tactics you need to follow to get the job done properly. As we point out in our article, "Can I Repair My Credit on My Own", one of the most important strategies is to document your efforts. If you are sending a letter to a creditor or a credit bureau, make sure to send it via registered or certified mail. I can't tell you how many times people have written to me and told me they can't understand why a negotiated settlement made over the phone with a creditor or a credit reporting agency didn't happen. They tell me the deal was lost or forgotten by the person or company

making the deal. Hello! There is no way you can prove any settlement which was agreed to over the phone. Whether you are writing a dispute letter to a collection agency or credit bureau, negotiating a settlement, validating a debt or disputing a credit listing, you are not protected unless you have some record of the correspondence being mailed and received by the intended party. You must have some written proof or documentation of your dispute! Ways to Document Your Correspondence There are many ways to get proof of a promise or even the fact that your letter was received: 1. Send Your Letter Certified Mail with a Return Receipt. Depending on the size of the letter and the distance it travels, you will spend approximately $5-6 dollars per letter. When you do this, you will have proof of when the letter was mailed and you will be sent a green postcard showing the letter was received and someone actually signed for this letter. This is your proof that your letter reached the intended destination and WHEN they received your letter. This is very important since there is a time deadline of 30 days for the credit bureaus to respond to your letter. 2. Online Mail Services. There are a couple of online services which allow you to send a letter certified return receipt requested via your computer, just as if you had gone down to the post office. Click2Mail This is another online service where you can print labels for certified mail. 3. UPS and Federal Express. Both of these carriers will provide a tracking number and afford a better chance of your letter being delivered. In the case of a collection agency, which may refuse certified mail, these carriers deliver your letter personally and are less likely to be refused. Remember to keep a copy of all letters sent to creditors, credit bureaus or collection agencies along with the proof of mailing and the return receipt post card showing when they signed for your letter. Keeping logs, records and receipts of letters sent can easily mean the difference between success and failure when it comes to getting negative items removed from your credit report. Want even more tips on documentation and record keeping? Read our article "Documentation and Organization Are Keys To Credit Repair Success".

USPS You can print a label to mail your letter which will provide you a tracking number.

State Attorney General Information

Last Updated: October 24, 2011

Your state attorney general is the consumer's best friend, especially in the area of credit issues. They can advice you how to proceed in all matters of law, tell you what paperwork you need, help you find affordable representation, give you statutes, cite legal precedences pertinent to your state, get you in touch with the consumer protection agency. As a matter of fact, in many states, the attorney general shares his or her office with the state consumer protection agency. I often advise people to give their attorney general's office a call whenever I don't know the answer to a legal question, especially about state banking laws, divorce, bankruptcy and what action to take if a creditor does not treat you fairly.

Texas: Greg Abbott Capitol Station, P.O.Box 12548, Austin, TX 78711-2548 http://www.oag.state.tx.us

(512) 463-2100

Virginia: Kenneth T. Cuccinelli, II 900 E. Main St., Richmond, VA 23219 http://www.oag.state.va.us

(804) 786-2071

Adding Positive Credit to Your Credit Report

Last Updated: February 8, 2012

People with bad credit often only concentrate on removing negative information when repairing their credit. But that is only part of the equation. Adding positive credit to your credit report is an integral part to rebuiling your credit history and raising your credit score. Adding positive information to your credit report will help to balance out some of the negative information. Paying off old debt is of course a great way to increase your score, but, you also need to remember to not increase the balances on other accounts. Also, you need to establish new credit so as the old and moldy bad accounts start to slowly fade away, they will be replaced with current and postive accounts.

Establishing or rebuilding a credit report is not a quick-fix situation. It takes a year or two to complete. Don't fall for promises of a "glowing report in a matter of weeks" from credit repair agencies or other scammers. Just follow the basic outline presented here. Obtain a Secured Credit Card For those who can not get approved for an unsecured credit card, a secured credit card is an excellent alternative. With this type of card, you will be making an intitial deposit into an account to secure the credit line on the card. You can get this card even if you still have some bad credit in your credit report. By putting $500 into a savings account, you will be allowed to charge up to $500 on the card. Eventhough you are securing your credit with a deposit, payments must be made on-time and the account balance should be kept low. Make sure this credit card company reports to all three credit bureaus as this will help increase your credit score. Get an Installment Loan You need a mix of different types of credit types, which include revolving credit (credit cards) and installment accounts. A credit union is a great place to apply for a small installment type loan. Credit unions are very forgiving to those who have less than perfect credit and you can get a small duration loan (no more than a year or two) to show you can pay on time and you will also end up paying little in interest. Get a Retail Credit Card Many stores extend credit without tremendous regard for the credit standing of the applicant. These stores usually can be found in industries with small products or traditionally high mark-ups. Here are a list of creditors who will often extend credit to those without much credit history: Fingerhut Department Stores Furniture Stores Tire Stores Appliance Stores

Keep Account Balances Low Keep those balances low - and by low I mean do not charge more than 30% of your available credit limit. If at all possible, aim for 10% of your available credit limit and your credit scores will get better and better as long as you pay all of your credit obligations on time. Consumers who max out or charge close to their credit limit are more likely to experience problems repaying the debt should a change of circumstance occur, such as loss of income or illness. The lower the utilization rate, the better your credit score. Become an Authorized User on a Friend's Credit Card If you know someone (a good friend or parent) who has good credit, you can "borrow" their good credit ranking. This friend must have credit cards and must trust you enough to allow you to become an "authorized user" on their card. Have your friend call his credit card company and request that you be placed on his card as an authorized user. A copy of the card will be sent to you but you never have to use it (you can simply return it to your friend). Your credit file will should soon show an open account with all of the positive history that your friend has created over the years from that credit card. A small footnote will show that you are an authorized user of that card. Remember, though, when a new credit grantor reviews your file, he may insist that the balance on the card appear on your debt-toincome ratio balance sheet. That shouldn't disqualify you for credit if your income is sufficient and you don't have an excess of debt on your file.

Keep the Accounts Active Once you've successfully received new lines of credit, it is important to have some activity going on each month. We don't suggest you pile up large debt-- maybe $50 dollars or so in a balance. Pay the minimum when the bill arrives even though it will cost you a little in interest charges. And pay it on time. This is what future loan officers and other creditors want to see. (Inactive accounts with a zero balance aren't displaying a tendency to handle existing debts.) You need to display at least one year of positive credit habits to be taken seriously, especially by a mortgage company. Start now or you will always be a year or two from a good credit standing.

Secured Credit Cards Are a Great Way to Rebuild Credit

Last Updated: July 7, 2011

See our complete list of recommended Secured Credit Cards available! For whatever reason, the economy, youthful negligence, health problems or general ignorance, you may now find yourself with a bad credit score and no means of getting small business loans, home loan, or favorable car loan terms. What you need is a way to increase your credit score in a hurry. Credit cards are a great way to establish credit. But people who have never had credit or need to repair a poor credit history may not qualify for a regular credit card. For them, a secured credit card may be the only way to establish, or re-establish, credit.

There are a lot of "bad" secured credit cards, so you want to make sure you do your homework first before getting one of these cards. Getting the right one and using it the right way, will go miles in the journey of rebuilding your credit and increasing your credit score. What is a Secured Credit Card? A secured credit card requires a cash collateral deposit that becomes the credit line for that account. For example, if you put $500 in the account; you can charge up to $500. You may be able to add to the deposit to add more credit, or sometimes a bank will reward you for good payment and add to your credit line without requesting additional deposits. A secured credit card should have the following: No application fee and a low annual fee. The ability to convert to a regular, unsecured credit card after 12-18 months of on-time payments. Be reporting to ALL THREE credit bureaus.

Rebuilding Your Credit With a Secured Credit Card Your best bet is to make arrangements with all of your current creditors to pay off your current debt and then make your payments on time. But this alone will not build a good credit score, it'll simply undo some damage to your credit score. You need to have a credit card you can use at least once per month and pay off in full each month to make your credit score go up quickly. Even in the present economy, a person with a bad credit score can get a credit card. And, you don't even have to stoop down to cards with annual fees. A secured credit card issued by your bank allows you to rebuild your credit score quickly, if you use it responsibly. You only need to make a small purchase each month and then pay the card in full each month. After several months of doing so, and if you are faithful with your other debt payments, your credit score will quickly rise. After about six to nine months of responsibly using your secured credit card, you will find your credit score rising sharply. At this point you should also know how to use your secured credit card responsibly. This is an important part of rebuilding credit scores. You need to continue using your secured credit card responsibly or your credit score will soon be damaged again. Building a Credit History First, get a couple of secured cards. Next, spend small amounts wisely, pay more than the minimum payment (or pay it all) every month and pay it right when you get the bill, don't wait for the due date and don't be late. For people with poor credit or no credit, a secured credit card is the fastest, most effective way to reestablish themselves as good credit risks in the eyes of lenders. Secured cards are easy to get and the card issuer reports your payment history to major credit bureaus every month. Using Credit Cards Responsibly Using credit wisely is important since your credit reputation influences the rates that will be paid on a loan for a house or car, or for a credit card. The better your credit reputation, the lower the interest you will have to pay. Although secured cards tend to have higher interest rates and annual fees, they provide a valuable steppingstone to unsecured credit. If you cannot use your secured credit card responsibly, it is time to consider that loans and credit cards are not for you. Some personalities simply don't work with credit. There is no shame in being someone who must live on a cash basis, but there is shame in taking on lines of credit when you are someone who must live on a cash basis. Establish a Sound Payment History Establishing a payment history will help you qualify down the road for the major credit cards. Using this secured card appropriately and within the set parameters will help rebuild your credit. Only make small purchases and pay the bill in full when it arrives and well before the due date. Doing this regularly over time helps build your credit history as a prompt payer. Don't fall into the trap of credit cards-overspending and/or making minimum payments. Once you have built a solid credit history over 12 months or more, you can apply for an unsecured card. Or, you can talk to the card issuer about converting from your present card to a regular card.

Increase Your Credit Score and Improve Your Credit Report

Last Updated - April 3, 2012

Increasing your credit score and repairing your credit are a bit like losing weight - it takes time and there is no quick way to fix a credit score. In fact, if you see any advertisements on ways to improve your credit score quickly, beware! Some methods used for this "quick fix" just may backfire on you. Our best advise for rebuilding your credit it to manage it carefully over time and take the time to do it right. If you are planning to buy a home or car in the near future, you will need to get your credit cleaned up so you can qualify for that lower interest loan. With a little forsight and due diligence, you can reap giant rewards in the form of a lower mortgage or car payment by qualifying for better loan. Check Your Credit Report This really should go without saying. Before you start any type of credit repair process, pull your credit report to see what is being reported

and what you will need to address and remove. You can get a free credit report once a year from AnnualReport.com or you can check out our page of recommended companies that will provide a credit report and score if you sign up for their credit monitoring service. Either way, get your report first. Pay Down Your Credit Cards Paying off your installment loans may can help your score, but typically not as dramatically as paying down -- or paying off -- revolving accounts like credit cards. The FICO model and even the Vantage scoring system now used by the Big 3 weight credit card debt more heavily. Each individual card as well as your total revolving line should be below 25%. If your goal is to increase your credit score, forget about paying down your high interest rate cards first. Work on getting those balances down over higher interest rates to reap the most improvement in credit score. Don't Max Out Your Credit Cards Your available credit is averaged over your billing cycle, which is sometimes less than 30 days. If your limit is say, $5,000 and you charge $5,000, even if you pay it off each month, your credit balance is still going to show $2,500 (a 50% usage limit), which is going to make your score plunge. For most small business owners, their credit cards are the way they purchase goods and supplies every month. If the card's limits are used to the hilt - this can hurt. But wait you say, these are business cards. Yes, they are and most small business owners still have to personally guarantee their business cards, which means they show up on personal credit reports. If you need to use all of the available credit line on your cards, you may want to consider getting a new card to spread out the credit lines a little. Make Sure Your Credit Report is Correctly Reporting Your Credit Limits If not, you can call your credit card issuer and ask them to update the list. You can also challenge the limits with the credit bureaus. Become an Authorized User Ask a friend or family member to add you to one of their older credit cards as an authorized user. The older your credit history, the better. If your mother agrees to put you as an authorized user on a card that she; had for 20 years, you could see your score increase dramatically. And with the authorized user plan, you don't even have to have the card in your possession. Ask a Creditor for Forgiveness If you've been a good customer for years, but had a rough patch and missed a payment - you might be able to ask your creditor to "erase" a negative listing. You can do this with a goodwill letter. There is no guarantee that a lender will do this, but this method has had lots of success. Get Student Loan Payments Current If you have a student loan that you have defaulted on or have missed payments, you can enter into a "rehab program" which will get your account back on track after 12 months. Sallie Mae regularly upgrades your loan status to "Paid as Agreed" if you make a series of 12 or so on-time payments. Dispute Old Negatives Say your insurance company never paid a medical bill and now you have a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as "not mine." The older and smaller a collection account, the more likely the collection agency won't have bothered to update good ole eOscar with the correct info and the credit bureau won't be able to match up computer records. Remove a Debt From Your Report if You Pay it This method is called "pay for delete" and it works like a charm on smaller amounts of $500 and under, especially medical collections. Remember to get the agreement in writing before you pay them anything, and only send a money order after you get them to agree. Check here for more info on settling debts. Dispute with Original Creditor Our patented method of disputing with original creditors really works, especially accounts which have been purchased by other banks or are currently with a bank who has gone through some of those massive mergers in the last 10 years. And you have the cases (more common than you think) where some banks just don't keep good records at all. This method is relatively quick.

Target Easy Errors Target the eary errors on your credit report that have a big bang for the buck. Such as: Negatives that are not yours: late payments, charge-offs, collections. Accounts listed anything other than "current" or "paid as agreed", if you paid on time and in full. Accounts that are still listed as unpaid that were included in a bankruptcy. Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report. Any account that is listed as "Closed by the credit grantor" when it wasn't should be fixed as this is definitely a negative.

How to Get a Live Person On the Phone

Last Updated: May 17, 2010

Ok, you've written your dispute letters to the credit bureaus, verification letters to credit card companies or settlement offers to collection agencies and now you just want to talk to a real person. I receive calls every day asking me for information on how to get a live person at the credit reporting agencies. They seems to change their automated prompts all the time - and in my opinion this is to cut down on staff required to answer the telephone. Here are some tips on how to get a live person for any situation, not just for credit repair or debt settlement. Finding a Number to Call

1. 2. 3.

Look up the company on gethuman.com. This is a fairly well-maintained list of how to get past computer prompts. DialAHuman.com similiar to gethuman.com, it also lists the methods of getting a human.

Jigsaw Data Corp.: Use Jigsaw to call the CEO's line, and you're sure to get an answer. 4. Disgruntled customers often post the phone numbers of company officials on consumer websites as revenge. Try phrases like "I

hate company X" as a search term on Google or Yahoo!. 5. You can also use the search terms like "Company X" and "president" or "officers". 6. The Securities and Exchange Commission have a complete list of company officers which are public record. You can search for these on EDGAR website. What to Do and Say When You Call 1. Press the following keys to try to bypass the automatic prompt system: 0, #0, 0#, 00, #, *. You can also just try pressing all the numbers to confuse the system. 2. Say the following terms at the voice prompt: "Prospective Member" "Agent" "Member" "Transfer" "Sales" "Operator" "Human" "Help" 3. Mumble. The computer will not know what to do if it does not understand what you're saying and will send you to a live agent. 4. Speak Nonsense. This is my personal favorite. It also confuses the computer and it relieves some of my stress during customer service calls. 5. Use Bad Language. Some company voice recognition software will put your call to the head of the line if they hear swearing. The same holds true for speaking loudly or shouting in the phone. They want really frustrated customers to get helped immediately. 6. Do nothing. The system will think you're on a dial phone and transfer you. You can also try these Toll Free "411" numbers (you will not incur a charge on your cell or land phone bill): 1-800-GOOG-411 1-800-CALL-411 1-800-BING-411 1-800-FREE-411 (requires listening to a short ad)

Call Their Hometown Corporate Office When all else fails, and this trick has gotten me to a live Equifax customer service rep - look up the local number in the yellow pages. In the case of calling Equifax: Equifax is based out of Atlanta, Gerogia, I just looked up the office number locally. It was the main switch board to corporate offices. I asked to speak to someone in customer service - explained why I was calling. I was put on hold, but it was only 10 minutes, wasn't an outsourced rep, and I did get issues resolved.

Requesting Removal of Inaccurate Information - Sample Letter 1

The following is a sample letter to send to the credit bureaus requesting the removal of inaccurate information. Always include any copies of proof you may have (i.e. cancelled checks showing timely payments, paid off accounts, loans, anything that will show the information is indeed erroneous). It never hurts to include the consequences that have resulted from this wrongful information as well. The credit agencies give the most immediate attention to seriously wronged consumers. Remember, they are bombarded with 10,000 letters a day.

Date Your Name Your Address City, State Zip

Credit Bureau Bureau Address City, State Zip Dear Credit Bureau, This letter is a formal complaint that you are reporting inaccurate credit information. I am very distressed that you have included the below information in my credit profile due to its damaging effects on my good credit standing. As you are no doubt aware, credit reporting laws ensure that bureaus report only accurate credit information. No doubt the inclusion of this inaccurate information is a mistake on either your or the reporting creditor's part. Because of the mistakes on my credit report, I have been wrongfully denied credit recently for a <insert credit type for which you were denied here>, which was highly embarrassing and has negatively impacted my lifestyle. optional With the proof I'm attaching to this letter, I'm sure you'll agree it needs to be removed ASAP. The following information therefore needs to be verified and deleted from the report as soon as possible: CREDITOR AGENCY, acct. 123-34567-ABC Please delete the above information as quickly as possible. Sincerely, Your Signature Your Name SSN# 123-45-6789 Attachment included

Another Letter to Requesting the Removal of Inaccurate Information - Sample Letter 5

This is a shorter version of a letter you can send to the credit bureaus to request removal of inaccurate information. Always include any copies of proof you may have (i.e. cancelled checks showing timely payments, paid off accounts, loans, anything that will show the information is indeed erroneous). It never hurts to include the consequences that have resulted from this wrongful information as well. The credit agencies give the most immediate attention to seriously wronged consumers. Remember, they are bombarded with 10,000 letters a day.

Date Your Name Your Address

City, State Zip Credit Bureau Bureau Address City, State Zip Dear Credit Bureau, I've just reviewed my credit report and have noticed there are several inaccurate items on my report: Chase VISA Acct: xxxxx-xxxxx-xxxx-xxx: This account is listed as being 30 days late. I have never been late on this account. Sears Acct: xxxxx-xxxxx-xxxx-xxx: This account is listed as being 30 days late. I have never been late on this account. Universal Acct: xxxxx-xxxxx-xxxx-xxx: This account is listed as being 30 days late. I have never been late on this account. In addition, there are a number of credit accounts which have been inactive for more than 7 years. As you know, the FCRA states that all credit older than 7 years should be removed from my report. The following accounts should be removed: Diner's Club Acct: xxxxx-xxxxx-xxxx-xxx: GE Consumer Card Acct: xxxxx-xxxxx-xxxx-xxx: Macy's Acct: xxxxx-xxxxx-xxxx-xxx: I have enclosed a copy of my driver's licence as proof of identity. Sincerely, Your Signature Your Name SSN# 123-45-6789 Attachment included

Don't forget to provide proof if you have it! Keep a copy for your files and send the letter registered mail.

Follow up Letter to Send to the Credit Bureaus - Sample Letter 2

In this letter, and all succeeding correspondence with the credit bureaus, you need to get increasingly threatening. Use this letter to follow up with the credit bureaus with respect to the original dispute letters you already sent to them. You will use this letter if you have not heard back from the bureaus in 30 days.

Date Your Name Your Address City, State Zip Credit Bureau

Bureau Address City, State Zip RE: Dispute Letter of date you sent in first or subsequent requests Dear Credit Bureau, This letter is formal notice that you have failed to respond to my dispute letter of date. I sent this letter registered mail and have enclosed a copy of the return receipt which you signed on some date. As you are well aware, federal law requires you to respond within 30 days. It has now been over that period since your receipt of my letter. As you are no doubt aware, failure to comply with federal regulations by credit reporting agencies are in serious violation of the Fair Credit Reporting Act and may be investigated by the FTC. Obviously, I am maintaining detailed records of all my correspondence with you. I am aware that you may have misplaced my letters or have failed to respond to my letter because of an oversight due to the high volume of the requests you receive daily. If this is the case, I'm sure you'll want to handle this matter as soon as possible. For this purpose, I have included a copy of my original request, the dated receipt of your reception of the original letter and a copy of the proof verifying the incorrectness of the credit item you have mistakenly placed on my records. The following information therefore needs to be verified and deleted from the report as soon as possible: CREDITOR AGENCY, acct. 123-34567-ABC Please delete this erroneous item from my credit report as soon as possible. Sincerely, Your Signature Your Name SSN# 123-45-6789 Attachment included

Removing Inquiries From Your Credit Report - Sample Letter 4

Prepare letters to each inquiring creditor asking them to remove their inquiry. The Fair Credit Reporting Act allows only authorized inquiries to appear on the consumer credit report. You must challenge whether the inquiring creditor had proper authorization to pull your credit file. Your letter can go something like this:

Re: Unauthorized Credit Inquiry Dear American Express, I recently received a copy of my Experian credit report. The credit report showed a credit inquiry by your company that I do not recall authorizing. I understand that you shouldn't be allowed to put an inquiry on my file unless I have authorized it. Please have this inquiry removed from my credit file because it is making it very

difficult for me to acquire credit. I have sent this letter certified mail because I need your prompt response to this issue. Please be so kind as to forward me documentation that you have had the unauthorized inquiry removed. If you find that I am remiss, and you did have my authorization to inquire into my credit report, then please send me proof of this. Thanking you in advance,

Letter to Credit Bureaus if Collection Agency Fails to Validate Your Debt - Sample Letter 15
Assuming you have contacted the collection agency using our debt validation methods, and they have failed to send you adequate proof of your legal obligation to pay a debt, this is the letter you need to write to the credit bureaus.

Date Your Name Your Address City, State Zip Credit Bureau Bureau Address City, State Zip

RE: Account XXXXX-XXXX-XXXXX Dear Credit Bureau, I am continually being called on the telephone by your firm over an alleged debt. I'm sure you are aware of the provisions in the Fair Debt Collection Practices Act (FDCPA), and I am requesting validation of this debt. I am requesting proof that I am indeed the party you are asking to pay this debt, and there is some contractual obligation which is binding on me to pay this debt. I request that you cease contacting me via telephone and all future correspondence be writing. To refresh your memory on what constitutes legal debt validation, I am providing you a list of the required documentation: Complete payment history, the requirement of which has been established via Spears v Brennan 745 N.E.2d 862; 2001 Ind. App. LEXIS 509. Agreement that bears the signature of the alleged debtor wherein he/she agreed to pay the original creditor. Letter of sale or assignment from the original creditor to your company. (Agreement with your client that grants you the authority to collect on this alleged debt. Coppola v. Arrow Financial Services, 302CV577, 2002 WL 32173704(D.Conn., Oct. 29, 2002) Information relating to the purchase of a bad debt is not proprietary or burdensome. Debtor must phrase their request clearly to obtain: The source of a debt and the amount a bad debt buyer paid for plaintiff's debt, how amount sought was calculated, where in issue a list of reports to credit bureaus, and documents conferring authority on defendant to collect debt. Intimate knowledge of the creation of the debt by you, the collection agency.

As I am sure you are well aware, under FDCPA Section 809 (b), you are not allowed to pursue collection activity until the debt is validated. You should be made aware that in TWYLA BOATLEY, Plaintiff, vs. DIEM CORPORATION, No. CIV 03-0762 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA, 2004, the courts ruled that reporting a collection account indeed is considered collection activity. While I prefer not to litigate, I will use the courts as needed to enforce my rights under the FDCPA. I look forward to a speedy resolution of this matter. Sincerely, Your Signature enclosures

Notification of Lawsuit to a Credit Bureau - Sample Letter 12

The following is a sample letter informing a credit reporting agency that you have filed suit against them. Make sure to edit this one carefully to include all of your correct information. Some of the language in this letter was from an identity theft case so you will have to tailor the verbage to fit your situation. You will also want to provide them with a copy of the filed lawsuit.

Date Your Name Your Address City, State Zip Credit Bureau Bureau Address City, State Zip RE: Your Social Security Number

Dear Credit Bureau, Enclosed is a copy of the lawsuit that I filed against you in (your county) court on (date of filed). Currently, the Pretrail Conference is scheduled for (insert date and time and location). The case number is (insert case #). The lawsuit was filed due to the utter lack of response from your company. When someone is the victim of identity theft, it is simply a nightmare trying to get false information removed from a credit file. I have contacted all of the false creditors listed on my credit file. I have challenged all of the false listings on my credit file. Nothing ever happens to fix the situation. Over 90 days ago I wrote each the creditors in question and demanded proof that I am their customer. I asked for proof of the alleged debt, including specifically the alleged contract or other instrument bearing my signature. So far none of them has been able to provide such proof to me. I have sent follow-up letters to each of them and there is still no proof. I have attempted phone contact, but I simply get transferred around and nothing ever gets accomplished. I have fully investigated my rights in this matter. Under the doctrine of estoppel by silence, Engelhardt v Gravens (Mo) 281 SW 715, 719, I may presume that no proof of the alleged debt, nor therefore any such debt, in fact exists. I have copies of the certified letters and dates prepared to bring to court on April 10th. Also, under the Fair Credit Reporting Act, these disputed items may not appear on my credit report if they cannot be supported by any evidence. Under the Fair Credit Reporting Act, if they cannot verify the debt within 30 days, then it must be removed. Your letters to me claim to have verified the debt, but this is in fact not true under law. Simply contacting the alleged creditor and asking them to match up numbers in their database is no sufficient verification for identity theft. Of course the information matches up. Someone clearly used my information without my authorization. Now I am suing Equifax for being such a pain in the posterior to me. I have provided more than sufficient evidence to get these false accounts removed. You may contact me before April 10th at (my phone number) or at my address listed at the top of this letter. This matter can be settled simply by your agreement to remove the false information from my credit file. I require a response, on point, in writing, hand signed, and in a timely manner. If I get another pointless letter from you saying that it has already been verified then there will be no more opportunity for negotiation. This will proceed in court until I have successfully proven to a judge that this false information must be removed from my credit file. I will also be aggressively pursuing the full judgment that I can get against Equifax for violation of the Fair Credit Reporting Act and Defamation. I have already won a similar lawsuit against Trans Union. Enclosed is a copy of that settlement. I will agree to a similar settlement with Equifax if you contact me before April 10th. If you accept the same terns as Trans Union did, then I will dismiss my lawsuit against Equifax and you will not need to appear in (my county and state). The items to be removed from my credit report are listed as follows: (list all accounts and account numbers) I look forward to your response. Sincerely, Your Signature Your Name SSN# 123-45-6789 Attachment included

Requesting Original Creditor to Investigate a Negative Listing -Sample Letter 17

Please follow the instructions on using this letter very carefully or you can do more damage than good.

Date Your Name Your Address City, State Zip Credit Card Company Credit Card Company Address City, State Zip

Re: Acct #XXX-XXX-XXXXXXX Dear Credit Card Company, I recently pulled my credit report from Experian and TransUnion and to my amazement, saw that you recently have decided to report me 30 days late on this account in (list the dates). I immediately disputed this information with Experian and TransUnion and the results of the investigation came back "verified". Not only was I never late on this account, but according to the Fair Credit Reporting Act (FCRA), as the information furnisher, you are required to notify me of the insertion of negative listings. Since I have disputed the lates with the credit bureaus, and you obviously "verified" them, I am very curious as to what kinds of "records" you may have for this alleged account. Under the FCRA, you are required to conduct an investigation on this account if I request it. I therefore am submitting my written request to you to conduct an investigation. Per the FCRA, you have 30 days to conduct this investigation and respond to my request. If you do not respond within this time periord, per the FCRA, you must remove this negative information. Sincerely, Your Signature

Goodwill Letter to Send to Original Creditor - Sample Letter 8

The following is a "Goodwill Letter" requesting a creditor to remove a late payment because you've been a good customer. Sometimes if you can plead your case that you were a good and loyal customer prior to a unfortunate circumstance, the creditor may remove late payments out of the goodness of their hearts.

Date Your Name Your Address City, State Zip Credit Card Company Credit Card Company Address

City, State Zip Re: Acct # XXXX-XXXX-XXXX-XXXX Dear Credit Card Company, I am writing to you today regarding my credit card account #4236-XXXX-XXXX-XXXX which I had while I was a medical student at ------------------------------------. The purpose of my correspondence is to see if you would be willing to make a "goodwill" adjustment on the reporting of this account to the three credit agencies. During the time period this account was established I had was very happy with the service, I was however not the ideal customer and made mistakes with my handling of the account. I should have kept better records regarding the account and I take full responsibility. I became aware of the unpaid balance when I got a copy of my credit report in June of 2006. I know that payment was my responsibility and I am not attempting to justify this breach of my user agreement, I was however hoping you might review the circumstances under which this non-payment occurred and consider removing the negative trade line associated with this account from my three credit reports. As soon as I became aware of the balance I contacted ----------------- and paid the balance in full. I provide this not to justify why the account was unpaid, but rather to show that the issue with ----------- is not a good indicator of my actual credit worthiness. I hope that ---------------- is willing to work with me on erasing this mark from my credit reports. I would like to STRESS that the information currently being reported IS accurate, (I am not disputing anything with ---------------). I am simply asking -------------for a courtesy gesture of goodwill in having the credit bureaus remove this account from my report. I do recognize that this request is unique and that it may not be ------------- normal policy. Please consider that the Fair Credit Reporting Act does not demand that all accounts be reported, only that any account that is reported be reported accurately. Therefore, a company does have legal discretion and permission to remove any account it chooses from the credit report. I'm hoping that ------------- will do that in my case for this account. Your kind consideration in this matter is greatly appreciated. Best Regards, Your Signature

If you would like to download a copy of this file for cutting and pasting into some other text editor, click here.

Attempt to Validate Debt - Sample Letter 9

The following is a sample letter requesting a collection agency to validate that you owe the debt. Under the Federal Debt Collection Practices Act, you are allowed to challenge the validity of a debt that a collection agency states you owe to them. Use this letter and the following form to make the agency verify that the debt is actually yours and owed by you. Keep a copy for your files and send the letter registered mail. Date Your Name Your Address City, State Zip Collection Agency Collection Agency Address

City, State Zip Re: Acct # XXXX-XXXX-XXXX-XXXX To Whom It May Concern: I am sending this letter to you in response to a notice I received from you on (date of letter). Be advised, this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested. This is NOT a request for verification or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your office provide me with competent evidence that I have any legal obligation to pay you. Please provide me with the following: What the money you say I owe is for; Explain and show me how you calculated what you say I owe; Provide me with copies of any papers that show I agreed to pay what you say I owe; Provide a verification or copy of any judgment if applicable; Identify the original creditor; Prove the Statute of Limitations has not expired on this account; Show me that you are licensed to collect in my state; and Provide me with your license numbers and Registered Agent.

If your offices have reported invalidated information to any of the three major Credit Bureaus (Equifax, Experian or TransUnion), said action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following: Violation of the Fair Credit Reporting Act Violation of the Fair Debt Collection Practices Act Defamation of Character

If your offices are able to provide the proper documentation as requested, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist. Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel. This includes any information to a credit reporting repository that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is. If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately. I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls or correspondence sent to any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter. This is an attempt to correct your records, any information obtained shall be used for that purpose. Best Regards,

Debt Validation Letter - a shorter version - Sample Letter 10

You don't have to go quoting a bunch of laws and regulations the first time you request a debt validation from a collection agency. Merely requesting them to validate the debt you owe it is sufficient enough to start the ball rolling under the FDCPA. This letter is a shorter version of our sample letter 9.

Date Your Name Your Address City, State Zip Collection Agency Collection Agency Address City, State Zip

Re: Acct # XXXX-XXXX-XXXX-XXXX To Whom It May Concern: I just pulled a copy of my credit report and noticed that your agency is reporting that I owe you a debt. I was not aware of this debt until now, and under my rights under the FDCPA, I request that you validate this debt. Sincerely, Your Signature

Cease and Desist Letter - Sample Letter 7

The following is a sample letter requesting a collection agency to cease and desist contact with you for a debt owed. Attach a copy of a recent statement from them showing the account you are referring to. If they continue to harass you, you have legal recourse against them. Check out our seciton on suing your creditors.

Date Your Name Your Address City, State Zip Collection Agency Collection Agency Address City, State Zip

RE: Account #xxxxx-xxxxxx Dear Collection Agency, Under the Fair Debt Collection Practices Act Section 805 (C), it is my right to request that you cease contact with me. I am exercising my right to do so with this letter. I request that you immediately CEASE and DESIST all contact with me. With this notice, under the law, you can now only contact me to: 1. To advise me that your company's further efforts are being terminated; 2. To notify me that your companie may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or 3. Where applicable, to notify me that your company intends to invoke a specified remedy. GIVE THIS LETTER THE IMMEDIATE ATTENTION IT DESERVES. Sincerely, Your Signature

Letter to Collection Agency to Stop Calling on a Zombie Debt - Sample Letter 20

If a collection agency is coming after you for zombie debt, debt which is outside of the statute of limitations, here is the letter you should send them. This letter is a triple whammy - it tells the collection agency to get lost because the debt is outside of the statute of limitations, requests a cease and desist under the FDCPA and also requests an investigation under the FCRA.

Date Your Name Your Address City, State Zip Collection Agency Collection Agency Address City, State Zip

Re: Acct # XXXX-XXXX-XXXX-XXXX To Whom It May Concern: I am continually being called on the telephone by your firm over an alleged (fill in the amount) debt. According to the information given to us by your firm, the date of last activity by the original creditor was (date). The State of Limitations on this alleged debt, even should it be ours, is X years in the state of (your state). Since the debt is out of the statute of limitations, and you are reporting this on my credit report, you are conducting collection activities on zombie debt. I'm sure you are aware of the provisions in the Fair Debt Collection Practices Act (FDCPA). However, I would like to point out that your firm has violated provisions of the FDCPA by implying that the legal status of the debt is collectible by reporting the alleged debt to the credit bureaus. The exact statute: [15 USC 1692e] (2) The false representation of -(A) the legal status of the alleged debt and (B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt. I am also doubtful that you would have adequate documentation to prove in court that you have the right to report this negative information on my credit report, and therefore you are in violation of the Fair Credit Reporting Act as well as the FDCPA. However, I will give you the chance to prove that you are lawfully entitled to report this information by requesting an investigation. Under the FDCPA I am also invoking my right to ask you to stop contacting me unless you can provide adequate validation of this alleged debt or notification that you are ceasing collections activiets. Please remove this account immediately from my credit report or I will have to take legal remedies which may include lawsuits and notifying our state attorney general's office. In addition, I'm sure your legal staff will agree that non-compliance with this request could put your company in serious legal trouble with the FTC and other state or federal agencies. Under the FCRA and the FDCPA, each violation is subject to a $1,000 fine, payable to me. Sincerely, Your Signature

Notification to a Collection Agency You Are Suing Them - Sample Letter 13

The following is a sample letter informing a collection agency you are planning to file suit against them. If you don't get a response to your previously sent debt validation letter, send this letter out to them. Add in specifics of what's been going on - describe what they're doing that's wrong, and WHAT YOU want them TO DO. Spell it out clear and simple.

Date Your Name Your Address City, State Zip Collection Agency Collection Agency Address

City, State Zip RE: Account #xxxx-xxxx-xxxx To Whom it May Concern, Your firm has failed to send the legally required validation of this debt. You have been notified that your actions are detrimental to me and that your firm has violated (including but not limited to) the Consumer Credit Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. Your firm knew or should have known that the actions taken against me and the information collected about me was inappropriate and damaging to me. Failed to use reasonable care in the course of business and failed to use even minimal procedures to ensure that I was not harmed. Communicated and are continuing to communicate incorrect and defamatory information to third parties including but not limited to: Equifax, Experian, and Trans Union. As a result of these blatantly reckless, wanton, and intentional acts, I have suffered and continue to suffer general and specific damages. I am also very upset at your firm's intentional infliction of emotional distress and at the other diminishments of the quality of my life. I am now demanding the immediate and complete removal of this tradeline from my credit reports (Equifax, Experian, and Trans Union). As I am currently attempting to apply for credit, time is of the essence. Please understand that I am extremely concerned about the consequences of the actions your firm is having on my life. Please be advised that, if this matter is not resolved by xxx, I will take any and all necessary steps to protect my rights. Thank you in advance for your attention to this matter. Sincerely, Your Signature

Please note: You will NEVER find the exact letter for your situation. You have to change the language in these sample letters to match your situation - don't be afraid to do this. 30-day lates, bankruptcies, charge-offs, etc. are all interchangeable terms on these credit repair/debt validation letters. You don't know how many times I've heard the question "Do you have a letter for disputing a bankruptcy?". The answer is YES, you take out the words "this credit card" and substitute "this bankrupcy" in the credit dispute letter - get the idea? The reasons for disputes are also interchangeable. Also, please READ the letters before sending them off. If you just copy and paste forms you find on the internet, you will FAIL in your efforts. These sample letters are meant to give you ideas on what to say. Don't get hung up on crafting the perfect letter - just know what you are saying!

Debt Validation - The Ultimate Weapon Against the Collection Agencies

Last Updated: March 8, 2011

If a collection account comes into your life, you've heard about it in one of three ways: 1. It came up as a listing on your credit report, or 2. You received a telephone call from a collection agency, or 3. You got a letter in the mail. You could try to use debt settlement methods to deal with a collection agency, but you might want to try debt validation first - the best defense against these collections is often debt validation. Why? Because the collection agency may not even be legally entitled to collect the debt from you. A Tale of You, Joe, Bob and Money Borrowed Let's say you borrowed money from your friend Joe. Joe would be the creditor of this debt, the original creditor. And, let's say some time has

gone by and you think you might still Joe money, though you're not sure how much. One day, a guy named Bob comes up to you and says he is collecting the money you owe Joe. Bob is acting just like a collection agency for a credit card company would. Think about it - having never met Bob before, would you just hand over the cash to him? No. Or at least I hope you wouldn't. You should have these questions for Bob: 1. How do you know that Bob is actually collecting for Joe? What legal documents does Bob 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 still really owe Joe the money? You remember borrowing money from someone else, your friend Sam, at the same time. You also remember paying one of them back the next day. Is this debt the one you borrowed from Sam or Joe? Where is the contract showing the terms of the loan with Joe and the one from Sam? At the very minimum you should call Joe or Sam on the phone to ask about the loan. You should have the same thoughts about a collection agency who sends you a bill for a debt you may or may not owe. Don't Panic If you receive a phone call or a letter from a collection agency, your first reaction may be to panic. Calm down and analyze the situation. Keep all the fancy language and legal terms out of the attempts by a collection agency to collect. Think of what you would ask Bob in our example. If you do, you'll know exactly what to ask a collection agency (Bob in our example) to validate a debt. (If you are wondering how a collection got on your credit report in the first place, read this).

The Fair Debt Collection Practices Act Debt Validation is a legal procedure which is spelled out by the Fair Debt Collection Practices Act, or FDCPA. It matters if the listing is from the original creditor or collection agency 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 the person asking you for the money, "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 does 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 formletters 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. Read our article on JDBs for more information. 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 the debt.

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. So, if a creditor can't validate 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? What to do if a collection agency responds to your request for validation with a summons to appear 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.

-cont. 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 our article on the validation process. 1. Dispute the collection with the credit bureaus.

2.

Look up the Statute of Limitations (SOL) on the debt. If the debt is past the statute of limitations, send them a letter informing that they are trying to collect "zombie debt". This is debt which is too old to have any legal liabilty for a consumer. Here is a sample letter for this.

3. If the collection agency does not remove the listing after you point out the SOL, sometimes your only remedy is to sue them.

4.

If the debt is not past the statute of limitations, 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.

5. 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 one of the following:

6.

Proof that the collection company owns the debt/or has been assigned the debt. Copies of statements from the original creditor. Copy of the original signed loan agreement or credit card application. If they haven't sent you satisfactory proof, and are still reporting this on your report, 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).

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

8.

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. 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.

9. 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.

10.File a lawsuit in small claims court against the collection agency on the basis of violating the FDCPA. 11.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:
http://www.1-800-serve-em.com/servicemap.html

12.In the meantime, in a parallel effort with your lawsuit against the collection agency.
13. 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.

14.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.

15.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. Theyare teetering on the edge of "willful non-compliance" under the FCRA. Tell them so.

16.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.

17.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

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

Spot The Collection Agency Violations

Last Updated: June 4, 2010

It's time to play "Find the Collection Agency Violations". This was posted in our discussion boards. It contains real violations made by a collection agency during a phone call. I would go so far to say that what went on in this conversation is typical. Can you spot the violations? The answers are given below. This will help you to identify collection agency practices and what to look for during a call. It may also help you to get rid of a collection! I got a call on my wife's phone tonight from CBE or something of that sort. I know she still has some credit issues coming out of the woodwork so I started the tape recorder up and answered the phone. Mike was the rep's name and he asked for my wife. I told him she wasn't there she was at the store. He asked by her maiden name and then ask if I was Mr. Maiden name. I said "No". He then proceeded to ask when was a good time to get a hold of her. I said I don't know but if you leave your information I'll give it to her. He said "OK". "Well my name is Mike and I'm with CBE and our number is 800-XXX-XXXX" he said. I said "Hey Mike so can I tell her what this is pertaining to?". Mike said "Yeah it's about a XXXXX hosital bill that is now in collections and I need to speak with her about paying it.". I said "Really? Well how much does she owe you?". Mike continued like nothing was wrong "$114.00 and it is from Feb 2008 when she had XXXXXX performed".

I know we had already paid this because we had issues with the insurance and the double coverage she had at the time so I say "You guys have all that information right in front of you......I'm impressed!" and he goes on to say "Yeah they give us everything we need to track these kind of people down. A lot try to hide from us but we can find them." At this point I think it's time to let Mike in on my little secret. So I say "Hey Mikey, Do you know how I know (wifey)?". He says "No...." and I say "Well why haven't your company ever sent her a dunning letter?". Now I think Mikey is getting worried cause he starts to sound really confused. He says "Well we don't have her address." and I say "So you are collecting for XXXXX hospital and I know they have her address, so why didn't they give it to you?". Mikey isn't full of a lot of answers right now so I explain that I have just recorded the whole conversation and then he gets a little mad. I guess he though we were friends. He tells me that I illegally taped the conversation and if I don't destroy it that I'll go to prison. I casually explain how IA(my state) and NE(his state) are both one party consent states and that the recording is perfectly legal and then I explain the damage he has done. Well after giving Mikey the once over about his illegal practices(citing the FDCPA and IA laws) and how I think people who try to collect and use illegal tactics are scumbags, Mikey starts to bargain with me. Yes he actually starts to ask me what he can do for me. He starts offering to settle for $10.00 as long as I don't tell anyone about this conversation (....still recording Mikey....). He says he can get the account deleted from their system and I won't have to pay a dime. I tell him "No thanks violations are worth a lot more then $114.00". He starts to get this attitude like I should help him out or something. Well I decide to end the fun and I tell him that he should get a different job because I wouldn't be surprised if he was held personally responsible for the law suit. And then I say "Well I'm gonna go now.....Oh and by the way we already paid that bill, maybe you should look into that." He says "Oh" and then I say goodbye.

So What Violations Were Made By The Collection Agency? 1. The Collector Gave Out Information About The Collection to a Third Party. It's fine for a collection agency to call a coworker, neighbor or family member and ask them for contact information. The collector started out properly, but when prompted, easily gave out private information. This is a violation of The Fair Debt Collection Practices Act: 804. Acquisition of location information [15 USC 1692b] Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall -(2) not state that such consumer owes any debt; 2. Tried to Collect on a Debt Which was Already Paid. This is definitely a misreprentation of the debt. The violation of the FDCPA: 807. False or misleading representations [15 USC 1962e] (2) The false representation of -(A) the character, amount, or legal status of any debt; or 3. Threatened to Sue if the Consumer Did Not Destroy the Tape. It was perfectly legal for the consumer to tape the conversation, as both the states were one-party states. One party means that a phone conversation can be taped as long as one of the participants gives permission and that can be the person taping and participating in the conversation. All but 12 states in the U.S. are one-party states. So the violation of the Fair Debt Collection was: 807. False or misleading representations [15 USC 1962e] (5) The threat to take any action that cannot legally be taken or that is not intended to be taken. 4. Tried to Bribe The Consumer. The collector suggested that he would pay $10 if the consumer would not report his illegal actions. I don't know about you, but this sounds like bribery to me. Definitely illegal. This would be a violation of the Fair Debt Collection Practices Act: 807. False or misleading representations [15 USC 1962e] (2) The false representation of -(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt. So what actions could be taken against the collector? The consumer could take the collection agency to court and win on violations of the Fair Debt Collection Practices Act. Armed with the taped conversation, it would be a slam-dunk. The best result, though, was that the consumer got rid of the collection agency and ensured that he and his wife would no longer be bothered.

Five Methods of Dealing With Collections on Your Credit Report

Last Updated: October 17, 2011

Don't be afraid of collections on your credit report or having to deal with the collection agencies. If you have recently pulled your credit report only to find some of your deliquent accounts have been sold to a collection company, fear not! In actuality, collections are the easiest things to get off your credit report. Why? Because generally, collection agencies have poor documentation and they are not actually authorized or licensed to collect on the debt. As a result of the shaky status of collection accounts, there are many techniques you can use to attack the collection agency and eventually get that collection record off your credit report. Here are the top 5 techniques we recommend.

1. 2. 3. 4. 5.

Pay for the Delete Settle the Debt Debt Validation Dispute with the Original Creditor Dispute with the Credit Bureaus

Pay for the Delete This situation is best for small collection amounts, $500 or less, like medical collections or utility bills. You get the collection agency to agree to remove the listing from your credit report if you pay the debt amount. This is a very successful technique. To read up on the expanded version of this technique, read the pay for delete method here. Settle the Debt This technique is much like the pay for delete method, except this method deals with collection amounts that are over $1,000. This method involves more negotiating with the collections agency to reduce the amount of the debt to an amount that you will be able to pay in one lump sum. Like the pay for delete method, as part of the settlement agreement, you get the collection agency to agree to remove the listing from your credit report. To read up on the expanded version of this technique, read the settling your debts method here. Debt Validation This method involves leveraging the protections of the Fair Debt Collection Practices Act to force the collection agency to provide documentation that the debt is valid. It's one of the more aggressive techniques against the collection agency. It involves writing a letter to the collection agency, but if the collection agency is non responsive, it requires the threat of filing a lawsuit. To get more information on this technique, read the debt validation method here. 623 Dispute with the Original Creditor This method involves leveraging the protections of section 623 of the Fair Credit Reporting Act which allows consumers to dispute a negative listing directly with the company reporting it on your credit report. The consumer merely requests an investigation of the account, and is required by law to respond within 30 days. In order to use this technique, you must have first disputed the negative information on your credit report with the credit bureaus. This is actually a very effective technique, especially since the collection agencies will not have any documentation to back up their reporting. To read up on the expanded version of this technique, read the disputing listing with original creditor method here. Dispute with the Credit Bureaus This method is the basic credit repair technique of writing letters to the credit bureaus to request an investigation of a collection on your credit report. It's basic credit repair 101. To read up on the expanded version of this technique, read the credit repair method here.

Pay for Delete - Removing Collections From Your Credit Report

Last Updated: October 19, 2011

If you have some cash, this is the easiest technique to use when trying to remove collections from your credit report. This is best for small collections, under $500, and you agree to pay them the entire amount, netting them a handsome profit, and you get the account deleted from your credit report, netting you a handsome increase in your credit score. Even if you are strapped for cash, most people can afford to pay $500 to a collection agency. If it's over $500, I still think this is an excellent technique. For debts over $500, I suggest paying a maximum of 25% of the total. At 25%, the collection agency is still making a handsome profit. To give you some background, most bad debt companies pay or receive literally pennies on the dollar for the debts on which they are trying to collect. The amount that companies pay for bad debt depends on the type of account and its age: * Debts that have recently been charged off: 6 to 7 cents on the dollar. Accounts that are slightly older and on which a collection agency or two has already taken a whack: 1.5 cents to 2 cents on the dollar. Years-old, out-of-statute debts: A penny or less.

* Source: Sean McVity, portfolio broker at Keefe, Bruyette & Woods. With this in mind, you should always start your offer at 25% or less. Let's understand the math here. If your debt is $1,000, let's say at the

most, the collection agencies has paid or will collect 7 cents on the dollar, or $70. If you offer them $250 (25%), they are still making a profit of $180. Remember, the credit card companies are out of the picture at this point. This money goes directly to the collection agencies. Pay for Delete Technique 1. Write the collection agency and offer to pay the amount in full (or at whatever amount you feel you can sell them on) in return for removing the collection account. Points to note in the letter: Mention the fact that they have not given you any kind of documentation on the debt, validating it is yours or that they are legally entitled to collect the debt. Tell them that you prefer just to pay this debt rather than hire an expensive attorney to sue them in court. Present your offer as a business deal - remind them of the handsome profit they are about to make on this deal by accepting your offer. 2. Attach a settlement offer. 3. Wait until you receive a signed, written acceptance of your offer from the collection agency. 4. Once you have a written, signed agreement (a fax is fine), send the collection agency a money order or cashier's check for the amount you agreed to pay them.

Reduction of Debt - Sample Letter 6

The following is a sample letter requesting the reduction of a debt owed and once signed, it is a binding contract for the settlement amount. This letter is sent to a collection agency confirming an offer to settle a debt and the amount the debt was settled for. It is very important this type of settlement is in writing and signed by all parties involved.

AGREEMENT TO COMPROMISE DEBT ABC Collections, Inc, referred to as COLLECTION AGENCY and John Q. Consumer, referred to as CONSUMER, agree to resolve the matter of the alleged debt, originally held by the ______________________ Company, hereafter referred to as the CLIENT. CONSUMER hereby agrees to settle this alleged debt claimed by COLLECTION AGENCY on the following terms and conditions: The COLLECTION AGENCY certifies that it is legally authorized to act in behalf of its CLIENT and that any agreement that the COLLECTION AGENCY makes on behalf of CLIENT is legally binding on the CLIENT. The COLLECTION AGENCY and the CONSUMER agree that alleged debt is $_____________.00 (_____________ & 00/100 dollars). While the CONSUMER feels that validity of the debt has not been proved by the COLLECTION AGENCY, the parties agree that the COLLECTION AGENCY shall accept the sum of $_________.00 (___________ & no/100 dollars) as full payment on the debt. The acceptance of the payment will serve as a complete discharge of all monies due, and the COLLECTION AGENCY agrees to consider the debt paid in full and agrees to not take further action to collect on the alleged debt. The payment shall be made in the form of a cashier's check or money order.

Upon payment of the $_______.00, the COLLECTION AGENCY agrees to remove any listing or information that the COLLECTION AGENCY may have placed on the CONSUMER'S credit report. The COLLECTION AGENCY agrees to never at any time in the future place any information on the CONSUMER'S credit report. The CONSUMER feels that the negative information on CONSUMER's credit report is damaging and while the exact estimation of the damage is not currently known, the CONSUMER estimates it to be $10,000 (ten thousand dollars and zero cents). Should the COLLECTION AGENCY fail to remove the listing or reinsert it at a later date, the COLLECTION AGENCY agrees to award liquidated damages of $10,000 to CONSUMER. This compromise is expressly conditioned upon the payment being received by (date). If the CONSUMER fails to pay the compromised amount by (date), this contract will be immediately terminated. The person signing this agreement, __________________________________, hereby declares that he/she is authorized to act as an agent of the COLLECTION AGENCY. This Agreement shall be binding upon and inure to the benefit of the parties, their successors, and assignees. Dated: Signature: ____________ Legal Representitive of ABC Collections, Inc. Signature: ____________ John Q. Consumer

Settling Your Debts

Part 1 in our Debt Settlement Series
Last Updated: June 23, 2011

Some people have expressed skepticism that you can actually do debt settlement on their own using our strategy or other creative methods of settling debts. Read letters from readers who were highly successful. You can also watch our video on how to settle your debts. Note: This page addresses debt which is with a collection agency (CA). For debts still with original creditors (still with the credit card company and NOT with a collection agency), go here. How do you know if your debt is still with the original creditor (OC) and not with a collection agency? Simple: call the credit card company. If a debt is with a collection agency, the original creditor is not going to deal with you. The OC has collected its tax benefits under US tax law for bad debts. They have "cut the ties" with the debt. Now that we've explained the difference between a past due debt which resides with a CA vs. an OC (collection agency vs. original creditor) - are you in the right place? You're sure your debt is with a collection agency? If the answer is yes, then you are now reading the right article. All of this material is covered in our ebook, "How to Settle Your Debts", by the way.

Understanding the True Risks and Realities of Overdue Debts Fact 1. Many consumers are unaware of their risks with unpaid debts. Yes, it's true that a creditor could sue you in court and win a judgment, allowing the creditor to garnish your wages or hire a sheriff to come get your property. However, the chances of this are not as big as you think. It's true that collection agencies are turning to lawsuits more and more these days, but I would still tell you not to worry. Once you make the creditor aware that you know the law, they are more likely to leave you alone. With savvy consumers, many debt collectors think it is simply too much time and expense for them to take legal action against a debt. We don't want to lie to you, the possibility of a lawsuit does exist. You might want to take comfort in this: if they do take you to court, often they have no case. There are a lot of new players out there, like the Junk Debt Buyers. These guys buy and sell debts and place them into million dollar packages which sell on Wall Street, much like the secondary mortgage market derivative packages. If push comes to shove and the collection agency won't settle your debt and decides to sue you, we have all the information you need to fight the lawsuit and win. Fact 2. Too many consumers feel their debts are overwhelming and there is nothing they can do other than file a bankruptcy. Consumers believe those awful tales spun by collection agencies of impending doom, especially about garnishment and seizure of property. Collection agents fail to mention (surprise!) that in order for these actions to take place, the creditor must first go to court. Due to lack of information, many consumers get panicky and turn to bankruptcy in these situations. Please don't do this! Bankruptcy should not be used until after all options are exhausted, including the settlement procedures we are going to talk about here. In addition to getting out of your debts by settling, see our other alternatives to filing a bankruptcy. In some cases, having your debt go into collections can be a blessing! Next, before we go into the actual process of settling your debts, let's see if we can get rid of the debt in other, simpler ways. Have You Tried Debt Validation? The best way to deal with a collection agency is the debt validation method. This should be your first step in the settlement process. Check the Statute of Limitations on the Debt Before you attempt to settle a debt, check the statute of limitations. Collectors only have a certain amount of time to sue you for payments! If your debt is too old, the collector can't take you to court. You can determine if the statute of limitations for collecting a debt in your state have past. If you find the debt is older than the statute of limitations, tell any bill collector calling you they are wasting their time by harassing you for an uncollectable debt, as neither they nor the original creditor nor the assigned collection agency can take you to court to get a judgment. Don't Confuse the Statute of Limitations With the Amount of Time a Collection Can Stay on Your Report After seven years (in most cases), a negative mark and the related collections will disappear from your credit report. If the debt has gone unpaid for 7 years, then it can no longer legally remain on your credit report. Before the seven year mark, you must challenge this listing on your credit report to get it off. To see how long a negative item remains on your report, click here. However, even though a debt may no longer legally appear on your credit report because it's too old, you could still be sued if the statute of limitations for your debt in your state is not up.

If the debt is gone from your credit report via debt validation AND the statute of limitations is up on this debt, you're home free! If your debt meets both of the above conditions, it is uncollectable and it cannot appear on your credit report! If you get to this point, stop here, you are done - don't worry about the debt! My Debts Are Not Past the Statute of Limitations, I Don't Want to go Through Debt Validation, and I Need to Settle Them If you cannot wait for the statute of limitations to pass on a debt, and you don't feel like messing with the debt validation procedure, you may consider trying to settle your debts yourself with a collection agency. Before we start, lets get some terms straight here. A collection agency is any agency which collects a debt on behalf of another company. Under these terms and federal law, this includes:

Companies who purchase the debt, also known as junk debt buyers.

Companies who has been assigned to collect the debt. Lawyers who send you letters to collect a debt (don't panic - they're not suing you, yet!).

Debts Which are Good Candidates For Settlement For the purpose of this article, there are two basic categories of debt: secured and unsecured. Unsecured Debts include: medical bills credit cards department store cards personal loans student loans bounced checks

Secured Debts include: home auto

As a Rule, You Can Only Settle Unsecured Debts With a secured debt, a piece of real property (such as an automobile or a home) is promised if the debtor can't finish making payments, or defaults, on the loan. You will not be able to settle these debts, as the creditor will simply accept the promised property as the "settlement." As a matter of fact, with a home or auto loan, you most likely won't be reading this information - your property will just be repossessed or foreclosed on. With unsecured debts, there is nothing "attached" to the loan promised as repayment. Unsecured loans are typically given to people with good credit, due solely to the fact that they have good credit. These are the type of debts that a creditor is willing to settle, as they have no way to guarantee they will receive anything from you. Another reminder: This page addresses debt which are with a COLLECTION AGENCY ONLY. For debts still with ORIGINAL CREDITORS, go here.

-cont. How to Get a Creditor to Make the Deal You Want

You have the natural advantage in debt settlement, because you have something the creditor wants. Don't cave in when they first tell you no. Remain calm and don't lose it and get angry. It's usually best to correspond with them via letters, so you have a paper trail of all your actions. Keep the attitude at all times that the collection agency will take less money then they say they will. Source: Sean McVity, portfolio broker at Keefe, Bruyette & Woods. How Much Should You Offer to Settle Your Debt? To give you some background, most bad debt companies pay or receive literally pennies (or less) on the dollar for the debts on which they are trying to collect. The amount that companies pay for bad debt depends on the type of account and its age: Debts that have recently been charged off: 6 to 7 cents on the dollar. Accounts that are slightly older and on which a collection agency or two has already taken a whack: 1.5 cents to 2 cents on the dollar. Years-old, out-of-statute debts: A penny or less. Other data showing old debts sold for 3 cents on the dollar Buyer Asset Acceptance Encore Capital Group Bought debt worth: $4.2 billion $5.9 billion Paid: $102.3 million $195.6 million Cents on $ 2.4 3.3

Portfolio Recovery Associates Source: 2005 SEC filings.

$5.3 billion

$149.6 million

2.8

With this in mind, you should always start your offer at 25% or less. Let's understand the math here. If your debt is $1,000, let's say at the most, the collection agencies has paid or will collect 7 cents on the dollar, or $70. If you offer them $250 (25%), they are still making a profit of $180. Remember, the credit card companies are out of the picture at this point. This money goes directly to the collection agencies. You can also try the Pay For Delete Method on small collection amounts. Important Tips When Negotiating Your Debts 1. It's best not talk to a collection agency on the phone. I used to say never, however, if you want to get vital information from the collection agency, or even "feel them out" for what they would take as a settlement, go ahead. Just keep your finger on the hang-up button on your phone in case they start getting nasty. 2. If you do call them, start off the conversation by getting the physical address of the collection agency, the name of the agency, and the direct line. The fax number is good, too.

3.

Get your terms in writing before you even consider making a payment. Here is a sample of an agreement requesting the reduction of your debt amount. Never expect a creditor to meet an agreement that was made verbally. Everything must be in writing and, even then, you will probably have to fight to make the creditor live up to his end of the bargain.

4. The older the debt, the smaller the settlement. Logically, if they have called you 50 times and gotten no response, most likely they are going to move on to a better prospect. The collection agency may also choose to sell or assign the debt to a new collection agency for even less money, or temporarily ignore the debt. The course of action chosen by the creditor will vary widely between corporations and debts.

5.

Don't agree to payments. This is always a bad idea. If you make payments to a collection agency, little things like extra interest or handling fees could keep your balance from ever going down. In some cases, making a payment restarts the statute of limitations. Wait until you have one lump sum. Remember, the older the collection, the more eager they will be to settle. If they are hounding you, get rid of them by sending a cease and desist letter.

6. Keep good records. This can be the difference between a good and bad settlement. Don't expect them to remember you or what you agreed upon. 7. Send all correspondence via registered mail, receipt requested (about $5-$6 a letter). This doesn't require a trip to the post office, you can use the US Postal Service's onle Click and Ship service. 8. Keep a copy of every letter you send. 9. Keep a log of when you spoke to the agencies, and who you spoke with. Ask for the name of the supervisor of the person you spoke to, as the turnover rate at collections agencies is high. 10. Follow up all phone correspondence with a letter (registered, of course). 11. Penalties and extra interest are typically fictitious amounts of money added on by the collection agency to pad their profits. I've seen as much as to 50% of the debt or more claimed to be owed by a collection agency consisting of interest and fees. Example: Recently, I talked to a guy who had his $5000 original debts balloon up to $11,000 in less than 3 years. This is illegal, every state has usury laws (which dictate the maximum interests allowed to be charged.) If you consider the junk debt buyer paid 7 cents on the dollar or less, there is no way there is this much interest. Most companies would be thrilled to get you to pay the original debt even without the extra penalties they add on and will usually be more than agreeable in waiving these fees. 12. Never look too eager to settle. Take plenty of time to reach an agreement. Never let it slip that you need to settle the debt because you're buying a home, car or anything else. If, for example, you tell a creditor that you really need to get this debt settled to get into your dream home, you can forget any kind of settlement. The creditor will insist on the full balance. Try not to accept the first, or even second, settlement offer (unless of course, it's really good). If the collection agency is the one calling YOU to push the deal forward, you have the upper hand. You cannot expect to reach an affordable settlement if the creditor thinks he is in the driver's seat. 13. Once you hand over the cash, all the wheeling and dealing is over. If you forgot to negotiate the way the listing appears on your credit report, guess what? You're out of luck. Make sure you've gone over your agreement with a fine tooth comb.

What If You're Contacted by More Than One Collection Agency for the Same Debt? If you're contacted by more than one collection agency for the same debt, it means that the original creditor has hired a secondary or even tertiary collection agency. This indicates that the original creditor and even the first collection agency has given up on you. This means that the second collection agency has paid even less for the debt than the first one. If the agency hasn't been able to reach you by phone but knows that you are receiving its letters, it may be willing to take even less. Should You Threaten Bankruptcy? Use the threat of bankruptcy. It will be in your best interest if the creditor believes that you have very little money and you are teetering on the edge of bankruptcy. You should approach each creditor as though this is their last chance to compromise, and get something out of your debt, before you declare bankruptcy and they get nothing. Be careful when doing this, however. If you accumulate any more debt after stating this to a creditor, (and they record all of your correspondence and phone calls), you may not be able to discharge this debt within bankruptcy. Negotiate Your Credit Rating With the Creditor The next thing you should do is negotiate your credit rating with the creditor. This is very important as a "paid" collection is as negative to your credit rating as an "unpaid collection." All your negotiation efforts and hard cold cash will do nothing to rebuild your credit report if you neglect to negotiate your credit rating in the process. Here's how to do it.

-cont. Negotiating with Original Creditors

Last Updated: March 14, 2011

Your account is with the Original Creditor if it is still with the credit card company. The negotiating tactics are quite different than a collection agency. Definition of an Original Creditor Your account is still with the original creditor if all of the following are true: 1. Your credit card accounts have not gone to collection. 2. You are no more than 150 days late on your payments. 3. And, the credit card company is still managing your account. As stated above, your negotiating tactics are quite different than those dealing with the collection agencies in the following way: How you pay them. If you need to get agreements in writing. Contacting them. Negotiating your credit rating.

If you are intimidated by the prospect of calling a credit card company, you could try Consumer Credit Counseling Services. Settling your debts is a time consuming ordeal many people find iconfusing and as a result leave it to CCCS, but you will most likely get a better deal if you handle things yourself. CCCS's main goal is a worthy one, but they often do not negotiate on how the account will be reported, which could leave you debt free, but with a ruined credit report.

If you are panicking about your debt, you might want to read our article on "Handling Debt Stress". How do you know your account is still with the credit card company? Easy. Just call them. Unlike all of my advice on how you should never call a collection agency, calling the original creditor is just fine and is actually the best way to get things accomplished. If you account is still with them, they will start dealing with you. Otherwise, they will just refer you to the collection agency to whom they have turned the account over. As a matter of fact, they will refuse to talk to you at all if your account is in collection. If you can avoid your account going into collection, by all means do so. Dealing with collection agencies are a headache and then you will have to worry about two negative marks on your credit. To make sure your account doesn't go into collection, don't let your payment get more than 90 days down. American Express will typically send your account to collection after 90 days. With everyone else, you are in dangerous waters after 120 days. Why Would a Creditor Settle With You Most credit card companies are not willing to talk to consumers until they are 60-90 days down. If you think about it, it makes sense - why would they offer to just let half of the debt go if you are current on your payments? Also, if you are current on everyone but the creditor you are trying to settle with, they are not going to be willing to reduce your debt. If they see (by looking at your credit report, which is legal) that you are paying everyone else but them, they are going to feel slighted. OK, this isn't quite true - but they will feel that since you are able to pay everyone else, you really do have the ability to pay them. Update June 16, 2009: With the current economy, more and more credit card companies are willing to take 35%-50% of the balance as payment in full. I've had some people tell me the credit card companies have called THEM with offers below 50%. If you don't have lump sum cash, some lenders are willing to spread out the payments over several months. Just don't look for a payment spread out over more than 6 months. All the more reason NOT to hire a debt settlement company. Other reasons they would settle: 1. If he believes it is in his best interest (you have convinced him that this is his only chance to receive anything.) 2. If he doesn't think that you have many assets (if he does sue, he won't be able to collect anything from you even if he wins.) So what does this say? If you've been paying on time and all of the sudden call up the credit card company and tell them you can't pay, they are going to be suspicious and less likely to make a deal. But don't stop paying your bills just to try and convince them to settle. Have an honest conversation with them first. You don't need anything in writing from the original creditors in order to accept a deal. As a matter of fact, they will refuse to give you anything in writing. That's ok. You might want to record the conversation - if you are not in a two party state, then you must inform them you are recording the conversation. What's a two party state? It means that in some states, only one party on the telephone needs to give permission to have the conversation recorded - and that one party can be you. Check your state for exact federal regulations. Also, I would keep a careful record log of your phone calls, who you talked to, etc. Just a file or notebook containing all of your notes is just fine. Paying by checks over the phone, credit cards (I know this sounds crazy) is fine. I'd still pay with a cashier's check or money order, but I don't really see a problem if they insist on taking payment over the phone. Credit card companies are highly regulated, much more so than the collection agencies, and they are, as a result, much more ethical. If you pay in full, you can get a "Paid as Agreed" rating, otherwise, "Settled" is the best you can do. In recent years, the credit card companies have adopted a immovable stance on your account rating if you settle for less than is owed. They will agree to list your account as "Settled", but that's it. You can always try to get a better rating, but I doubt if you are going to have much luck. Remember, "Settled" is better than "charged off".

Congratulations, Your Account is in Collections!

Many people are really worried when an account goes in to collections, meaning a credit card company has decided to charge off your debt due to non-payment. Sure, now you have two big negative marks on your credit report, but Im going to make a statement now that may seem counter-intuitive: once something gets to collections, you are pretty much home free!

Much of my reason for making this crazy statement comes from the fact that your protections under the law are dramatically increased when an account goes into collections. Lets see how.

1. 2.

Its pretty hard for the collection agency to build up a good case against you in court if they decide to sue. Read more.

If they are reporting on your credit report, its generally easy to get this off using the debt validation or so-called 623 method of requesting an investigation from the information furnisher. These two methods are effective because collection agencies do not have documentation adequate enough to support them if you challenged them in court. When a credit card company sells off bad debts, they place them in million dollar packages of debt to be sold on the market to junk debt buyers. No documentation regarding the original debt goes along with this debt when a junk debt buyer purchases the paper. 3. Its very easy to get them to settle for 10-25% on the dollar and also remove the item from your credit report. Our readers do this all the time, its called pay for delete in the credit world. 4. Its easy to tell them to just go away via your rights in the Fair Debt Collection Practices Act (FDCPA). Under the FDCPA, you can send them a written note telling them you wish no further contact with them and they MUST comply or they are violating the law. This way you call essentially call off the dogs forever. So while being in collections is not necessarily a good thing, there really is no need to panic. Remain calm and read the information on this site and you will be ok. As a parting tip: heres another good article on ways of dealing with collection agencies.

Negotiating Your Credit Rating When Settling Your Debt Part 2 in Our Debt Settlement Series
Last Updated: March 14, 2011 Note: This page addresses debt which are with a COLLECTION AGENCY ONLY. For debts still with ORIGINAL CREDITORS, go here. Points to Remember When Negotiating Your Credit Rating 1. Collection agencies. Always insist on complete removal of a listing from a collection agency. I mean really, who cares if you have a "Paid As Agreed" collection account: no matter what the rating, every collection account is a negative mark. It's no skin off their nose to change it, and of no use to your credit.

2.

If you do pay the collection agency, you can contact the original creditor and tell them the debt was "settled" and they need to update your account to reflect this. Technically, they are obligated to do this, as this is the truth. For the creditor to NOT do this is a violation of the FCRA. Don't do this, though, if you plan on disputing the whole listing later, though, through the Method of Verification.

3. In some cases, you can get the collection agency to change your listing with the original creditor. I wouldn't count on it, though. Some collection agencies will tell you they have no power over what the original creditor will do regarding your credit. To some extent, this is true. However, both the collection agency and the creditor want their money. If collection agency gets paid, so does the creditor, therefore it is to their advantage to cooperate.

4.

Remember, though, not all collections result from credit cards. Doctor's bills cannot appear on your report. But collections resulting from these accounts can. In the case of such collections, there is no duplicate negative listing, since the original creditor

is not allowed to put a listing on your account, so this collection may legally remain on your report. If You Have to Accept an Imperfect Credit Listing as Part of Your Settlement You may find that some of your creditors are willing to hold out longer than you are before agreeing to delete the negative listing from your file. It may seem that they are unwilling to delete the negative listing under any circumstance. Once again, let it be said that every creditor will eventually give you what you want if you speak to the right person, are patient and persistent, and make the right offer. But if you are on a time-line, and your attorney can't get them to agree to full deletion, you have a couple of other options: List the account as "Paid" only. You may counter-offer that the creditor list the account as "Paid" rather than delete it altogether. This is a true indication of the status of the account and many creditors will concede and agree to this wording. A "Paid" status is still very negative for a collection account or an account that will show "Paid Charge-off" or "Paid Repossession." You should insist that the account show "Paid" only and that all other negative notations (such as "Charge-off," "Repossession," late notations, or Collection") are deleted at the same time. A simple "Paid" notation on a regular trade line is neutral and should not hurt your credit. List the account as "Settled" only. You may counter-offer that the creditor simply list the account as "Settled" rather than delete it altogether. "Settled" is an inherently negative listing but not as negative as "Paid Charge-off." Don't agree to a "Settled" listing until you have exhausted all other possibilities. "Settled" will still trigger a credit denial. You should only agree that the account show "Settled" if all other negative notations (such as "Charge-off", "Repossession", late notations, and "Collection") are deleted at the same time. If you agree to a "Settled" notation, you must continue to work hard to delete the notation through the credit bureau dispute process. List the account as "Paid Charge-off" or "Paid Collection" or "Paid was 30-, 60-, or 90-days late." This will be the creditor's first choice, and your last choice, of what to place on your credit report once you have paid. These notations are almost as damaging as showing the same debt unpaid. It sometimes happens that an account to be deleted (through credit bureau disputes) once it has been paid. The creditor now has no compelling reason to keep the negative listing on your report. For this reason, it is still usually a good idea to settle even if the creditor won't budge on deleting or positively modifying the negative listing. OK, now you've negotiated. Next you have to pay. How you pay can make a big difference, so be sure you read the correct ways of paying your debts in part 3.

Paying Your Settlements - Can You be Sued by a Creditor After Your Debt is Settled? Part 3 in our Debt Settlement Series
Last Updated: July 27, 2011 Note: This page addresses debts which are with a COLLECTION AGENCY ONLY. For debts still with ORIGINAL CREDITORS, go here.

Settling your debt is not an easy task and hopefully the two previous articles in our Debt Settlement Series, "Understanding the Principles of Settling Debts" and "Negotiate Your Credit Rating" have been helpful. Up to this point, you have been in contact with the collection agencies and you have been successful in negotiating and settling your debts. Now comes the most important part of the entire process, paying your creditors. This is a crutial part of the entire process and this is where you need to be the most careful in how your pay, who you pay, and knowing what will happen next. Tips on Paying Your Debts Once Settled Never Disclose Where You Work or Bank. If you are asked, simply say "no comment". The reason: If your settlement falls through, and the creditor gets a judgment against you, knowing where you bank or work will make it easy to collect the judgement. Never Pay Your Settlements With a Personal Check. How you make payments is very important, as it protects you from other creditors learning about your financial status and bank account numbers. For this reason, never send a personal check. Get a cashier's check or money order. Make sure you get the money order or cashier's check from a different bank than your own bank or the post office. Keep a Copy of Your Money Order or Cashier's Check and Put it Somewhere Safe. Collection agencies keep notoriously bad records and it's your word against theirs if you say you paid and they said you didn't...unless you have the copy of the money order or cashier's check.

If You Negotiated a Settlement for Less Than You Owed, Can the Creditor Sue You For the Balance? Yes! You need to read the following information carefully. Some collection agencies will agree to settle with you for far less than you owe and then turn around and hire another collection agency to collect the difference. However, in many states this is illegal. Once a creditor deposits or cashes your check, even if they strikes out the words "payment in full" and writes "I don't agree" on the check, they can't come after you for the balance. The states in which this law is enforced: Arkansas Colorado Connecticut Georgia Kansas Louisiana Maine Michigan Nebraska New Jersey North Carolina Oregon Pennsylvania Texas Utah Vermont Virginia Washington Wyoming

Here is Your Personalized Credit Repair Plan

Bankruptcy Advice You did not either want or need any Bankruptcy Advice. Judgment Advice You did not either want or need any Judgment Advice. Collection Advice Do not call the collection agencies or talk to them on the phone. Go to our debt validation section and get started! Late Pay Advice You did not either want or need any Late Pay Advice. Chargeoff Advice Your goal is to completely remove these accounts from your credit reports. Write a letter to the credit bureaus and dispute the chargeoff balance, date the account was opened, or account number. You can also use the Dispute with Original Creditors method (do a search on the upper right to find the article). Tax Lien Advice You did not either want or need any Tax Lien Advice.