Archives for "Statute of limitation"
Crazy Credit Repair Collection Facts
Many Collections are Not Valid
Many people in credit repair programs need some level of help with collectors. Between phone calls, dunning letters, and the often cryptic list of debts that appear on credit reports, it can be problematic to identify legitimate debts and determine the best course of action.
A Unique Breed of Collector
There is a unique breed of collector that specializes in buying and dunning ancient collection accounts; debts over seven years old. These accounts are unattractive to first level collectors as they are beyond the statute of limitation for enforcing through the courts. They are also beyond the credit bureau reporting period limit.
Profiting From Ignorance
Of interest to anyone in a credit repair program, the age of the debt means that legal action can be neutralized by the statute of limitation defense, and any threat of reporting to the credit bureaus is not valid. The lack of legal leverage does not stop these collectors from vigorously practicing their craft. In fact, these last-chance collectors represent the most profitable part of the collection industry!
Credit Repair Education Pays
What is their secret? They prey on consumers who do not know their rights. If you are contacted by a collector about an ancient debt, just examine the statute of limitation, check out the reporting period limit, and send the collector a cease communication letter. They will go away forever. There are many great credit repair resources online. A little education goes a long way!
Another Common Quirk
While a bit of credit repair education can arm you with the knowledge you need to vanquish these collectors of ancient debt, there is another type of collection account that can be eliminated quickly with a dispute letter, if you know what to look for…
Compliance Failures
A significant percentage of all collections on credit reports fall into a very special category. These accounts are everywhere. Left alone they can linger for years, in some cases decades. They have the power to depress the credit scores of their unfortunate victims, often dramatically. And they should not be reporting.
Failure to Vacate
Collectors buy and sell debt. Over the last decade this practice has become commonplace, and much more frequent. Many collectors will sell an account in as little as six months if it does not pay. When an account is sold the collector is supposed to vacate all credit bureau reporting. Sadly, this often does not happen. And yet a little credit repair could eliminate the offending account completely.
The Credit Repair Solution
If you have collections on your credit report, it is fairly certain that you are a victim of this type of defunct account. Credit repair is the answer. The first and most obvious indication is the presence of more than one collection account for the same debt. If you examine your credit report and find several collections for the same debt, all but one is erroneous. And the last one may be too!
The Value of Vigilance
Given the speed at which collectors churn their portfolio these days. It is quite feasible that even the most recent collection on your report is in error. Once you remove all of the duplicates, examine the last, most recent, account. It may be legitimate, but if the reporting date is over six months, or if you have been contacted by a different collector since the reporting date, it may be a candidate for credit repair as well. Good luck!
Copyright © 2010 Sky Blue Credit Repair. All Content. All Rights Reserved.
Easy Credit Repair Clean Up Candidates
Think Twice
Credit repair is not about getting rid of genuine derogatory information on your reports, but before you decide what is genuine and what is not, you should think twice. There may be some issues you have to live with until the reporting period, usually seven years, has passed, but you may find that some of the items which look accurate have no business being on your report.
Accept Nothing Blindly
Many people make the mistake of accepting the presence of negative information on their reports simply because it looks familiar. In the present credit environment, where every single point in your credit score translates into money in your pocket, you cannot afford to accept anything without putting it under the microscope of credit repair.
Common Culprits
Commonly neglected derogatory information most often prone to reporting errors includes: overstated revolving balances, closed accounts reported as open, duplicate accounts, and collections, once accurate, but no longer allowed to report. All of these are prime and often easy credit repair candidates. All of these can be removed from your reports.
Overstated Balances
Overstated revolving accounts are often neglected in the credit repair process as the account may in every other way look fine. The single erroneous balance figure is easily overlooked in a cursory examination, and yet, this single innocuous error can knock the wind out of your credit score. High revolving balances hurt. Overstated balanced should be corrected.
Closed or Open
Closed accounts which continue to report as open can likewise be eliminated. You must examine your reports very carefully as you pursue your credit repair project. Creditors often continue to show accounts in an open status, often with balances, for years after they have been closed!
Mysterious Duplicates
Duplicate accounts, like the above two cases, may not be spotted, especially by those scouring for derogatory issues. But like overstated balances, these accounts can overstate your obligations and lower your scores. Put your credit repair knowledge to work and erase these extraneous accounts.
Collectors Out of Compliance
The last of these sneaky candidates for credit repair is the most insidious, erroneous collection accounts. Spotting these little devils can be difficult unless you know exactly what to look for. By law, collectors are supposed to cease the reporting of a debt at the time that they no longer own it. Many collectors will sell accounts if they cannot collect in the first six months. This should trigger an end to their reporting, but do not hold your breath.
Spotting the Offenders
One way to spot these incorrect lingering collection accounts is easy. If more than one collector is reporting a single debt, the oldest one should be disputed and removed with credit repair. This does not mean that singular occurrences are correct! The most recent collector may have sold the account too. You may opt to challenge these collections as well, but please do your homework first.
Research Comes First
Before including any questionable collection in your credit repair effort you should do a bit of homework. Try to recall everything you can about the original event. If you can remember the original date of default you can calculate the statute of limitation (SOL). If the debt is beyond the SOL you can dispute without fear of the collector prevailing in a lawsuit. Credit repair works, but carefully!
Copyright © 2010 Sky Blue Credit Repair. All Content. All Rights Reserved.
Credit Repair: How to Handle a Collector
The Basic Rules
Collectors are governed by the Fair Debt Collection Practices Act (FDCPA). Collectors do not always play fair, so it is best if you know the rules. Collectors cannot report a collection to the credit bureaus unless they have sent you a letter detailing the debt and the identity of the original creditor. They must also provide an explanation of your right to challenge the debt within thirty days of receiving the letter; if used properly this is a powerful credit repair tool.
Read that Letter
If you receive a collection letter don’t be intimidated. Collection letters provide a thirty day challenge period. The collection industry is far from perfect. If you are in a credit repair program you are probably aware that debts are sold and resold. Many are past the statute of limitations for collectability. Some are past the reporting period limits for the credit bureaus. And a surprising number of collection letters are sent to the wrong people altogether.
Evaluate the Issue
Don’t jump to any conclusions. Is the debt yours? Did you pay the original creditor? Was the debt discharged in a bankruptcy? Is the amount correct? How old is the debt? You have more rights than you think. Many people needlessly pay collectors for debts that are beyond the statute of limitations, and even past the time limits for reporting to the credit bureaus. An intelligent credit repair effort is always economical. Don’t throw your money away.
Understand Your Statute of Limitation
The statute of limitation for collecting through the courts is often misunderstood. Statutes of limitation are state and debt type specific and are, in almost all cases, far less than the seven year reporting period limit for credit reporting. State statutes of limitation for credit card debt, for example, range from 3 years to 6 years, except for Wyoming, where legislation favors collectors by providing an 8 year limit.
Count Your Statute of Limitation
A large part of every credit repair effort involves researching dates and may take a bit of work. The statute of limitation time limit starts with the original default date, rather than the charge-off date or the date a collector reported to the credit bureaus. The default date was the date of the first missed payment in the sequence that resulted in the collection status. You may find statute of limitation information on the internet. If the debt was entered into in a different state from where you live you need to check two state limits because collectors may apply the more favorable (longer) limit.
Use Time Limits for Credit Repair Success
What does this mean for your credit repair effort? If a collection is beyond the statute of limitation the collector cannot get a judgment. Many collectors bank on debtors not knowing this fact and rely on the implicit threat of legal action to encourage payment. The collector can report the debt to the credit bureaus until the reporting period expires, but nothing more. Here is a great credit repair tip. If you let a collector know that you are aware of the statute of limitation they should be happy to negotiate a much smaller payment. Or if you don’t want to pay, you can wait it out without fear.
Check Your Reporting Period Limits
The reporting period limit for most derogatory information is seven years. The time limit starts with the date of original default. Here again, the default date was the date of the first missed payment. If you were thirty days late in January of 2003 and never made another payment, your default date is January of 2003. Check the dates carefully. Most people in credit repair programs are aware that the dates on credit reports are often inaccurate. Double check everything.
Validate the Debt
Now that you have examined the collection letter and determined your rights it is time to challenge the debt; this is called debt validation, and is useful for your credit repair effort even if you identified the debt as legitimate. If you request the validation of a debt within thirty days of getting a collection letter the FDCPA requires collectors to provide proof they have the legal right to collect and an objective accounting of the amount they say you owe. An objective accounting of the amount should originate from the original creditor.
Dealing with Aggressive Collectors
If you find yourself being harassed by an aggressive collector there are a variety of credit repair tools you can use to stop the annoyance. If the debt is beyond the statute of limitation you can send a letter to the collector demanding they cease all communication immediately. The FDCPA requires that they comply with your request. If the debt is within the statute of limitation the use of a cease communication letter may be a strategic credit repair error, as the collector may opt to sue in response. But it might help to know that you can ask them to stop calling you during working hours by telling them that your employer does not approve of you taking calls.
Copyright © 2007 Sky Blue Credit. All Content. All Rights Reserved.
Credit Repair Adventures: A True Story
The Journey Begins
Bob and Sue are real people. They are smart and resourceful, but several years ago they made some bad choices. Soon their credit was a mess. So they started their credit repair journey. Here are a few of their credit repair adventures that might shine some light on your own path. Good luck!
Cease Communication Letters Cut Two Ways
Bob and Sue were reading about credit repair and the Fair Debt Collection Practices Act on the internet. They came across information about Cease Communication Letters which would force a collector to stop calling. So one day, after getting a call from an aggressive collector, Sue suggested they send a Cease Communication Letter. They sat down at the keyboard and gleefully wrote a note to the collector demanding that he cease communication. Bob even added some impressive language to convey his knowledge of the law. They went to the Post Office, mailed the letter, and went out to celebrate their credit repair victory. And then it all went bad.
The Cease Communication Backlash
Bob and Sue thought they magically made the collector vanish. Unfortunately, the collection was about to return with a vengeance. One evening there was a knock on the door. Bob answered, and a man handed him an envelope. Bob had been served. The collector who received the Cease Communication Letter had returned the collection to the original creditor. The collection was well within the statute of limitation for collecting through the courts, and the creditor decided to sue. It was their right. Bob and Sue learned the hard way about sending Cease Communication Letters before the expiration of the Stature of Limitation. Credit repair decisions require care.
Falling for a Collection Trick
One day Bob and Sue got a friendly letter from a collection agency. It was an offer to settle an old debt for half price. Even better, Bob and Sue could make three affordable installment payments. They were determined to make their credit repair program succeed, so they called the collector and started the payment plan. It was only later that they realized the mistake. First of all, the collection was many years past the statute of limitation for collection through the courts. Worse yet, in spite of the fact that this account was showing on their credit report, the original default had occurred more than seven years ago…
Credit Repair and Timing
So what did this all mean? It meant that they did not have to pay a penny. The fact that the collection was beyond the statute of limitation for collecting through the courts meant that the collector had no way to enforce the collection. And the fact that the original default date was over seven years old meant that Bob and Sue could have disputed the presence of the account on their credit report with the credit bureaus and it would have been deleted. Credit repair is all about the timing.
Statute of Limitation Knowledge Pays Off
Sometime later, after Bob and Sue had become aware of their credit repair rights, another collection letter arrived. They were not about to be fooled again. First, Bob checked the statute of limitation and found that the original default happened about ten years previously. He had also learned about his right to validate a debt within thirty days of getting a collection letter. So he sent a letter demanding that the collector furnish proof of their legal right to collect the debt along with a true accounting of the amount claimed. Because he knew that the documentation must be objective he also insisted that the accounting come from the original creditor. The collector was never heard from again. The collection was never reported on Bob’s credit. Credit repair success is sweet.
Credit Repair and New Accounts
Bob and Sues credit repair effort was well underway. Their credit reports were really shaping up. Many derogatory accounts had been deleted. They were happy, at least until their trip to the car dealer. The finance manager ran their credit and informed them that their credit scores were too low. The reports were not bad, but the scores were dismal. After doing a little homework Bob and Sue found out about the importance of building new credit. It is not enough to clean up derogatory information. The FICO credit scoring model needs open and active credit. So they each opened two new secured credit cards. They made their payments on time and kept the balances under 20% of the high credit limit. Within a few months their scores were dramatically higher. Soon they were behind the wheel of their new car.
Budget Some Credit Repair Insurance
Bob and Sue were thrilled; their credit repair effort was successful, but they worried about a setback. They wanted to be ready for anything. So they sat down one Sunday morning and worked up a budget. When they were done they had found a way to set aside ten percent of their monthly income for a savings account. Initially they thought of it as credit repair insurance. Over time they realized it was the best thing they could have done. Their savings insured that they could maintain their perfect credit. But better yet, it gave them real inner peace and satisfaction, a new and fantastic experience.
Copyright © 2007 Sky Blue Credit Repair. All Content. All Rights Reserved.
How to Win the Credit Repair Game
Right Where You Belong!
The credit bureaus are not the enemy. And the folks that created the FICO credit score model are not out to get you. In fact, if you take time to learn the rules you will find out how fun the game can be. Here are a few moves that will boost your credit scores and put you right where you belong, in control.
Your Credit Repair Lifeline
No matter how bad your credit might be there is a quick way to get your credit scores moving in the right direction. The FICO scoring model places considerable weight on your ability to manage your debt; and credit cards offer the perfect way to demonstrate your responsibility and influence your credit scores quickly.
Get Back in the Action Right Now
If the events of life have left you without credit cards, now is the time to get back in the action. It does not matter what your credit report looks like. Forget the past. Credit repair is about the present. Forget your fear of denial. You can do this now. Secured credit cards are the perfect credit repair option.
Secured Cards Done Right
Open two new secured credit cards today. Secured cards require a small savings deposit that will secure a modest line of credit. Once you have your cards it is time to work the system. It’s credit repair magic. Just maintain your balances under 20% of your credit limit. Don’t pay them off, and don’t let them go above 20% of the limit. Do it right and watch your scores improve.
Pay Down Your Balances
If you have plenty of credit, secured cards are not for you. But here are some facts that should aid your credit repair efforts. The FICO credit-scoring model is very sensitive to the relationship between your current balance and your high credit limit. FICO acknowledges six different balance-to-limit ratios: 20%, 40%, 60%, 80%, 100%, and over 100%. The first two are positive, 60% is neutral, and 80% and 100% are increasingly bad. To go over the limit is credit repair suicide.
Up Your Limits
Pay down your credit card balances and your scores will improve on the next reporting cycle. The affect can be dramatic. But there is another way. While you work on paying your balances down you should try this easy credit repair strategy. Call the credit card issuers and ask them to increase your limit. The affect on your credit score will be the same as if you paid your balance down. Can’t hurt to ask!
Give Uncle Bob a Call
Additional card member accounts still work! For those unfamiliar with the concept, here is an overview. Let’s say old uncle Bob has fantastic credit. If he is willing to make you an additional card member on one of his well-managed credit cards you will miraculously inherit the credit history of the card as if it were yours. It’s a real credit repair boost. So if you are on good terms with uncle Bob, give him a call.
A Caution About Additional Card Member Accounts
There is a downside to the additional card member strategy. Fair Isaac and Company, the creators of the FICO scoring model, are well aware of the loophole and have already blocked the benefit in the latest release of the software. The credit bureaus always take time to adopt a new release; you just might have another year to use this credit repair trick. If you take this route, you should also open two new secured cards and start building real credit of your own.
Pay off an Old Judgment
Here is an interesting credit repair trick. Unpaid judgments can report for seven years or the state statute of limitation, which ever is longer. Statutes of limitation on judgments are usually longer than seven years, and they can be re-filed in most states. Paid judgments are a different story altogether. Paid judgments are removed by the credit bureaus seven years from the original filing date. So if you have a judgment that is seven years old, payment will cause it to be removed from your credit report.
Negotiate That Collection Away
If you have a collection account on your credit report chances are that there is a collector that would love to hear from you. Collectors play hard, but they also know that something is better than nothing. And if you hang up without making a deal, they get nothing. You can always try to negotiate with a collector, but there is one circumstance where you are virtually guaranteed to succeed…
Credit Repair and the Statute of Limitation
Collections can only be enforced through the courts for a limited time. Once the statute of limitation expires a collector may talk big, but they have no way to force payment. They can’t get a judgment, and if you send them a cease communication letter they can’t call you again. The collection, on the other hand will linger on your credit report until the seven years are up. Are you past the statute of limitation? Want to get rid of the collection for ten to twenty-five cents on the dollar? Call your collector, and make them an offer. Your credit repair efforts will pay off.
Copyright © 2007 Sky Blue Credit Repair. All Content. All Rights Reserved.