Archives for "Debt Validation"
Debt Validation Tips for Credit Repair Success
Introduction
Debt validation is a powerful credit repair tool, but like many credit repair techniques it must be approached properly to get the optimal outcome. When done right debt validation can provide wonderful results including proof that the collector has the legal right to collect and an accounting of the amount due. And there are many cases when the collector, unable to provide the documentation required, will quietly vanish from your life.
Respond to Collection Letters Quickly
Collection letters must include, or be closely followed by, a written notice including your right to dispute the debt within 30 days. It is important to know that collectors do not like to validate debt or process credit repair demands. From a collectors perspective they are playing a numbers game; they want to send out collections letters and collect money. They would rather not tangle with debtors over the details. If you do not dispute the debt within the 30 day period allowed the collector is likely to ignore your request.
Credit Repair Options
Once you have a collection notice in hand there are a couple of credit repair strategies you should consider right away. If you don’t recognize the debt you have the right to request the name and phone number of the original creditor. Collection notices are supposed to include the name of the creditor to whom the debt is owned, however in the case that the debt has been sold and resold the original creditors name may not be indicated. But if you do recognize the debt you should research the statute of limitation before going any further.
Statutes of Limitation
The statute of limitation (SOL) for the collection of a debt is the maximum period of time that a collector can file a lawsuit. To be precise, a collector can file a lawsuit after the SOL has passed, but should they do so you can have the suit dismissed on this basis. It is important to your credit repair effort to know that the SOL clock starts on the day that you first become delinquent. This means that you need to count from the first time you missed a payment in the sequence that led to the chargeoff or collection status. SOLs are state and debt type specific and are easily found on the Internet.
Negotiation Opportunities
If the subject collection is beyond the SOL you are pretty much in the clear. You can choose to contact the collector to negotiate the debt if you wish. Those looking for the best credit repair outcome may want to take the opportunity to negotiate for complete account deletion. Once a collector knows that you are aware of the SOL they should be extremely willing to settle. You also have the option of ignoring the debt. The reporting period limit will roll around and the debt will fall off your credit report. If you decide to ignore the debt and the collector continues to contact you, you may opt to send them a cease communication letter, another useful credit repair tool. Once they receive this they will stop all communications.
Validate the Debt
Assuming that you decide to validate the debt you must do so in writing. Keep your request as simple and clear as possible. As with all credit repair communications, do not go into a story or explanation. Just ask for validation of the debt. I strongly recommend that you specifically list the documents and information you want them to send you. Ask them for proof they have the legal right to collect the debt, a detailed calculation of the amount claimed owed, and a copy of your original signed contract or account agreement.
Right and Wrong Results
If a collector cannot validate the debt they should stop collecting and not report to the credit bureaus. This happy credit repair outcome occurs quite often. But it does occasionally happen that they send nothing more than an internal printout or some such thing, and then continue their collection efforts. This can make your credit repair project difficult. There is ample case precedent to support the argument that a collector must provide the documentation listed above, but you may have to go to court to get satisfaction. If you reach the point where you are ready to get into a legal battle you should consider consulting an attorney so you are fully prepared when you get in front of the judge.
Credit Repair Help
If you begin your debt validation journey on your own and find that you are confused you should reach out to a credit repair service where a professional will review your entire case, research the SOL, prepare and send the letters as needed to get the best possible results. You do not have to do it alone. Reputable credit repair services are extremely affordable and will insure that the job is done properly. Good luck!
Copyright © 2008 Sky Blue Credit Repair. All Content. All Rights Reserved.
Credit Repair and the Collection Puzzle
You Can Take Control!
Collectors use both law and psychology in the practice of their craft. Many collectors operate legitimately, while others cross the line daily. Do you know your rights? Here is the correct way to deal with a collector – and maybe even come out ahead.
Getting the Collection Letter
Many people in credit repair programs have received collection letters. Sometimes the credit repair effort itself can attract a collector, but you can turn the situation to your advantage. Collection letters are designed to intimidate, and include enough threatening legal language to upset anyone. Many recipients of collection letters opt to ignore them. This is a mistake. You have an important right when contacted by a collector, but it only lasts for 30 days.
Debt Validation as a Credit Repair Tool
The Fair Debt Collection Practices Act (FDCPA) is the body of law that governs the collection industry. Under the FDCPA, if you receive a collection letter you have a powerful legal right called debt validation, an excellent weapon in the credit repair process. Upon your request, a collector must provide proof of their right to collect, as well as an accounting of the amount claimed. Further, an internal memorandum reiterating the information provided in the collection letter does not satisfy the obligation. Documentation must be solid and objective. If the collector cannot provide the requested proof, they must cease all collection efforts. But you must request this documentation within 30 days.
Collector Do’s and Don’ts
Under the FDCPA collectors face a long list of prohibited behaviors. Many of these rules are ignored, bent, and often broken. Here is a sampling of behaviors which collectors are prohibited from engaging in:
- Contacting consumers by telephone before 8:00 AM or after 9:00 PM
- Calling the same consumer in a repetitious manner
- Threatening to make embarrassing contacts with an employer or other person
- Contacting a consumer at his place of employment after the consumer has advised the bill collector not to do so
- Inquiring about personal property, and implying that these items may be confiscated to satisfy the debt
Cease Communication Letter
You have the right under the FDCPA to demand that a collector cease all communication with you. But like many credit repair tools this must be used with caution. If you choose this course of action, just put your demand in writing. A cease communication letter will not prevent collectors from filing suit against you, but it will stop telephone calls and collection letters. Be aware that 5% of all complaints received by the FTC about FDCPA violations in 2007 related to collectors ignoring cease communication letters. If the calls keep coming you should send the letter again, only this time send it certified and copy the FTC.
Problems Before Statute of Limitation Expiration
Credit repair requires knowledge; you must understand the possible consequences of your actions. If you send a cease communication letter to a collector prior to the expiration of the statute of limitation (SOL) you may push them to file suit. The SOL for debt is state specific and debt-type specific. You can find the information on the web. But be careful. A collector may apply the SOL from the state where the contract originated or your current state of residence, so check both. On the other hand filing suit can be expensive and is not always the best move for a collector. Many collectors return the debt to the original creditor upon receipt of a cease communication letter. This may mean that another collector will be in touch soon and your credit repair efforts may need to be renewed.
Getting to Know Your Statute of Limitation
If you get a collection letter you should check your SOL. The SOL clock starts with the date of original default on the original debt. Collectors are notorious for “accidentally” resetting the clock. Many people starting a credit repair program discover how frequent this practice is when they examine their credit reports. The date of original default is the first time you were late in the sequence that led to the charge-off or collection status. Also note that the SOL for collection has nothing to do with the reporting limit on your credit report. The SOL for debt is usually far less than the normal seven-year limit for credit reporting.
Credit Repair Solutions After SOL Expiration
If the SOL on the debt has expired you are home free. Here is a bit of credit repair magic. A collector can attempt to collect beyond the SOL, but since they can’t get a judgment they have no way to enforce their efforts. A cease communication letter will put and end to their presence in your life. You have other options as well. Remember that the SOL is different from the reporting period limit on your credit report. The collector may have no way to enforce a collection, but it can continue to show on your credit report. If you would like to negotiate the debt, now is the time. Any money a collector gets past the SOL is a gift, so start your offer as low as you wish. You may even be able to negotiate for complete removal from your report, a perfect credit repair outcome.
Copyright © 2007 Sky Blue Credit Repair. All Content. All Rights Reserved
Credit Repair: Exercise Your Legal Rights!
Take Control!
Don’t imagine that other people always play fair. Look out for yourself. Knowing your legal rights can make all the difference in the world. Here is our take on some essential rights and remedies that can save you money and put you back where you belong – in control.
Credit Repair and FCRA Reporting Limits
The Fair Credit Reporting Act (FCRA) is the law that stipulates the amount of time derogatory information can remain on your credit report. Most people attempting credit report repair are aware that most derogatory information can report for up to seven years. This is easy to calculate for a simple item like a late payment. If you were 30 days late on a credit card payment in January of 2001 the late payment can continue to report until January of 2008.
Credit Repair and Modified Reporting Limits
The FCRA offers a different approach to calculating the reporting period for charged off accounts and collections. If you are in a credit repair program and trying to calculate drop-off dates you need this information. Rather than limiting the reporting period to seven years for these two events, the FCRA instructs the credit bureaus to count seven years plus 180 days from the original default date. And there are good reasons…
Charge Off Reporting Limits
A charged off account is unique inasmuch as it is not an isolated event but rather the outcome of an earlier default. The seven year plus 180 day rule creates a measurable start date for reporting period calculations. So, if you were 30 days late on a credit card payment in January of 2001 and never made another payment, the last date derogatory information can show on your credit report is June of 2008. This is the case regardless of when the creditor charged off the account.
Collection Reporting Limits
Reporting periods for collections are counted in the same way, but for different reasons. Collectors live in a world of their own, buying and selling collection accounts with a surprising frequency. There are many reasons for this behavior; the chief reason being that as soon as a collector determines a debt is uncollectable the only value it has is as a salable commodity. Because collections change hands so often people attempting credit repair are often confused about reporting period limits.
Reporting Periods Cannot be Reset
The reporting period for a collection begins with the original default date on the original debt and ends 180 days plus seven years later. And nothing can reset it. The FCRA is clear that nothing can reset the reporting period including the sale of debt, payments made to a collector during the life of the debt, or any disputes about the account made to creditor, collector, or credit bureau. But don’t confuse the reporting period limits with Statute of Limitations on collectability…
Reporting Period Vs Statue of Limitation
Understanding SOL rules will allow you to exercise several powerful credit repair possibilities. The Statue of Limitation (SOL) on a debt is the length of time it can be collected through the courts, and varies from state to state. You can easily find your state SOL on the internet. Of interest to anyone in a credit repair program, the expiration of an SOL will not stop collectors from attempting to collect. Collectors are well aware that most people have no concept of SOL and are happy to take advantage.
Don’t Ignore a Summons
Aside from basic collection efforts like phone calls and letters, collectors will often attempt to obtain a judgment after the expiration of the SOL. You may be surprised to hear that they often succeed. If you get sued by a collector beyond the SOL you must file a response with the court within the time allowed in the summons. If you do not respond the collector will prevail in spite of the expired SOL. You must positively affirm your SOL defense! Credit repair requires action.
Collections beyond the Statute of Limitation
If you get a collection letter check the SOL. If the debt is beyond the SOL you have several fantastic options. If you want the collector to leave you alone, just send a Cease Communication Letter demanding they stop all attempts to contact you. Once they get the letter there is nothing further they can do. Here’s a great credit repair tip. If you want to pay the debt you have a major edge in negotiating a payoff. Just make it clear to the collector that you are aware of the SOL and they should be happy to settle. Try calling the last week of the month. You may even be able to negotiate to have the collection removed altogether from your credit report. That’s credit repair gold.
Credit Repair and Cease Communication Vs Debt Validation
Be careful about using a Cease Communication Letter on debt that is within the SOL. You might push them into legal action. If you get a collection letter on a debt that is still within the SOL send a Debt Validation Letter instead. It’s a great credit repair tool; the Fair Debt Collection Practices Act requires collectors to provide proof of their legal right to collect as well as an accounting from the original creditor of the amount claimed. You have 30 days exercise your rights. If they respond you will have peace of mind knowing they own the debt and the amount is correct. But there is a fair possibility that the collector will not be able to furnish the proof you have requested. If that is the case you will not hear from them again and they will have to stop reporting. Not a bad outcome either!
Copyright © 2007 Sky Blue Credit Repair. All Content. All Rights Reserved.
Credit Repair and the Power of Debt Validation
Debt Validation – A Powerful Tool
Have you received a collection letter? The law provides consumers with a powerful tool for dealing with collectors. Here is our explanation of the power of debt validation and how to use it to your benefit.
The Letter of the Law
The correct way to respond to a collection letter is with a written request for debt validation. This is your right under the Fair Debt Collection Practices Act (FDCPA), and if done in a timely and correct manner can produce fantastic results. Let’s start with the law: FDCPA § 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.”
Timing is Everything
Please note that there is only a 30 day window of opportunity to request your debt validation. Collectors must abide by the laws spelled out in the FDCPA, but these laws only mandate a response for the 30 days following the date of the initial collection letter. Beyond the 30 day window collectors have no obligation to provide the documents that you request and you have lost the opportunity to force compliance. Don’t procrastinate. Your credit is too important.
Why Validate the Debt?
Why request validation of a debt? There are two good reasons that you should request debt validation on every collection letter you receive, even if it looks legitimate. First, how do you know that the collector has the legal right to collect? You don’t! Debt is regularly sold, and just as often re-sold. You may have incurred an obligation with the original creditor, but you don’t know anything about the party that is currently demanding payment. So exercise your rights and ask them to prove that they own the debt. Secondly, how do you know that the amount of the debt is correct? Is the interest calculated properly? Are there other fees added? You deserve to know. As with any other credit repair tool, it’s about exercising your rights!
The Debt Validation Letter
Let’s get to work. Write a letter to the collector. Make it neat. Reference the debt using the identification they provided in the collection letter, such as collector account number, creditor account number, creditor name, etc. Clearly state that you dispute the collection and that according to the FDCPA you demand that the collector provide proof that they own the debt and have the right to collect, as well as proof of the amount owed by providing a copy of your signed credit agreement with the original creditor and a complete accounting of the amount in question. Attach a copy of the collection letter, and send it certified mail. If you are not comfortable doing this yourself contact a reputable credit repair company. Most legitimate credit repair businesses offer debt validation as part of their arsenal and will be happy to do this for you.
The Response
What happens next? Once you have sent a debt validation letter to a collector they must satisfy your request with adequate documentation. Ownership of debt may be proven with a contract or purchase agreement transferring the debt to them. The amount owed may be documented with account statements from the original creditor, or a copy of the original signed loan agreement and an accounting of the total. It is never sufficient for the collector to provide their own internal itemization of the debt. In all cases, the documentation should be clear and provide definitive proof of the collectors claim.
Say Goodbye to the Collector
What happens if the collector cannot (or does not wish to) provide the documentation that you request? If they can’t comply …they can’t collect, they can’t contact you, and they can’t report the collection to the credit bureaus. It’s that simple. And it is likely that you will never hear from them again.
An Important Note
Our credit repair clients occasionally express concern that if the collector is pushed too hard they will send a summons and attempt to get a judgment. It is not legal for a collector to take any additional steps to collect, including getting a judgment, until they have satisfied their obligation under the FDCPA. If you receive a summons after challenging a collector with a debt validation letter you will need to appear in court with proof that you requested validation. Going to court is not an attractive option, but if you kept proper records and appear with your certified mail receipt you will prevail.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.