Archives for "Quick Fixes"
Credit Repair: How to Stop a Collector
Your Legal Rights
Have you been contacted by a collector? You are not powerless! You have legal rights under the Fair Debt Collection Practices Act to stop collectors and gain control of the situation.
Your Thirty-Day Window
Have you received a collection notice? Don’t ignore it! The first receipt of a collection notice contains an opportunity that you should not miss. If you dispute the debt in the thirty days after receiving notice the collector must stop all collection activities while investigating your dispute, and may not make any attempt to collect until he has provided you with verification of the debt. In addition, the debt may not be reported on your credit report during this period of time. If you do not respond within thirty days you have effectively waived your right to demand investigation under the Fair Debt Collection Practices Act (FDCPA). This is an important right and may serve you well if you have any question about the accuracy of the debt. Are you in a credit repair program? The more comprehensive credit repair programs provide debt validation as part of their service at no extra charge. Simply forward the collection notice to your credit repair company immediately so that they can respond within the time allowed.
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.”
The Cease Communication Letter
In some cases collectors can be abusive and cause significant stress. Consumers often give in to the pressure for partial payment at the expense of their food and housing budget causing needless hardship for themselves and their family. If you are faced with a high-pressure collector it may be best to put an end to their communication. The FDCPA requires collectors to stop collection efforts upon receiving a written request to stop. If you are in a credit repair program they should be happy to prepare the cease communication letter on your behalf as well as providing competent counsel.
FDCPA § 805. Communication in connection with debt collection [15 USC 1692c] (c) “Ceasing Communication. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except — (1) to advise the consumer that the debt collector’s further efforts are being terminated; (2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or (3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.”
In some cases, if the dollar amount is enough, and the collector believes that you have the ability to pay they may serve you with court papers. This may or may not happen. The process of filing suit is expensive and may not justify the results. Whatever a collector sounds like on the phone you can bet that the decision to pursue or not pursue your case will be rational. If you cannot afford to pay you may decide to let it take its course. As always, it is best to contact a competent credit repair professional to discuss the potential benefits and risks of any action.
Get an Attorney
The FDCPA requires collectors to stop collection efforts upon receiving notice that an attorney is representing you. Once a collector receives this notice they must direct all further communications to the attorney. This approach has several benefits. The right attorney may be able to raise useful defenses. In the credit repair business we often suggest this course of action where the dollar amount of the collection is significant or where the collector is especially aggressive.
FDCPA § 805. Communication in connection with debt collection [15 USC 1692c] (a) “Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt — (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer…”
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Student Loans
A Tough Spot
There is no statute of limitation for collection of defaulted student loans. And unless you are totally and permanently disabled, there is no way that you can discharge your student loans in a bankruptcy. What to do? Here are some insights and a couple of fantastic solutions.
The Default Story
Legally, a default occurs the first time you fail to make a payment when it is due. But if you fail to make your student loan payment for 180 days, your loan will enter the “official” default status and take on a life of its own. This is the point at which the lender will report your student loan as defaulted to the credit bureaus. It is also the point at which a long list of bad things can start to occur. Your tax refund checks can be seized and your wages can be garnished.
What Happened?
Why are student loans so different from all other debts? Well, prior to 1991 the U.S. Department of Education was empowered to collect delinquent student loans for only six years. But in 1991 an amendment to the Higher U.S. Department of Education Act lifted all time limits for collection. And the amendment was retroactive; student loans that were past the statute of limitation for collection prior to the amendment became collectible again. And to further reinforce the longevity of student loan debt, a 1998 change in federal law made it virtually impossible to discharge student loan debt in a bankruptcy.
The Reason for All This
The theory behind making sure that student loan debt can be collected forever is simple; the cost of student loans can be kept low by minimizing the number of borrowers that don’t repay. And since education, and the availability of low cost education loans, is always a political priority, it was not all that difficult to enact these changes.
The Ultimate Collectors
There is simply no way to escape the U.S. Department of Education and their army of private collection agencies that collect on their behalf. In addition, Sallie Mae, the nation’s largest student loan lender, has been purchasing collection agencies to track you down. So, what if they find you and you say you have no money? Well, the U.S. Department of Education now has the right to garnish wages, grab your tax refunds, and even seize your Social Security Checks (you read that right!), all without a court order. And, although Sallie Mae does not wield the same powers, they have started to turn over hard cases to the U.S. Department of Education to get the job done. Anyone attempting credit repair must realize that student loans must be dealt with head on, and the sooner the better.
Credit Repair Options
There are two great solutions that are designed to solve all of your student loan problems. Both of these options can stop all collection activity, lower your interest rate and payment, and reinstate your right to borrow more money for school (in case you want to go back to school). There are no qualification requirements and you are not punished for having bad credit. Everyone gets the same low interest rate. These two options are consolidation and rehabilitation. Both are a good fit with any credit repair process.
Student Loan Consolidation
Just contact the lender or collector and tell them that you would like to consolidate your defaulted loans. You will be required to make three monthly payments on time. Once you have done this you will qualify for consolidation. If you are attempting credit repair you should note that after consolidation your credit report will be updated to show the consolidated status, but the default notation will remain, like most derogatory information, for seven years. If you are in a rough patch the consolidation program allows for up to three years forbearance. Ask your lender for details. My focus has been on defaulted student loans, but it may be handy to note that you do not need to be in default to enjoy the benefits of consolidation.
Rehabilitation
This is a slightly longer process, but has the extra benefit of removing the default status notation from your credit report. To rehabilitate your loan you need to make nine to twelve consecutive on-time payments (depending on which type of student loan you have). Once you have completed this process your loan is considered “seasoned” and is sold to a new lender, and the default is wiped off of your credit. Once done, it is like it never happened. If you are attempting credit repair you should note that your payment history, including any late payments that you made, will remain, but your credit score will benefit from the removal of the default. Borrowers are allowed to rehabilitate a defaulted student loan one time only. As always, contact your lender to discuss the details.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Collection Solutions
Getting contacted by a collector is never a good thing. But there are laws that govern the behavior of collectors, and there are steps you can take to control the situation. Here are the rights and remedies that anyone facing a collector should know.
Fair Debt Collection Practices Act (FDCPA)
The FDCPA is the consumer protection act designed to prohibit abusive practices by debt collectors. The FDCPA specifically defines a collector as any person that collects debts owed to others, and may include attorneys that collect debts on a regular basis. Note that the language indicates “debts owed to others”, and therefore excludes original creditors from its scope.
Getting Started
When a debt collector initiates a collection effort they must send you a written notice indicating: 1) How much you owe, 2) The name of the creditor to whom the debt is owed, 3) Notice that unless you, within thirty days after receipt of the notice, dispute the validity of the debt or any portion thereof, the debt will be assumed valid by the debt collector, 4) That if you dispute the debt in full or in part within thirty days, the debt collector will obtain verification of the debt and mail it to the consumer, and 5) Upon written request within thirty days, the debt collector will provide you with the name and address of the original creditor, if different from the current creditor.
Exercising Your Rights
Your rights under the FDCPA, as indicated above, allow you to dispute the validity of the debt in full or in part within 30 days of receiving written notice. Your legal rights, as in all credit repair efforts, are the tools that you will use to establish the facts. An extra benefit of disputing the validity of the debt is that the collector must cease all communication until they have furnished the documentation that you have requested. In many cases, especially with older debts where documentation could be hard to obtain, you may never hear from the collector again.
Bringing an Attorney into the Picture
If you have an attorney, the debt collector must contact the attorney instead of you. This is a good way to put an end to abusive collection calls. The collector will undoubtedly be on best behavior when communicating with an attorney and a good deal of grief may be avoided. In many cases unscrupulous collectors sense weakness in the consumer and take advantage, often acting illegally to extort payment. We highly recommend hiring an attorney for anyone that feels out of their depth and uncomfortable when speaking with a pushy collector.
Cease Communication Letter
If you would like the debt collector to stop contacting you altogether you can send a letter asking them to stop. Once they receive your letter, they are allowed to contact you only one additional time for the purpose of telling you that they intend to take a certain specific action. This strategy is often recommended by credit repair companies, but be aware that in some cases, especially with recent or large collections, your letter may push the collector into taking legal action to recover, such as filing a lawsuit.
Statue of Limitations
Statutes of limitations (SoL) for collecting debt are typically far less than the SoL for reporting on your credit report. Debts may be collectable through the courts for as little as three years. If a debt is beyond the SoL the collector may attempt to pursuade you to pay, but as he cannot enforce the collection, his efforts have no “teeth”. Communicate your knowledge of the SoL to the collector. As an aside, should a collector attempt to collect a post-SoL debt by filing a lawsuit, you must appear and raise the SoL defense to have the lawsuit dismissed. It is also crucial to understand that the SoL clock starts with the original creditor. For most states the clock starts on the day you made your last payment on the account. This date can not be reset by the passing from creditor to collector, or from one collector to another. But beware that in some states partial payment can reset the SoL clock. Check your state statutes of limitation, easily found on the internet, or speak with a credit repair expert before assuming anything.
Bad Behavior
The FDCPA prohibits a wide range of specific inappropriate behavior by collectors. Prohibited practices include contacting you before 8 a.m. or after 9 p.m., calling you at work if you tell them that your employer does not approve, use of threats, obscene language, repeated calls designed to scare you into making payment, implying affiliation with the government, or implying that you have could be arrested for not paying a debt. In the credit repair business we are regularly asked about specific collection practices. Many of the stories we hear detail outrageous and illegal behavior…
Pick up the Phone
If you feel that a collector is behaving in an improper or illegal manner, the ultimate resource for answers is the FTC. If you find yourself on the telephone with a collector in such a situation it is entirely appropriate for you take careful notes: Ask their name (the FDCPA prohibits the use of false names), ask them to repeat anything that you are uncomfortable with, and then call the FTC. They welcome phone calls. The toll-free number is (877) FTC-HELP. That’s easy!
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Try This!
Do you have a past due credit card that is hurting your credit scores? Would you like the creditor to make it current, and even eliminate your entire record of late payments? It can be done. Here’s a neat little trick that may be as easy as picking up the phone.
An Overview of Re-Aging
Credit card issuers have the ability to bring your account current and wipe out your entire record of late payments using a procedure called “re-aging”. Re-aging, if managed properly, can be a fantastic credit repair tool. The re-aging guidelines were set by the Federal Financial Institutions Examination Council (FFIEC) in June of 2000 for the purpose of helping “borrowers overcome temporary financial difficulties, such as loss of job, medical emergency, or change in family circumstances like loss of a family member”.
The Policy Background
The FFIEC is a formal interagency body empowered by the Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and others, to prescribe principles and standards in the supervision of financial institutions. The re-aging guidelines are observed by all credit card issuers with the understanding that they can take a more “conservative” stance at their discretion. Credit Unions did not opt to adopt this policy, but if you have a credit card with a credit union it does not hurt to ask if they have a re-aging policy.
Some Plain English
It sounds great so far! But how does it work? Re-aging is defined as “returning a delinquent, open-end account to current status without collecting the total amount of principle, interest, and fees that are contractually due”. And it means what it says. If you meet certain, very reasonable, guidelines your credit card issuer will wipe out your bad credit. What are those guidelines?
Nuts and Bolts
There are a few basic rules. The account has to have existed for at least 9 months, you have to offer to make three on-time payments or an equivalent lump sum payment before the re-aging will be finalized, you cannot re-age an account more than one time in any 12 month period and no more than 2 times in any 5 year period. Working on credit repair? Please note that there is no limit on the number of accounts that you can re-age. But I suggest you complete one effort first to get comfortable.
Your Part of the Deal
Just so you understand, this process is designed for cardholders that have a renewed willingness and ability to make payments in a timely manner. Like any credit repair effort there is no point if you fall behind again. It is also designed for cardholders that have experienced a financial hardship. Remember the list of hardships that constitute acceptable causes of past financial problems: loss of job, medical emergency, and change in family circumstances like loss of a family member. There may be other equally acceptable events. But since the re-aging process is taken seriously you should not expect that your request be honored if you say that you just didn’t want to pay your bills!
Getting Started
Are you ready to get started? Call the credit card issuer and ask them to explain their re-aging policy. Some issuers use the term, “curing”. If the person on the phone does not know what you are talking about you should ask for a supervisor. You will want to organize your thoughts in advance. Remember that you need to communicate the reasons for your past delinquency and your renewed willingness and ability to pay on time from now on.
The Deal
Re-aging deals can differ from one issuer to the next. You will want to make sure that all derogatory information will be deleted from your account. It is also a good idea to get the details in writing. Anyone who has made a credit repair effort knows that verbal agreements with creditors have a pretty poor record of success. If they won’t put it in writing, at least take careful notes including the name and direct phone number of the person that you are speaking with.
A Caution
Removing derogatory information from your credit is a great thing. It is the goal of every credit repair effort. But it is important to keep your FICO score in mind as well. If the issuer resets the opening date on your account when they remove your derogatory information you may lose points, depending on the number and age of other accounts on your report. Ask the issuers specifically if they will reset the open date. Some do and some don’t. If they will, you’ll want to consider the impact on your scores. FICO loves old accounts. If you have plenty of accounts with many years of history there is no problem. But if your credit is young and limited resetting an older account could be a set back, at least temporarily.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair: Quick Identity Theft Solution
An Unpleasant Possibility
Are there entries on your credit report that do not belong to you? These may be the result of a file merger error on the part of the credit bureaus. Or they may be the result of a more nefarious case of identity theft. The Fair Credit Reporting Act (FCRA) gives you very specific and powerful tools to fix identity theft and to quickly block the erroneous information from appearing on your credit report and impacting your credit scores.
Section 611
Most disputes are governed by FCRA Section 611 procedures which rule that “if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file, before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute.”
A Powerful Credit Repair Tool
Section 611 procedures are normally fine, but if you have a pending transaction that requires your credit report to be in top form and time is of the essence you should consider getting out the big guns. The FCRA remedy for identity theft is the most powerful and quick acting tool available. But before you utilize this powerful credit repair tool you need to determine that the erroneous information on your report is something more than a file merger problem.
Assess the Situation
Many of the erroneous entries that appear on consumer’s credit reports are due to annoying file merger problems resulting from deficiencies in the credit bureau’s data management systems. These are altogether too common and do not fall into the category of identity theft. If you examine your credit report and discover an account that does not belong to you it is essential to take action immediately. The first step is to call the creditor that is furnishing the data to the credit bureau and ask them if the account is truly under your name. In many cases victims of file mergers discover quickly that these mysterious accounts belong to someone with similar identifying characteristics, like a similar name. In this case your credit repair efforts will fall under Section 611 as indicated above. But if the creditor says that it is your account and verifies your name and address, and you know that this is an account that you never personally opened it is time to act.
The Dispute
An Identity Theft Dispute must include an Identity Theft Report which may be obtained from an authorized agency including, but not limited to, your local police department, the FTC, the States Attorney General Office, and The United States Post Office. In addition to the Identity Theft Report you must include clear proof of your identity, identification of each suspect account on your report, and a statement that the suspect information is not related to any transaction made by you. Don’t make the mistake of providing speculation about the disputed items. The credit bureaus only want the simple facts. Many credit repair efforts are foiled by too much information. Don’t muddy the water.
Immediate Results
Once you have properly submitted an Identify Theft Dispute to one of the credit bureaus they are required to take immediate action. The FCRA (Section 605B) mandates that a credit bureau block the reporting of any information that you have identified as having resulted from identity theft within four business days of the receipt of your dispute. The blocking of information means that it cannot be included on your credit report nor have any impact on your credit scores. To further accommodate your dispute the three credit bureaus, Experian, Equifax, and TransUnion must refer your dispute to each other. This eliminates the burden of dealing with your credit repair project in triplicate. Other rights related to identity theft include Fraud Alerts and Credit Freeze which may or may not be appropriate for your situation.
Contact a Credit Repair Professional
If you feel in doubt about the process and want clarification contact a credit repair professional. Most reputable credit repair companies will offer a free consultation and take the time to clarify any concerns that you may have. If you would rather hire someone instead of doing it yourself, a competent credit repair professional can perform the work for you in an efficient and careful manner.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.