Can I Repair my Credit on My Own?

Last Updated: July 17, 2011

Credit repair on your own - yes you can! Many of our readers (even yours truly) have removed negatives from their reports using the techniques on this page. By the way, everything a credit repair company can do for you, you can do for yourself at a fraction of the cost.

We know sometimes people feel overwhelmed with the credit repair process and want to ask a live person a question if they get stumped. If you do, we recommend Lexington Law. We've had a relationship with them since 2000 and we have visited their corporate office to review their credit repair process. They offer a free initial credit consultation and they use the same ethical credit repair techniques we talk about on our website.

Now, before you get started, make sure you read our article, "The 5 Biggest Mistakes People Make in Credit Repair", and you might want to watch our credit repair video.

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.

Edouardo’s Story

Edouardo’s 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 Edouardo’s credit.

Basic Credit Repair Strategy

The basic strategy to repairing your credit is as follows:

1. Get and review your credit report .2. Analyze your report .3. Make a list of all items you consider to be questionable or negative. Clearly identify each item in your report you

are disputing and explain why you are disputing this information.4. Write a dispute letter to the credit bureaus.5. Mail the letter to the credit bureaus . Make sure you send it registered or certified mail.6. Document your efforts. Record when you sent your letters, and the results.7. Wait for the bureaus to investigate your claims.8. Analyze the results. 9. Repeat. 10. Specialized techniques. Was the item deleted or changed to your satisfaction? You may continue steps 1, 2 and 3

above until you feel the dispute is settled satisfactorily. Remember, there is no charge for a reinvestigation. If you don’t get the results you want, dispute the listing again.

11. Should I dispute personal information? 12. Use our free sample letters .13. What if a removed a negative item and comes back on my credit report? 14. What if I get stuck and need help? 15. See Eduardo's results .16. Feeling overwhelmed by this process and think you don't have the time? You do!

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.

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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.

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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.

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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.

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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.

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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.

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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 don’t waste your time or energy on this approach.

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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. It’s 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 didn’t 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.

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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. Not mine or not my account. 2. I didn't pay late that month. 3. Wrong amount. 4. Wrong account number. 5. Wrong original creditor. 6. Wrong charge-off date. 7. Wrong date of last activity. 8. Wrong balance. 9. Wrong credit limit.

10. Wrong status - there are about 20 of these. 11. 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.

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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".

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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".

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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, you’ve 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.

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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: $132Time it took to remove the negative listings: 4 months

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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

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:

1. 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.

2. 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.

3. 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.

4. 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

Getting and Reading Your Credit Report

Last Updated - May 29, 2010

You have started on the road to credit repair! There are many in's and out's of repairing your credit and we are here to help you on this journey to financial freedom. The following questions are the most common questions we get from clients. We hope these answers help you, but if not, we are just a phone call away.

Can I get a free copy of my own credit report? How much does my credit report cost? What is the contact information for the three credit bureaus? What information should I provide when requesting a report? What are all those codes on my credit report? What are all those inquiries on my credit report? Can you provide any information on profit and loss charge offs? Who makes sure that the credit laws are enforced?

Can I get a free copy of my own credit report?

Yes! There are many ways to get a free copy of your credit report.

All credit bureaus are required to give out one free credit report per year. You can order your free annual credit report online at www.annualcreditreport.com, by calling 877-322-8228. When you order, you need to provide your name, address, Social Security number, and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.

Note: The Credit Bureaus are not required to give out your credit score for free.

If you want to order your score in addition to your free report, it's about $5.95 per bureau. The free reports are good for 30 days only, so make sure you print your reports if you get them online. The other thing is that if you do any credit disputes after pulling your free report, the credit bureaus have 45 days instead of 30 days to pull your credit reports. Nothing is ever really free, is it? This could mean the difference, in all seriousness, in getting a deletion because of the extra time they have to "investigate". If you want to avoid all this hassle, you can get your credit report, score PLUS free credit report monitoring/analysis tools by ordering your credit reports here.

Beware! There are some web sites out there who are posing as the free annual credit report site who are engaged in fraudulent activities.

What if I've already gotten my free report for the year?

There are exceptions to this one-per-consumer-per-year rule.

If you are turned down for credit, employment, or insurance within the last 60 days. Mail a copy of the written proof of your turn down to the credit bureaus, requesting your free report.

If you were charged higher rates and fees or deposits based on a credit report issued by a credit bureau, you have the right to get a free copy from that bureau.

If you certify in writing that either you are unemployed and plan to seek employment in the next 60 days. If you are on welfare. If you write to say you were a victim of fraud. If you are too impatient to wait for this, you can always order your credit report online. Get all three credit bureau's

information in ordering your credit reports one merged report.

What are all those codes on my credit report?

A separate key or explanation should be included with the report you receive. Sit down and spend some time with it. If you gave it an honest try and it still seems like Sanskrit, you might ask a trusted friend to go over it with you. Or someone in your personnel office at work, or the dean of students office at your school, or behind the railing at your bank, might be willing to help you. (It's not their job to do this, so remember that you're asking a favor. You may be charged a fee.) You can also get help by reading our info on Decoding Credit Reports.

What are all those inquiries on my credit report?

Whenever you or anyone else asks for a copy of your credit report, the request is supposed to be noted as part of your credit history. If you apply for lots of credit cards in a short time, this will produce a flurry of "inquiry" notes on your credit report. Lenders often turn this around and assume that a flurry of inquiries means you've recently applied for lots of credit, so they turn you down on that basis even though the inference is not strictly valid.

If a lender cites "excessive inquiries" as a reason for turning you down, this is what has happened. The lender has guidelines for how many inquiries in what period of time is too many. Unfortunately, you have no legal right to challenge this policy or even to know what the specific criteria may be.

Don't give your name or address to a merchant until you're actually ready to apply for credit there. Some merchants illegally run credit checks on you as soon as they have your name and address, even though you have not applied for credit, to give them an idea of what to sell you and how.

If lender A sees inquiries from B, C, and D but no new accounts, A may assume that B, C, and D turned you down for credit. Figuring "better safe than sorry," A may then turn you down just because it assumes B, C, and D turned you down. Again, this is a judgment call on the part of A, and you have no legal right to challenge it. If you have not applied for any credit recently but have been, say, looking at cars at several dealerships, you might want to let the lender know this in case it's taking unauthorized inquiries into account. Also, see our information on how to remove inquiries from your credit report

Interpreting Your Credit Report

Last Updated: July 21, 2011

You are ready to tackle your bad credit and you want to increase your credit score so you just ordered your credit report. But, if you are like most people, you have a hard time understanding what your credit report means let alone interpreting all of the information it contains.

Although each credit reporting agency may have a slightly different format, all credit reports contain basically the same categories of information. I just ordered all three of my free credit reports from annualcreditreport.com, and I was actually

pleased at how easy it was to interpret them. Of course, being in the credit business, I strive to maintain a good credit history and score thus your experience may not be quite as "pleasant". That said, here are the basic categories of information found in your credit report.

Identifying Information

Your name, address, Social Security number, date of birth, and employment information are used to identify you. You may have multiple versions of your name, especially if you are a married/divorced female who has changed her name a few times. This section will also show any nicknames and abbreviations of you name that might be luring out there. Your past and present address(es) will be included as well. These factors are not used in credit scoring. Updates to this information come from information you supply lenders.

Trade Lines

These are your credit accounts. Lenders report on each account that is established with them. They report the type of account, the date you opened the account, your credit limit, your loan amount, the account balance, and your payment history.

There are three different types of account classifications:

Mortgage Accounts. These include first mortgages, home equity loans, and any other loans secured by real estate that you own.

Revolving Accounts. Revolving accounts are charge accounts that have a credit limit and require a minimum payment each month. This includes most credit cards.

Installment Accounts. Installment accounts are credit accounts in which the amount of the payment and the number of payments are predetermined or fixed, such as a car loan.

Credit Inquiries

When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of lenders who accessed your credit report within the last two years. Typically you will see a list of "voluntary" inquiries, spurred by your own requests for credit, followed by a list of "involuntary" inquiries. These result from creditors who order your report prior to sending you one of those "preapproved" offers for credit, and don't affect your credit rating.

Public Record and Collection Items

Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.

Satisfactory Accounts and Negatives Items

All three of the major credit reporting agencies (TransUnion, Equifax, Experian) will segregate "positive" accounts from "negative" ones, thereby making the interpretation of your report a little easier. The Equifax report gives a nice "Credit Summary" which provides a one-page, easy to review snapshot of all your open accounts, as well as some useful summary statistics, such as total debt by account type, debt to credit ratio by account type, and length of credit history.

In the section showing the negative items, these accounts will be listed showing when a late payment occurred and how late is was, the balance on these accounts, and if this account was a charge-off or went to a collection agency. It will usually have the address of the creditor and the account number listed as well.

Credit Report Formats and Codes

We found a great site which provides each of the three credit bureau report layouts and an explaination of all the codes found on each report. This site decifers the payment history codes, the public record codes, the trade check rating codes, and breaks down each section of the report. If there is anything on your credit report you do not understand, go to one of the links below and you will find out what all the codes mean.

Experian Credit Report Format and Codes TransUnion Credit Report Format and Codes Equifax Credit Report Format and Codes Risk Factor Reason Codes

Common Questions About Credit Reports

How often should you check your credit report? As a rule of thumb, you should check your credit report once a year. If you are planning any big purchases, like a house or car, it is a good idea to check your credit report well ahead of time so you don't have any "surprises" during the loan process.

Why are my credit reports different? If you compare your credit reports side-by-side, you may notice they're not the same. That is because not all businesses report to all three credit bureaus. Credit bureaus typically do not share information so not all your account information makes it onto all three credit reports.

What does my credit report have to do with my credit score? Your credit report is a detailed history of your credit accounts including payment history, credit limit, highest balance ever charged, and age of the account. Your credit score is a numeric representation of your credit report.

Will my spouse's information appear on my credit report? Your credit report will contain only your credit and loan accounts. The exception is joint accounts shared between you and your spouse. Here, the account history will be reported on both your and your spouse's credit report. Similary, if one spouse is an authorized user on the other spouse's account or one spouse co-signs another's account, the account history will be reported on both credit reports.

How do I know if I have any late payments on any of my accounts? All three reports seem to be pretty consistent on this. They use a little "square" with either 30, 60, 90, or 120 in it and you don't want anything but a "zero" underneath that symbol. You want to see "OK" in green shown, or under "status", the notation "never late".

What does "charged-off", "bad debt", or "placed for collections" mean? This means the account went longer than 120 to 180 days without a payment from you. At this point, the credit card company decided the debt was not going to be collected from you, and decided to write it off. The company took the IRS tax deduction and sold the debt to a debt collector. Many of the recent real estate "short sales" may end up as charge-offs on a consumer's credit report.

What does "Account Closed by Credit Grantor" mean? The credit card company was worried you would default on the debt and shut down your ability to access any more of your credit line. This sometimes happens if you are defaulting on other cards - also referred to as universal default.

What does "Account Balance" mean? Fairly straightforward, this is the amount owed on the loan, whether it is a credit card balance or the balance of a home mortgage or installment loan.

What does "High Balance" mean? This is the most you ever owed on the loan, whether it is a credit card balance or the balance of a home mortgage or installment loan.

What is "Date of Last Activity" (DOLA)? This will be specified on the report as "last updated" or "last activity" and basically is the last date any account activity occurred, typically the last time you made a payment.

GOOD LUCK!!

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

Credit Inquiries - Will They Affect Your Credit Score?

Last Updated: April 11, 2012

Credit inquiries are requests by a "legitimate business" to check your credit. So when you apply for a new credit card, auto loan, or mortgage loan, that lender is going to pull your credit report so they can analyze whether or not you are credit worthy. You may also see inquiries from businesses you do not know as these credit checks are made by businesses looking to offer you goods or services such as promotional offers by credit card companies.

According to myFICO.com, as far as your FICO score is concerned, credit inquiries are classified as either "hard inquiries" or "soft inquiries" - only hard inquiries have an affect on your FICO score.

Soft Inquries

Soft inquiries are all credit inquiries where your credit is NOT being reviewed by a lender. These might include:

Inquiries where you are checking your own credit.

Credit checks made by businesses to offer you goods or services, such as a promotional offer by a credit card company.

Inquires made by lenders with whom you already have a credit account.

Hard Inquiries

Hard inquiries are all credit inquiries where a potential lender is reviewing your credit because you have applied for credit with them. These types of credit checks could be from:

Application for an auto loan.

Application for a credit card.

Application for a home loan.

Each of these type of credit check counts as a single inquiry, except when you are "rate shopping". FICO considers all inquiries made with a 2 week period for an auto or mortgage loan to be a single inquiry.

Will All Hard Inquiries Affect Your Credit Score?

Hard inquiries may or may not affect your FICO score. A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries that can be factored into your FICO score includes:

Number of recently open accounts and the type of accounts. Opening several credit accounts in a short period of time may lower your score.

Number of recent credit inquiries. The only time this will not affect your score is if you are "rate shopping".

How Much Will Credit Inquiries Affect Your Score?

That seems to be the million dollar question and FICO is not going to give that exact information out to just anyone. In fact, they give that information out to no one! According once again to myFICO.com, "the impact from applying for credit will vary from person to person based on their unique credit histories." How's that for vague. Furthermore, credit inquiries have a small impact on one's FICO score - generally less than 5 points.

Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries can often play a part in assessing risk, they only play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

So how many inquiries are too many? We can't really tell you for sure, but obviously, you want to keep them to a minimum.

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,

Profit and Loss Charge-Offs - What Does This Mean on Your Report?

Last Updated: June 3, 2011

Many people mistakenly think when a debt has been charged-off that it's been cancelled by the creditor. This is not true. You are still responsible for paying off the debt. Companies, including creditors and lenders, have profits and losses every year. They make money from profits and lose money from losses. When a creditor charges-off your account, it's declaring your debt as a loss for the company.

Is a Charge-Off Bad?

Even if these companies aren't actively trying to collect from you, these debts are still owed by you to the company. If you refinance your house or apply for a loan, most mortgage companies will make you pay off these debts. The reason is that these debts can be turned into a lien against your property. Liens matter to a mortgage company for a couple of reasons:

1. When you sell your home, the monies owed against a lien (plus interest) must be paid off to clear your title. 2. Liens are in a higher position than a mortgage, meaning they get paid off before the mortgage company gets its

money. If the mortgage company has to foreclose and you have lots of liens on your home plus a mortgage, the mortgage company potentially could lose thousands of dollars.

3. Just because these debts are charged off doesn't mean that the creditor won't come after you later. Creditors have the right to sue you and win a judgment in court until the statute of limitations runs out.

However, if you're never going to buy a home, or at least not for 7 more years (that's when the profit and losses will drop off your credit report), it won't affect you, except for having bad credit. If you buy a car, you won't be asked to pay these debts off, or any thing other than real estate. Again, charge offs are almost as bad as having a bankruptcy, plus you still owe the money.

How to Remove a Charge-Off

Future creditors and lenders take charge-offs seriously, so itÕs in your best interest to remove charge-offs from your credit report. Negotiation is your best tactic for reducing the effects of a charged-off account.

Talk to the Creditor - To remove a charge-off, you should contact the original creditor NOT the debt collector. You want to convince the creditor to remove the charge-off from your credit report in exchange for payment.

Get the Agreement in Writing - When the creditor agrees to remove the charge-off from your credit report, get the agreement in writing. Either on company letterhead with the all the info of the agreement on it as well as the person you make the agreement with. Or, you can send them a letter with all the terms of the agreement on it. Do not mail payment until the agreement is signed by you and the representative for the creditor.

If There is No Agreement - If you and the creditor can not come to an agreement, just wait out the 7 years and it will come off. Or you can file bankruptcy.

Bankruptcy, although not to be undertaken lightly, is not a terrible option if your debts are out of control. If you keep your credit clean and open three new charge accounts (even gas cards), you can get an A paper (the best rates and terms) loan in 2 years. See our bankruptcy FAQ sheet for more information.

Who to Complain to if You Have Been Treated Unfairly by a Creditor

Last Updated: October 14, 2011

If you have been treated unfairly by a creditor, here is a listing of the United States regulatory agencies to contact. If you feel that your credit rights have been violated or if you feel that you have been treated unfairly, contact one of these agencies below.

Type of Creditor Who to Contact

National Banks

Office of the Comptroller of the CurrencyCustomer Assistance Unit1301 McKinney St.Suite 3710Houston, TX 77010(800) 613-6743www.occ.treas.gov

State Member Banks of the Federal Reserve System

Division of Consumer and Community AffairsMail Stop 801Federal Reserve BoardWashington, D.C. 20551(202) 452-3693www.federalreserve.gov

Non-Member Federally Insured State Banks Federal Deposit Insurance CorporationOffice of Compliance and Consumer Affairs550 Seventeenth St., N.W.Washington, D.C. 20429(202) 942-3100

www.fdic.gov

Savings and Loan Associations

Office of Thrift SupervisionConsumer Programs17010 G Street, N.W., 6th FloorWashington, D.C. 20552(202) 906-6237www.ots.treas.gov

Federal Credit Unions

National Credit Union AdministrationOffice of Public and Congressional Affairs1775 Duke StreetAlexandria, VA 22314(703) 518-6330www.ncua.gov

Other Lenders

Federal Trade CommissionConsumer Response Center600 Pennsylvania Avenue, N.W.Washington, D.C. 20580(202) 326-3758www.ftc.org

Notice of Negative Information

One of the interesting new provisions of the new FACTA regulations which is supposed to help with identity theft is the notice of negative information provision, covered in section 623(A)(7)

FACTA now requires creditors to give you what might be called an “early warning” notice. This notice could alert you that something is amiss with an account. However, the notice is not a substitute for your own close monitoring of credit reports, bank accounts, and credit card statements. And, you may have to look closely to even see this new notice.

Starting in December 2004 a financial institution that extends credit must send you a notice before or no later than 30 days after negative information is furnished to a credit bureau. Negative information includes late payments, missed payments, partial payments, or any other form of default on the account.

Q. Does this apply only to my accounts with a bank?

A. No. A “financial institution” has the same meaning as under the Gramm-Leach-Bliley Act. In addition to a bank, this can mean a merchant that extends credit to you or a collection agency that routinely reports information to a credit bureau.

Q. Do I get a notice every time the account is delinquent?

A. It’s a one-time notice as long as the late payment or other negative information has to do with the same account. After the one-time notice, the financial institution can continue to report negative information about the same account. For example, if you are late on your credit card payment three months straight, you are only entitled to the notice either before or within 30 days after the first late payment is reported.

Q. Will I receive a separate notice or registered letter?

A. You will almost certainly not receive a registered letter. FACTA requires the financial institution to give you this notice along with “any notice of default, any billing statement, or any other materials provided to [you].” The one place the notice cannot appear is in the Truth in Lending Act notice you get when you first open an account. The notice must be “clear and conspicuous,” but need not be in bold or enlarged type.

Q. What does the notice look like?

A.The Federal Reserve Board (www.federalreserve.gov) was directed by Congress to write sample notices for financial institutions. The Board has finalized the regulation, at

www.federalreserve.gov/BoardDocs/Press/bcreg/2004/200406082/default.htm. The sample notices adopted by the Federal Reserve Board are short and to the point:

Notice before negative information is reported: We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.

Notice after negative information is reported: We have told a credit bureau about a late payment, missed payment or other default on your account. This information may be reflected in your credit report.

Q. If the Original Creditor does not notify me of this negative information, are they in violation of the FCRA?

A. Absolutely!! You may sue the original creditor in court (or negotiate to merely have the negative information removed) for $1000 per the terms of the FCRA.

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.

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

Documentation and Organization Are Keys To Credit Repair Success

September 24th, 2009

Ever tried to return an item but didn’t have a receipt? Tried to prove you made a payment on a bill when your credit card company said otherwise? Tried to get a mortgage? Gone through an IRS audit? How about repairing your credit? The tip to success in all these situations is having good documentation and records.

Documentation and good records are incredibly important during the credit repair process. Not keeping logs, receipts and copies of letters sent to information furnishers (anyone who reports information about you to the credit bureaus) can easily mean the difference between success and failure:

Always correspond and communicate with information furnishers via snail mail, and send it certified mail, return receipt requested (CRRR).

To make sure you have ironclad evidence of your disputes, DON’T use the online system offered by the credit bureaus on their websites. Send a letter.

Don’t miss your chance to force an information furnisher to remove negative information because they didn’t respond in time. When requesting an investigation of negative information, the information furnisher only has 30 days to respond or they must remove the information. If you don’t have proof when the party received the request, you can’t hold their feet to the fire and get the disputed item removed.

Sometimes it takes several rounds of dispute letters to the credit bureaus to get an account removed. To re-dispute, though, you must give a different reason or send new information. You should keep track of all reasons you used, the date and all documentation sent by making an entry in your log book and saving a copy of the dispute letter.

Did you write a letter to a collection agency and ask that they stop contacting you? Once receiving such a letter, by law, they must comply with this request. It’s good to have proof they received this letter if they don’t stop bothering you.

Did you send a timely debt validation letter to a collection agency? If you did, the collection agency cannot bother you without validating the debt. It’s crucial to have a copy of the letter you sent and they receipt showing when they received it.

Has someone violated your rights per the Fair Credit Reporting Act or Fair Debt Collection Practices Act? If you plan to take them to court, you better have good documentation.

Did you negotiate a settlement with a collection agency? Verbal agreements are difficult if not impossible to enforce. Get the agreement in writing and keep a copy.

In addition to these obvious reasons for keeping receipts and copies of letters, it is good motivation to track your progress as you turn over a new good credit leaf. Sometimes the process of credit repair can seem overwhelming. A log book showing that you’ve removed 10 of 30 items from your credit report can help you focus on your accomplishments rather than how much more work remains and simultaneously boost your resolve to continue.

Do you have any other documentation tips you’d like to share? Tell us about it by leaving a comment!

Method of Verification - Secret Credit Repair Tool

Last Updated: October 18, 2011

Everyone, it seems through mass media coverage, knows how to dispute negative credit listings on your credit report. This is a good thing. However, many people are foiled in their disputes because of the way the credit bureaus "investigate" the disputes.

If you get a notice from your the credit bureaus telling you the information you disputed has been verified as accurate, you can request the method of verification, which is your right under the FCRA section 611 (a) (7). The credit bureau must give you this information within 15 days of the request.

Why the CRAs Are Not Doing Their Job

Each credit reporting agency has a different process for handling credit report disputes, but all three use a similar system. The three bureaus collaborated through their trade organization to automate the entire reinvestigation process using an online computer program, e-Oscar.

All disputes received by the credit bureaus are done via written letter, the telephone or the credit bureaus online dispute service. Even if the credit bureau receives a written dispute highly detailed and with documentation, each dispute is reduced to a two-digit code - the best guess of a minimum wage employee.

Under the FCRA, the credit bureaus are required to send the information on to the furnisher of the consumer's account (in other words, the original creditor), but all they receive is the two-digit code.

According to testimony from Leonard A. Bennett, Testimony Before Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services Regarding "Fair Credit Reporting Act: How it Functions for Consumers and the Economy," June 4, 2003, Leonard A. Bennett P.C. on behalf of the National Association of Consumer Advocates (http://www.naca.net):

The employees of all three CRAs operate under a quota system whereby each employee is expected to process all of the disputes of an individual consumer in less than four minutes. Worse still, the "codes" used by both the CRAs and their subscribers (the furnishers) are limited in number and rarely describe the actual basis for the consumer's dispute.

For example, in two of my recent cases, both identical, consumers wrote dispute letters to all three bureaus. The disputes were conveyed in great detail and explained that the consumers were not responsible for the disputed accounts and that any signatures claimed to be theirs were forgeries. Each consumer dispute letter also enclosed copies of handwriting exemplars such as signatures on driver's license, military IDs and other credit cards. <Name omitted> had also obtained a copy of the forged note and included it in his dispute letter. When Equifax and TransUnion received the letters, their employees simplified the disputes to a code and the description "not his/hers." The [two-digit code indicating "not mine"] was all the furnishers received.

In a deposition taken in a Pennsylvania case, TransUnion's responsible employee explained the CRA's "investigation procedure."

Q. [T]he dispute investigator looks at the consumer's written dispute and then reduces that to a code that gets transmitted to the furnisher?

A. Yes.

Q. Does the furnisher ever see the consumer's written dispute?

A. No.

Q. Are there any instances in which the dispute investigator would call the consumer to find out more about the dispute?

A. No.

This is consistent with CRA testimony in every other case of which I am aware. The Bureaus do not convey the full dispute or forward any of the documents to the furnishers. As an expected result, nearly all consumer disputes are verified against the consumers.

The computer-based system, described above, which all of the credit bureaus use is called eOscar.

My Experience

So how do you go about requesting method of verification? I'll tell you about my own experience with a bogus tax lien which had appeared on my credit report.

I was refinancing my house and my loan officer called to tell me I was approved but I would have to pay off my $5,000 Missouri state tax lien. Excusez-moi??? I have never lived in Missouri, so I wouldn't have needed to pay state taxes (you have to be employed in Missouri for this to happen); therefore, it was impossible for this lien to be mine. I explained this to the loan officer (who happened to be a friend of mine for many years). As you can imagine, I was extremely embarrassed.

Conversation with Equifax

I called Equifax, the credit bureau who had this listed, and disputed the tax lien. To my surprise, it came back "verified". I called the toll-free number listed at the top of the report sent to me by Equifax and asked for method of verification. The response: "We have documentation."

"What kind of documentation do you have?" I asked.

"Documentation."

Silence followed. "Who did you call? Did you call the county clerk?"

"We never call the original creditor," the Equifax employee responded.

"Never?"

"No, Ma'am."

Stuttering in surprise, I asked for the number and name of the court house. With disgust so palpable that I could feel it through the phone line, I was given the name and number of the Missouri courthouse.

My Investigation Efforts

Naturally, I immediately called the Missouri courthouse, asked for the records clerk and explained the situation. The very nice woman on the other end of the phone said, "Well, I can tell you that no credit bureau has ever called here." She then asked for my social security number and name and after comparing them, "Honey, the social security numbers aren't even close! This definitely isn't yours."

I breathed a sign of relief and asked, "Can I get a letter from you stating this tax lien isn't mine?"

"I'm afraid we can't do that, as this information is private. The tax lien isn't yours."

"Can I give Equifax your name and number and have them call you so you can tell them what you told me?" The clerk assured me that would be fine, and I wrote down the information.

Forcing Equifax to Comply

I called Equifax back, and recounted what the clerk had just told me. I then insisted that Equifax call the clerk to verify what I had said. "Oh we can't do that," was the reply.

"You better do that, or I will sue you for willful non-compliance with the FCRA. You are required to investigate my dispute, and consider all information."

"Does this mean you want to open up a new investigation?" I held back the expletive which was on the tip of my tongue, and replied that yes, I did want to open a new investigation. I gave her the clerk's name and direct line. I was given a new confirmation number for my dispute.

The Results

Ten days later I received a letter from Equifax that the account was removed from my credit report. My loan went through.

The Method

After this experience, I did a little more investigation on the credit bureau's methods of investigation and someone pointed me to the Bennett testimony. Based on my own experience and what I learned, I came up with the following procedure which seems to be working for people:

1. Challenge the listing thru the normal channels. 2. If verified, with a copy of the investigation result in hand, call the CRA at the toll-free number listed at the top of

the report. 3. Give the report reference number and ask for method of verification per FCRA Section 611(a)(7). 4. They will have never called the original creditor, but will have relied on a third party database to verify, which they

may or may not admit to you. If they can't cite solid evidence like "we called the original creditor and they verified", ask for their phone number.

5. Call the original creditor and ask for the records. 6. If the creditor doesn't have them (they will typically tell you that the collection agency has them and they don't

keep them), get the person's name and direct line. If they do have them, demand a copy under the new FACTA act. 7. If you are sent records, review them and see how good they are. If they are not conclusive, take the next step. 8. If the original creditor has no records;

Call the CRA back and tell them the OC has no records. Inform the CRA that they need to open another dispute. The new information for the disput is the name

and number of the person to whom you have just called at the OC. If they refuse, inform them you will sue for willful non-compliance under section FCRA § 616. If they still refuse, send the information via certified letter along with an intent to sue letter. If not, they

will give you a new confirmation number (write it down! and the date!). This acts as a new investigation, and the CRA has 30 days to get back to you.

If you have written records proving the OC can't back up the negative listing(s) they are reporting on your credit report, send them registered mail to the CRA along with an intent to sue letter if the account is not removed

How the Credit Bureaus are Suppose to Investigate Disputes

Last Updated December 14, 2009

The credit bureaus are SUPPOSED to conduct a reasonable investigation when a consumer makes a credit dispute by actually contacting the information furnisher such as a credit card company, collection agency or mortgage company to verify information. It's a total myth. All the credit bureaus do with disputes is submit the dispute through a computerized system known as eOscar. In most cases, the information furnisher is not contacted about the dispute.

The form that Equifax uses for its electronic disputes was posted on our discussion forums by a reader. We've included this form further down in the article,

Submitting disputes via eOscar is the procedure that Equifax sends out for EVERY investigation, not just some of them. TransUnion and Experian also use eOscar for all their credit disputes, written or otherwise.

Is this legal?Case law has borne out that this method of investigation is not sufficient. In Cushman vs. Trans Union, Stevenson v. TRW (Experian), and Richardson vs. Fleet, Equifax, et al, the courts ruled each and every time that the CRA couldn't merely "parrot" information from the creditors and collection agencies. They must conduct an independent REASONABLE investigation to ensure the validity of the debt and the honesty/integrity of the creditor/CA in question. This is not regarded by the courts as a reasonable investigation.

This is all Equifax sends to the creditor/collection agent. (Click on the image to see the full size form.)

Please note that name/address/prev/SSN all appear TWICE on this form. In the left hand versions of those, the CRA (EQ in this instance) fills in the information they have on file. The check boxes are there for the CA's/Creditors to mark if their computers match that information. If it DOESN'T match that information, they fill in what their computers have on the right hand version and then check the box.

If the information is even CLOSE, the CRA will consider it "valid" and verify the debt--yes, even social security numbers and dates of birth. Addresses do not need to match AT ALL. Equifax will simply update their files with the address the CA/creditor provides if they fill in a different address, and THAT address, valid or not, will magically become your CURRENT address on your credit file (making it insanely difficult to get correspondence going with the CRA). As for the rest of the information? If 3 portions of the form are listed as "match"...your debt has just been verified. That's ALL these CRA's do in order to "ensure" that your financial future isn't jeopardized.

One thing to note in particular is the "Consumer states" box. This will often be the key piece of evidence in a "furnisher liability" cases.

Consider a hypothetical identity theft situation where a California resident sees trade lines from Florida on their report. The consumer writes 47 letters explaining that the charges were incurred in Florida while the consumer lives in California. Utility bills and drivers license are copied and sent to prove residence. The consumer even (cleverly) points out that charges were incurred in Florida at the same time as legitimate charges were incurred in California. The CRA reduces the consumer complaint to "not mine" and asks the creditor to verify.

In the above hypothesis, it would be difficult for the CRA to argue that its reinvestigation was reasonable if it did not forward all relevant information to the creditor but simply characterized the complaint as "not mine". Furnishers may try to defend a case saying they got inadequate info from the CRA. If you read the text of S2B, you'll see what I'm talking about. That is why it is a good idea to copy the furnisher on all disputes to the CRA (and include all proof sent to the CRA).

Another poster wrote about their experience with an electronic dispute method:

I recently had my credit union change some inaccurate info. To prove they sent it to the CRAs, they sent me copies of a "Universal Data Form" which is apparently a standard form furnishers use to send in data. Interestingly, at the top of the sheet is a box that starts with the question" If change makes trade current is previous delinquent history to be deleted?" with a Yes/No check off. In other words, deletion can be had if the furnisher really wants it.

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 NameYour AddressCity, State Zip

Credit BureauBureau AddressCity, 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 NameSSN# 123-45-6789Attachment included

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.

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??

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.

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,

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. Pay for the Delete 2. Settle the Debt 3. Debt Validation 4. Dispute with the Original Creditor 5. 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. Back to Top

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. Back to Top

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. Back to Top

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. Back to Top

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. Back to Top

Who Can Legally Pull Your Credit Report?

Last Updated: June 1, 2011

The last thing you want is for your credit report to fall into the wrong hands. Not only does your credit report contain information about you, such as your Social Security number, that identity thieves can use to incur debts in your name, it also contains a thorough record of your debts and accounts - something you aren't likely to want to share with anyone unless it's absolutely necessary. The Fair Credit Reporting Act (FCRA) protects each consumer's private information by restricting credit report access only to those who have permissible purpose to conduct a credit inquiry.

Banks and Credit Card Companies

Banks and credit card companies make a profit by loaning money to consumers and then collecting interest on the loan amount. When you apply for a loan or credit card, your lender reviews your credit record to determine how likely you are to

repay your debt responsibly. The lender then assigns you an interest rate based on your risk level via a process known as price-based risk assessment.

Your credit report contains all the information your lender needs to conduct a price-based risk assessment. Although many lenders will ask you for your permission before pulling and reviewing your credit report, they are not legally required to do so.

Prospective Employers

If you plan to apply for a new job in the near future, be aware of the fact that more and more prospective employers are reviewing applicants' credit records before making hiring decisions. Each employer's reason for conducting credit inquiries differs, but many look to see how responsibly you pay your debts since, for many, this is an indicator of how responsibly you will perform at your job. Still others look to credit reports to determine if your level of debt is high enough to make you a theft risk to the company.

A prospective employer must have your written permission before pulling a copy of your credit report. If the employer decides not to offer you the job based on information within your credit records, it must notify you of that fact and notify you of your federal right to a free credit report based on adverse action.

Debt Collectors

Your credit report contains your most recent address and your previous addresses for the past five years. If a debt collection agency cannot locate you, it may pull your credit report as part of the skip-tracing process. Debt collectors also conduct credit inquiries in order to evaluate your assets and determine if you make a good candidate for a lawsuit. Like lenders, collection agencies have permissible purpose to access your credit records and do not require your permission to do so.

Landlords

If you decide to rent a house or apartment, you can expect to undergo a credit check. Landlords check your credit to ensure that you pay your debts on time. Renters who pay other creditors on time are more likely to also pay their rent in a timely manner.

When reviewing your credit history, landlords pay close attention to any past evictions you have on file. Evictions are public records and, as such, appear on your credit report for up to seven years. Regardless of whether or not you pay your debts in a timely manner, a previous eviction serves as a red flag for many landlords and could negatively affect your ability to get approved for housing.

Pulling Your Own Credit

Companies you do business with are not the only ones who can access your credit history. The FCRA gives you the right to request one free credit report each year from the credit bureau of your choice. Some states, such as Georgia and California, provide residents with two free credit reports per year. Taking advantage of your right to a free copy of your credit report helps you identify any errors your report contains and work toward correcting them.

The FCRA prohibits the credit bureaus from releasing your credit history to any company or individual that does not have permissible purpose to view it. Should this occur, you have the legal right to file a lawsuit against the person or business that requested your credit report without your permission

What Are My Rights Regarding Collection Agencies?

Last Updated: July 28,2011

Like so many Americans these days, you are behind on your credit card payments and your balances are more than you can pay off. You have not made a payment on your credit cards in over 3 months and now your creditors have turned your case over to a collection agency. Now, instead of getting constant phone calls from your creditors, you are getting phone calls from some collection agency trying to collect on this debt. Do you have to put with this? Are they allowed to call you day and night? Can they contact your immediate family? These are all things the collection agency will try to get away with, but more often than not, they are in violation of the rules set forth by the Fair Debt Collection Practices Act (FDCPA).

The FDCPA was instituted to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with a way of disputing and obtaining validation of debt information in order to ensure the information's accuracy. The act created guidelines under which debt collectors may conduct business.

Prohibited Conduct by a Collection Agency

The FDCPA prohibits the following conduct when attempting to collect a debt:

Hours for Phone Contact - contacting consumers by telephone outside the hours of 8 a.m. to 9 p.m. local time is prohibited.

Failure to Cease Communication Upon Request - communicating with consumers in ANY way after receiving

written notice that said consumer wishes no further contact or refuses to pay the debt. Engaging a Person in a Telephone Conversation Repeatedly or Continuously - this is with intent to annoy,

abuse, or harass any person at the number called. Contacting a Person at Their Place of Employment - after having been told this is not acceptable and prohibited

by the employer. Contacing a Person Known to be Represented by an Attorney Communicating with Consumer After Request for Validation Has Been Made - communicating with the

consumer after receipt of a consumer's written request for verification of a debt made within the 30 day validation period (or for the name and address of the original creditor on a debt) and before the debt collector mails the consumer the requested verification or original creditor's name and address.

Misrepresenting the Debt - using deception to collect the debt by claiming to be an attorney or a law enforcement officer.

Publishing Consumers Name or Address - on a "bad debt" list. Seeking Unjustified Amounts - collection agency is demanding amounts not permitted under applicable contract

or law. Threatening Arrest or Legal Action - the threat to take any action that cannot legally be taken is prohibited. Using Abusive or Profane Language Contacting Third Parties - revealing or discussing your debt with neighbors, co-workers, family members (other

than spouse), or friends is strictly prohibited. Reporting False Information on a Consumer's Credit Report - or threatening to do so in the process of

collection.

Required Conduct by a Collection Agency

The FDCPA requires debt collectors adhere to the following actions:

Identify Themselves and Notify the Consumer - in every communication, that the communication is from a debt collector, and that any information obtained will be used to effect collection of the debt.

Give the Name and Address of Original Creditor - upon the consumer's written request and made within 30 days of receipt of the notice.

Notify the Consumer of Their Right to Dispute the Debt Provide Verification of the Debt - if consumer sends a written request for verification within 30 days, then the

debt collector must either mail the consumer the requested verification information or cease collection efforts altogether. Verification should include at a minimum the amount owed and the name and address of the original creditor.

File a Lawsuit in a Proper Venue - a debt collector may file a lawsuit, only in the place where the consumer lives or signed the contract.

Commonly Asked Questions Regarding Your Rights When Dealing with Collection Agencies

May a debt collector contact any person other than you concerning your debt?If you have an attorney, the debt collector may not contact anyone other than your attorney. If you do not have an attorney, a collector may contact other people, but only to find out where you live and work. Collectors usually are prohibited from contacting such permissible third parties more than once. In most cases, the collector is not permitted to tell anyone other than you and your attorney that you owe money.

What is the debt collector required to tell you about the debt?Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you, if you believe you do not owe money?A collector may not contact you if, within 30 days after you are first contacted, if you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What can I do if a bill collector violates the FDCPA?First, try to get the collector back on the phone and repeat whatever you said the first time that caused the collector to make the illegal statement(s). Have a witness listen in on an extension or tape the conversation. Taping is permitted without the collector's knowledge in all states except California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania and Washington.

Then file a complaint. You can even file a complaint if you don't have a witness, but a witness helps. File your complaint with the Federal Trade Commission, 6th & Pennsylvania Ave., NW, Washington, DC 20850, 202-326-2222.

Next, complain to your state consumer protection agency (who in some cases is your state attorney general's office).

Finally, send a copy of your complaint to the creditor who hired the collection agency. If the violations are severe enough, the creditor may stop the collection efforts. If the violations are ongoing, you can sue the collection agency (and the creditor that hired the agency) for up to $1,000 in small claims court for violating the FDCPA. You probably won't win if you can prove only a few minor violations. If the violations are outrageous, you can sue the collection agency and creditor in regular civil court

Collection Agency Harassment - What are Your Rights?

Last Updated - June 24, 2010

You owe money, and a debt collector or collection agency is calling you night and day. Collectors are applying the thumbscrews -- often illegally -- as recent complaints to the Federal Trade Commission bear out. In this situation, it is important you know your legal rights.

Collection Agencies Are Not Allowed to:

Call your office; Call your home before 8 a.m. or after 9 p.m.; Address you in an abusive manner; Call family or friends in an attempt to collect your debt; Harass you; Make false or misleading statements; or Add unauthorized charges.

If any of the above is happening to you, tell the collection agency to stop harassing you. If it continues, ask for its name and address and report it to the Better Business Bureau, the Federal Trade Commission (see below), or your state's attorney general's office. The federal Fair Debt Collection Practices Act also states that you can demand that the collection agency stop contacting you, except to tell you that collection efforts have ended or that the creditor or collection agency will sue you. However, you must put your request in writing.

Please note: The FDCPA applies only to bill collectors who work for collection agencies, not the original creditors. You will not be able to get the collection department in your credit card company to stop calling you with a letter. Only New York City has a local consumer protection law that requires the original creditor to stop calling you after a written request to do so.

What if the Collector Breaks the Law?

If a bill collector violates the FDCPA, try and see if you can get the illegal behavior on tape. Taping is permitted without the collector's knowledge in all states except CA, CT, DE, FL, IL, MD, MA, MI, MT, NH, PA, and WA. At the very least, record everything the bill collector says in some form of a written log. Be sure to include the dates of the conversations. The next step is to file a complaint in writing. You can even file a complaint if you don't have a witness to any of these conversations, but a witness helps. The correct agency to file your complaint with is the FTC. You can even file a complaint online:

Federal Trade Commission6th Street & Pennsylvania Avenue NWWashington, DC 20850202-326-2222http://www.ftc.gov

Next, complain to your state consumer protection agency. Then send a copy of your complaint to the creditor who hired the collection agency. If the violations are severe enough, the creditor may stop the collection efforts.

If the violations are ongoing, you can sue the collection agency (and the creditor that hired the agency) for up to $1,000.00 in small claims court for violating the FTC regulations (note: you probably won't win if you can prove only a few minor violations). If the violations are outrageous, you can sue the collection agency and creditor in regular civil or small claims court.

Common Collections Tactics and Rebuttals

Some collection agencies do employ collection methods involving the use of false and misleading statements. Just like any other high pressure salesman, these guys will make lots of "helpful" suggestions to get you to close the deal NOW. They will always try to get you to pay up right then and there. Some examples:

Insist you FedEx or Express your check to them (can you really afford to add $12 to the debt you already can't pay?)

Charge it on your credit card (sure, charge up the old card - isn't this how you got into trouble in the first place?) They will try to get you to pay by "telecheck". This means you give them your checking account number, and they

deduct the amount electronically. Are you crazy? NEVER give out your checking account and check routing numbers.

While the FDCPA allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings, or the addition of such interest is allowed under state law, it is not necessary to spend the money or risk your checking account for any of the above methods. The three or four days it may take to mail a payment with a first class stamp, if they do decide to come after you for interest, won't break the bank.

What if You Can't Pay?

It is generally in your best interest to settle your debts as quickly as possible, or use the debt validation techniques outlined here, or by settling your debts. Before obtaining a court judgment, a bill collector generally has only one way of getting paid: Demand payment by calling you and sending you threatening letters. If you refuse, the collector can't do much else short of suing you. Once the collector (or creditor) does sue and gets a judgment, however, you can expect more aggressive collections actions:

If you have a job, the collector will try to garnish up to 25% of your net wages. The collector also may try to seize any bank or other deposit accounts you have. If you own real property (real estate), the collector will probably record a lien, which will have to be paid when you

sell or refinance your property.

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 a full payment check, even if she strikes out the words "payment in full," or writes "I don't agree" on the check, she can't come after you for the balance. The states in which this law is enforced include:

Arkansas Colorado Connecticut Georgia

Kansas Louisiana Maine Michigan

Nebraska New Jersey North Carolina Oregon

Pennsylvania Texas Utah Vermont

Virginia Washington Wyoming  Some states have modified this rule. In the following states, if a creditor cashes a full payment check and explicitly retains his right to sue you by writing "under protest or without prejudice" with his endorsement, then he can come after you for the balance. But those exact words must be used. If he writes "without recourse," communicates with you separately, notifies you verbally, or writes on the check that it is partial payment, it is not enough.

Alabama Delaware Massachusetts Minnesota

Missouri New Hampshire New York Ohio

Rhode Island South Carolina South Dakota West Virginia

Wisconsin

I Paid a Collection to Have it Removed – It’s Still on My Credit Report

June 28th, 2011

Q. I have a collection on my credit report from a gas utility company. Two years ago, I told them I would pay the entire amount if they would remove it from my CR. When I called, the person said yes and was very eager to inform me they would update to the credit bureaus in a few days. They took my payment on credit card.

Two years later, the item is still on my credit report, listed as unpaid, amount past due $444, date opened is 7/2009, terms 1 month, payment history nothing listed except Sept 09. I spoke with the CA and they claimed there was no pay to remove agreement made, which I stupidly did over the phone, and that they had properly updated the credit bureaus to say I had paid the debt so it was not their problem.

My credit score has sat motionless at 650 for 2 years now all because of this item. I really have no idea what to attack to try to get it removed, and its really frustrating because I got screwed over 3 or 4 times now, by this one ridiculous debt. Any help will be greatly appreciated!!

A. So you were trying to use the technique “pay for delete“, where you’re basically bribing the collection agency to remove your listing from your credit report by paying them in full. This works if you have documentation – the agreement in writing and a copy of a check. Unfortunately, and you know this, you didn’t get a written agreement and paid over the phone, essentially leaving no written record.

The biggest thing you have going for you in your favor is that the balance is showing unpaid when in fact it was paid. This means the collection agency is in violation of the Fair Credit Reporting Act (FCRA) for showing an account status inaccurately. Technically, the collection agency owes you $1000 for each credit bureau showing you unpaid.

All you need to do is find your records showing that you paid the balance. Since you paid by credit card, you should be able to get a copy of the statement showing you paid.

You can write them a letter, along with a copy of proof you paid the account off, explaining the facts of life to them. Tell them that in lieu of the $1000s of dollars they now owe you, you will accept a deletion of the account off of your credit report. You can threaten to take them to court.

If they merely update it to “paid” with a zero balance, they better not re-age your account by showing the update as recent activity. That is illegal, and will hurt your listing. Updating your account properly, even without a deletion, will help your credit score. The older the account is, the less it will affect your credit score.

If they ignore you, your best bet would then be to take them to court for violations of the FCRA. This will definitely get their attention. For more information about how to take them to court, read our article on suing your creditors.

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 NameYour AddressCity, State Zip

Collection AgencyCollection Agency AddressCity, 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

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 co-worker, 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

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 Why Precedent/Law Fine

Creditors if they report your credit history inaccurately

Defamation, financial injury

US Court of Appeals, Ninth Circuit, No. 00-15946, Nelson vs. Chase Manhattan

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

Protection under the FCRA

FCRASection 623. $1,000

Creditors if they pull your credit file without permissible purpose

Injury to your credit report and credit score

FCRA Section 604 (A)(3) $1,000

Credit bureaus if they refuse to correct information after being provided proof

Defamation, willful injury FCRA Section 623

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

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

Credit bureaus if they reinsert a removed item from your credit report without notifying you in writing within 5 business days.

Consumer protection afforded by the FCRA

FCRA Part (A)(5)(B)(ii) $1,000

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)

Consumer protection afforded by the FCRA

FCRA Section 611 Part (A)(1) $1,000

Collection Agency can NOT be BOTHpurchaser and 'assignee'it's one or the other

Protection under the FDCPA

Gearing v. Check Brokerage Corp233 F.3d 469 (7th Cir. 2000)

$1000

Misrepresentations by the collector aboutthemselves or the debtare actionable regardlessof intent

Protection under the FDCPA

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

$1000

Creditors or collection agencies, and credit bureaus if they try and “Re-age” your account by updating the date of last activity on your credit report in the hopes of keeping negative information on your account longer

Consumer protection afforded by the FCRA

FCRA Section 605(c) Running of the reporting period

$1,000

If you dispute a debt, the collection agency fails to report it disputed to the credit bureaus

Protection under the FDCPA

FDCPASection 807(8) $1,000

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

FDCPA Section 809 (b),

FTC opinion letter Cass from LeFevre

$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 validated your debt and they still continue to report to the credit bureaus

Consumer protection afforded by the FDCPA

FDCPA Section 809 (b),

FTC opinion letter Cass from LeFevre

$1,000

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

Consumer protection afforded by the FDCPA

FDCPA 808 Section $1,000

If a collector calls you after 9 PM at night or before 8 AM

Consumer protection afforded by the FDCPA

FDCPA  Section 805. (a)(1) $1,000

Calls you at your place of employment if the debt collector knows or has reason to know that your employer prohibits the consumer from receiving such communication.

Consumer protection afforded by the FDCPA

FDCPA Section 805. (a)(3) $1,000

Calls any third part about your debt like friends, neighbors, relatives, etc.  However they can contact your attorney, a consumer reporting agency, the creditor, the attorney of the creditor, or the attorney of the debt collector. 

Consumer protection afforded by the FDCPA

FDCPA Section 805. (b) $1,000

The collection agency can not use any kind of harassment or abuse**

Consumer protection afforded by the FDCPA

FDCPA Section 806 $1,000

Collector cannot claim to garnish your wages, seize property or have you arrested ***

Consumer protection afforded by the FDCPA

FDCPA Section 807 $1,000

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

Xan's 2nd day in court (Experian)

Just got back from the courthouse. I had sued EQ on the grounds that they did not properly verify disputed information(as I do not believe the info. could be verified, yet was verified anyways using substandard methods), violating FCRA section 609 by locking me out of my credit file in retaliation of filing suit(amended on to the suit today), and violating FCRA Section 611 for a separate illegal reinsertion rule. Treble damages under the Tennessee Consumer Protection Act, and 6,000 dollars in punitive damages for stress, embarassment, lost loans, etc..

They tried to get a continuance on the basis that it was the day before Thanksgiving, I objected, as I'm moving to Oregon next month. Their motion for a continuance was denied, as they sent a representative to the court to request the continuance(thusly rendering their argument that they needed a continuance due to them not being able to get a rep. up to the court today invalid).

Took the stand, presented me case...judge gave me all the time in the world...I was done, and he started asking questions...guy was REALLY interested in my presentation and what the FCRA stands for, the rules associated with it, etc.(always a bonus).

EQ's rep. attempted to talk...judge told her she COULDN'T because she wasn't recognized by the Tennessee Bar Association, and only recognized attorney's may speak on behalf of a corporation in a trial. Since she wasn't, she had to sit her ass back down...not that it would have made any difference. She tried to argue, judge told her only way she could talk was if *I* called her as a witness, and asked me if I wanted to(sort of...his wording was "And you don't want to call this woman as a witness, do you?". Said I had tried to play nice with these guys for 6 months and they refuse to take me seriously, so I'm done taking them seriously or playing nice, and that she could just keep her butt planted in her chair.

When it was all said and done, yours truly was granted a judgement from the WONDERFUL judge in the amount of.....NINE......THOUSAND....DOLLARS.

He gave me 1,000 each for each of the 3 FCRA violations, treble damages under the TCPA, and denied my request for 6,000 in punitive damages...apparently I couldn't claim those, even though he said he was profusely apologetic for the trauma EQ has put me through and said he understood my frustration, he just couldn't give it to me.

But wait, there's more! EQ is STILL on the hook for violating the 15,000 dollar liquidated damages provision for illegally reinserting a previous tradeline.

The only downsides are

A) the judge said he also couldn't order EQ to remove the tradelines from my credit report, and that I would have to file a separate claim in Federal court or Chancery court to get an order for that.

B) EQ has 10 days to appeal the ruling, as they did not get to speak at the hearing. Not that it will make a damn bit of difference. I'll argue that they knew full well that they were required to send a licensed attorney to speak on behalf of them, and as a multi billion dollar organization, there's no way someone should reasonably believe they didn't know something so basic, and will argue that they DIDN'T send a licensed attorney in an attempt to FORCE a continuance after their motion for one was denied.

Using the FDCPA as Debt Defense Against Collectors

Last Updated: October 27, 2011

I'm going to be generous here and say that not all collection firms violate the law, but, I've haven't heard of many agencies that are in strict adherence of it. According to the FTC Annual Report of 2011, they received a total of 140,036 complaints against debt collections companies.

Debt collection complaints accounted for more than 27% of all FTC complaints, more than any other industry. This was as increase of over 4% from 2009. The chart below shows a detailed breakdown of the types of complaints, including FDCPA section violated, and the number of complaints per category.

This report and the actions included are confirmation the FTC takes action against complaints received from consumers. If your rights under the FDCPA are violated, don't hesitate to contact the FTC to make a complaint.

View the FTC 2011 Annual Report: Fair Debt Collection Practices Act.

Complaint Complaints Consumers

Harassing the Debtor By Repeatedly Calling 49.7% 54,147

Collector Demanding Larger Payment Than Permitted by Law

30.4% 33,122

Failing to Send Required Customer Notice 29.8% 32,477

Threatening Dire Consequences if Consumer Fails to Pay

25.3% 27,554

Failing to Identify Self as Debt Collector 22.8% 24,889

Revealing Debt to Third Parties 21.8% 23,758

Collector Threatened Arrest or Seizure of Property 18.6% 20,256

Collector Used Obscene, Profane, or Abusive Language 16.1% 17,532

Improper Calls to Place of Employment 15.6% 17,008

Failing to Verify Disputed Debts and Continuing Collection

10.5% 11,492

Debt Collector Demanding Fees Not Owed 9.7% 10,614

Continuing to Contact Consumer After Receiving "Cease and Desist"

6.7% 7,343

CAMCO is shut down

The Federal Trade Commission just shut down the national collection agency CAMCO (a subsidiary of Risk Management) for massive violations of the Fair Debt Collection Practices Act (FDCPA). The FTC received many complaints about CAMCO from consumers. CAMCO was notified of the violations, but apparently ignored them. The complaints continued, and after 8 months, the FTC shut them down Dec 6, 2004, as well as required CAMCO to pay a $300,000 civil penalty.

After reading through the following information, I hope this shows you that a) this is proof that collection agencies violate the law, and as in this case, they do it flagrantly, b) legal action can be taken against collection agencies who violate the law and c) that complaining to the FTC is NEVER a waste of time.

Here's the full text of the agreement. Here's a copy of the complaint.

Among the violations:

Harassing consumers at their workplaces; Discussing consumers’ debts with third parties; Continuing to communicate with consumers after consumers had notified them that they did not owe the money

and did not wish to be contacted again; Using obscene or profane language; Calling consumers continuously with the intention of annoying and abusing them; Falsely representing the amount and legal status of the debts; Misrepresenting themselves as attorneys; Threatening imprisonment, seizure, garnishment, attachment or sale of property or wages with full knowledge that

such action could not legally be taken; Threatening to take action that could not be legally taken, including threatening to disclose the debts to consumers’

employers and threatening to report the debt to consumer reporting agencies even though the debts are past the credit reporting periods; and

Ignoring consumers disputes of the charges and continuing to harass them after consumers requested verification of the debts.

Specific Violations (The laws violated are listed):

On numerous occasions , in connection with the collection of debts, defendants have communicated with a consumer without the consumer s prior consent given directly to the debt collector or the express permission of a court of competent jurisdiction:

at times or places that defendants knew or should have known to be inconvenient to the consumer including but not limited to communicating with the consumer at the consumer's place of employment when the debt collector knew or should have known that it is inconvenient for the consumer to receive such communications , in violation of Section 805(a)(1) of the FDCPA , 15 V. C. 9 1692c(a)(I); or

at the consumer's place of employment when defendants knew or had reason to know that the consumer's employer prohibited the consumer from receiving such communications in violation of Section 805(a)(3) of the FDCPA , 15 U. C. ~1692c(a)(3).

On numerous occasions, in connection with the collection of debts, defendants have communicated with third parties for purposes other that acquiring location information about the consumer, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction and when not reasonably necessary to effectuate a post-judgment judicial remedy, in violation of Section 805(b) of the FDCPA , 15 U. c. 91692c(b).

On numerous occasions, in connection with the collection of debts, defendants have communicated with a consumer after the consumer has notified defendants in writing that the consumer refuse to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, in violation of Section 805(c) of the FDCPA, 15 U.S. C. 9 I 692c(c).

On numerous occasions, engaged in conduct the natural consequence of which is to harass, oppress, or abuse a person, on numerous occasions, in connection with the collection of debts, defendants have violation of Section 806 of the FDCPA, 15 C. g 1692d, including, but not limited to the following:

using obscene or profane language or language the natural consequence of which is to abuse the hearer, in violation of Section 806(2) of the FDCPA , 15 D. C. 92d(2); or

causing a telephone to ring or engaging any person in telephone conversation -repeatedly or continuously with the intent to annoy, abuse, or harass any person at the called number, in violation of Section 806(5) of the FDCPA , 15 D. C. 1692d(5).

On numerous occasions, used false, deceptive, or misleading representations or means, in violation of Section Section 807 of the On numerous occasions, in connection with the collection of a debt , defendants have FDCPA, 15 U. C. 1692e, including but not limited to the following:

falsely representing the character, amount, or legal status of any debt, in violation of Section 807(2)(A) of the FDCPA, 15 C. 1692e(2)(A);

falsely representing or implying that any individual is an attorney or that a communication is from an attorney, in violation of Section 807(3) of the FDCPA, 15 C. 1692e(3);

representing that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure; garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action , in violation of Section 807(4) of the FDCPA, 15 D. C. 1692e(4);

threatening to take any action that cannot legally be taken or that is not intended to be taken, in violation of Section 807(5) of the FDCPA , 15 U. C. 1692e(5);

threatening to communicate to any person credit information that defendants know or should have known to be. false , in violation of Section 807(8) of the FDCPA, 15 C. 9 1692e(8);

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 NameYour AddressCity, State Zip

Credit BureauBureau AddressCity, 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 NameSSN# 123-45-6789Attachment 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 NameYour AddressCity, State Zip

Credit BureauBureau AddressCity, 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 NameSSN# 123-45-6789Attachment included

Don't forget to provide copies of your original letter and other documentation.

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,

Repair Your Credit With Our Easy to Follow Schedule

Last Updated: September 28, 2011

Feeling overwhelmed by it all and tempted to hire a credit repair company? You're not alone. Many people get overwhelmed by the thought of repairing their credit. "There is so much to learn" or "I have a full time job, I have kids, I have a LIFE" are the common excuses I hear everyday. I understand all this, but honestly, repairing your credit takes about 2-3 hours a month. Not only will you be able to find these few hours a month to devote to credit repair, you could save yourself $800 - $1,700 in credit repair fees by doing it yourself.

Easy to Follow Credit Repair Schedule

Just to illustrate the kind of time you will be spending cleaning up your credit report, I've come up with a sample schedule:

Month 1

1. Get and read your credit reports . 1 hour 2. Reading initial credit repair method. 30 minutes 3. Writing initial dispute letters to credit bureaus. 1 - 1.5 hours 4. Making copies of all the letters you are sending. 15 minutes 5. Mailing dispute letters . 15 minutes

Total: 3 1/2 hrs. max

Month 2:

1. Collecting letters from credit bureaus and filing them as them come in. 15 minutes 2. Gathering your responses at the end of the month and reading them. 30 minutes 3. Logging results in a journal. 15 minutes 4. Reading credit repair method. 15-30 minutes 5. Writing new dispute letters to credit bureaus. 30 minutes 6. Writing debt validation letters to collection agencies. 1 hour (depending how many you have) 7. Making copies of all the letters you are sending. 15 minutes 8. Mailing letters. 15 minutes

Total: 3 1/2 hrs max

Month 3: (Repeat or follow up on activities performed in Month 2)

1. Collecting letters from credit bureaus and filing them as them come in. 15 minutes 2. Gathering your responses at the end of the month, reading them, logging results. 15 minutes 3. Writing out new dispute letters to credit bureaus. 30 minutes 4. Writing follow-up debt validation letters to collection agencies. 30 minutes 5. Making copies of all the letters you are sending. 15 minutes 6. Mailing letters. 15 minutes 7. Writing investigation requests to original creditors . 30 minutes

Total: 2 1/2 hrs max

Month 4: Repeat or follow up on activities performed in Month 3. You should be getting quicker at doing all these things, it should be taking no longer than 2 hours a month at this point.

1. Collecting letters from credit bureaus and filing them as them come in. 15 minutes 2. Gathering your responses at the end of the month, reading them, logging results. 15 minutes 3. Writing out new dispute letters to credit bureaus. 30 minutes 4. Writing follow-up debt validation letters to collection agencies. 30 minutes 5. Making copies of all the letters you are sending. 15 minutes 6. Mailing letters. 15 minutes 7. Calling original creditors about investigation results. 15 minutes

Total: 2 1/2 hrs max

Months 5, 6 and beyond: Repeat activities in Month 4. You should be getting quicker at doing all these things, it should be taking no longer than 1.5 hours a month at this point. In addition, if you get stuck, you can ask for advice on our discussion boards.

Credit Repair is Not That Difficult

Come on, people - just give up 3 hours of watching TV every month and you can have vastly improved credit! According to the New York Times, the average American watched 142 hours of TV in a month in 2008. in 2007, the typical home had a television on for eight hours and 18 minutes each day. You do have the time!

Our Credit Repair Workbook takes you through things step by step and also helps you keep track of where you are at in the credit repair process. At $19.95, it's a steal.

We hope we've convinced you you can do this on your own, but if we haven't we can recommend Lexington Law. This company follows the same credit repair methods we promote on this site.

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.

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

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 form-letters 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

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

Most consumers hit the panic button over notifications from collection agencies:

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.

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 dollarBuyer Bought debt worth: Paid: Cents on $

Asset Acceptance $4.2 billion $102.3 million 2.4

Encore Capital Group $5.9 billion $195.6 million 3.3

Portfolio Recovery Associates $5.3 billion $149.6 million 2.8

Source: 2005 SEC filings.

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.

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".

Collection Agencies Who Violate the Law - Is This Really Possible? You Bet It Is!

Last Updated: October 26, 2011

Do collection agencies violate the law? You bet they do. According to the FTC Annual Report of 2011, hundreds of thousands of consumers contact the FTC each year with complaints regarding debt collection issues. The FTC receives more complaints about the debt collection industry than any other specific industry. In 2010, the FTC received a total of 140,036 complaints which accounted for 27% of all complaints received by the FTC. This was up over 4% from 2009.

There are many cases of collections agencies performing illegal acts. Imagine the number of companies who have not been caught yet! Collection agency stocks are now traded on Wall Street but are more unscrupulous than ever.

Here is the Federal Trade Commission's Annual Report for 2011: Fair Debt Collection Practices Act.

FTC Enforcement Actions Against Collection Agencies

The FTC's debt collection program has three goals:

1. Vigorous Law Enforcement 2. Consumer and Industry Education Efforts 3. Research and Policy Initiatives

FTC Lawsuits in 2010

Here are some recent court cases which were settled in 2010 against collection agencies caught in the act of illegal practices:

In February 2010, the FTC settled an action against Credit Bureau Collection Services and two of its officers to resolve allegations that the defendants violated the law in the course of collecting debts from consumers. Among other things, the complaint alleged that the defendants violated the FDCPA by misrepresenting both to consumers and to consumer reporting agencies ("CRAs") that consumers owed the debts and by failing to inform the CRAs that those debts were disputed by consumers. The complaint also alleged that the defendants violated the FTC Act by misrepresenting that consumers owed debts or by failing to have a reasonable basis for such representations. The consent decree filed requires the defendants to pay a $1,095,000 civil penalty.

In March 2010, the Commission announced a settlement agreement with collector West Asset Management, Inc. ("WAM"), resulting in a $2.8 million civil penalty, the largest civil penalty ever obtained by the FTC in a debt collection case. The complaint alleged WAM violated the FDCPA by calling consumers and third parties repeatedly with intent to harass or annoy, and by revealing debts to third parties and calling them for reasons other than to obtain location information about the consumer. In addition, the Commission alleged that WAM engaged in deception in violation of the FTC Act by materially misrepresenting to consumers that WAM was a law firm, it would bring civil action or criminal prosecution against consumers who failed to pay, and nonpayment would result in the seizure, garnishment, attachment, or sale of consumers' properties or wages, or their arrest or imprisonment. The FTC further alleged WAM engaged in unfairness in violation of the FTC Act by debiting consumers' financial accounts or charging their credit cards without their express, informed consent.

In April 2010, the FTC filed suit under Section 13(b) of the FTC Act against an alleged common enterprise composed of Internet-based payday lenders, a collection agency, and their principals, seeking preliminary and permanent injunctive relief in addition to consumer redress or disgorgement of ill-gotten gains. The complaint alleged the defendants violated the FTC Act and the FDCPA by falsely claiming to consumers' employers that they were entitled by law to garnish wages without obtaining a court order; falsely claiming to have informed consumers of their intent to garnish and provided consumers with the opportunity to dispute the debt; and communicating with consumers' employers and co-workers about debts without the consumers' knowledge or consent. The defendants also were alleged to have violated the Credit Practices Rule 32 and the FTC Act by including an unlawful wage assignment clause in their loan agreements with consumers. In April, most of the defendants stipulated to the entry of a preliminary injunction. In September, the Commission entered into a settlement with defendant Mark S. Lofgren containing a $38,133 suspended judgment and permanent conduct relief. Litigation against the remaining defendants - payday lender Eastbrook, LLC, also doing business as Ecash and Getecash; collector LoanPointe, LLC; and principal Joe S. Strom - is ongoing.

In October 2010, the FTC reached a settlement agreement with collector Allied Interstate, Inc. ("Allied"), one of the nation's largest debt collectors. The Commission alleged that Allied continued collection efforts even after consumers told the company that they did not owe the debt, without verifying the accuracy of the disputed information or otherwise having a reasonable basis for representing that the consumers owed the debt. The FTC further alleged that Allied violated the FDCPA and Section 5 of the FTC Act by making improper harassing phone calls to consumers (using abusive language or calling many times a day for weeks or months); making repeated calls to third parties seeking to locate a consumer; revealing alleged debts to third parties without the consumer's consent or court permission; and threatening legal action against consumers that it did not intend to take. Under the settlement agreement, Allied paid a $1.75 million civil penalty and agreed to stop collection efforts on disputed debts in the future unless and until it conducts a reasonable investigation and verifies the debt. In addition, the agreement bars Allied from violating the FDCPA or from engaging in the types of conduct the complaint alleged violated the FTC Act.

FTC Lawsuits in 2009

In June 2009, the FTC settled an action against Oxford Collection Agency, Inc., its officers, and an attorney who acted as its agent, for collection practices allegedly in violation of the FTC Act and the FDCPA. The FTC's complaint alleged that the defendants falsely threatened to garnish consumers' wages, bring lawsuits against them, or have them arrested. It also charged that the defendants used illegal and abusive collection methods such as calling consumers before 8 a.m. or after 9 p.m.; calling their workplace when the collectors knew or had reason to know that the calls were inconvenient; telling employers, co-workers, relatives, and neighbors about the consumers'

debts; continuing to call after receiving consumers' written demands to stop; calling consumers repeatedly throughout the day; calling back immediately after the consumer hung up; and using profane or other abusive language. Separate FTC settlements, one with Oxford and its officers, and the other with the attorney and his law firm, each imposed a $1,060,00 civil penalty which was partially or wholly suspended based on inability to pay.

In October 2009, the FTC and the State of Nevada settled an action filed in November 2008 against an international Internet payday lending operation that used unfair and deceptive debt collection tactics. The defendants, ten related Internet payday lenders (including Cash Today) and their principals, operated from the United Kingdom and targeted consumers in the United States. The FTC charged them with, among other things, violating the FTC Act by: (1) falsely threatening consumers with arrest or imprisonment; (2) falsely claiming that consumers were legally obligated to pay the debts when they were not; (3) making false threats to take legal action that they could not take; (4) repeatedly calling consumers at work; (5) using abusive and profane language; and (6) disclosing consumers' purported debts to third parties. Under the terms of the settlement, the defendants had to pay $970,125 in consumer redress for distribution by the FTC and $29,875 to the State of Nevada.

FTC Lawsuits for 2008

The Commission surpassed its 2007 record for the largest amount of civil penalties obtained in a single FDCPA case with the following settlement:

The largest amount of civil penalties ever in an FDCPA case Academy Collection Service, Inc. ("Academy") and its owner, Keith Dickstein, agreed in November 2008 to pay $2.25 million in civil penalties to settle charges that they violated the FDCPA and Section 5 of the FTC Act. The complaint alleged that those defendants and two other corporate officer defendants, Albert Bastian and Edward Hurt III, had "formulated, directed, participated in, controlled, or had the authority to control" the following acts by Academy collectors: (1) misleading, threatening, and harassing consumers; (2) depositing postdated checks early; (3) falsely threatening or implying that the company would garnish consumers' wages, seize or attach their property, or initiate lawsuits against the consumers if they failed to pay; (4) making unfair and unauthorized withdrawals from consumers' bank accounts; (5) communicating impermissibly with third parties about consumers' alleged debts; and (6) engaging in harassing or abusive behavior, such as threatening the use of physical violence, using obscene or profane language, and repeatedly or continuously causing the telephone to ring.

In May 2008, the Commission settled an action filed in June 2007 against Tono Records and related companies and individuals whose representatives allegedly victimized Spanish-speaking consumers nationwide by posing as debt collectors seeking payments for purported debts that consumers did not owe. Because the defendants presented themselves as if they were third-party debt collectors, they were subject to the FDCPA as well as the FTC Act. The defendants were charged with violating the FTC Act and the FDCPA by: (1) falsely claiming that a debt is owed; (2) falsely claiming to be, or to represent, an attorney; and (3) falsely threatening legal action, arrest, imprisonment, property seizure, or garnishment of wages. Other FDCPA violations alleged included attempting to collect an amount of debt not authorized by contract or permitted by law; harassing consumers; and failing to inform consumers, within five days of their initial communication with them, of their right to dispute and obtain verification of their debt and the name of the original creditor. The settlement imposed a $1.19 million judgment against the defendants and permanently enjoined them from violating the FTC Act or the FDCPA.

In September 2008, the FTC settled charges that EMC Mortgage Corporation and its parent, The Bear Stearns Companies, LLC, violated the FDCPA and Section 5 of the FTC Act, among other statutes, in conjunction with servicing and collecting on mortgage loans, including debts that were in default when EMC obtained them. Among other practices, the complaint alleged the defendants had: (1) misrepresented the amounts consumers owed; (2) assessed and collected unauthorized fees; and (3) misrepresented that they possessed and relied upon a reasonable basis to substantiate their representations about consumers' mortgage loan debts. The complaint further alleged the defendants to have made harassing collection calls; falsely represented the character, amount, or legal status of consumers' debts; and used false representations and deceptive means to collect, including falsely representing to consumers with "Caller ID" service that defendants were calling from a consumer's local area code. The settlement required the defendants to pay $28 million in consumer redress.

Sued by a Creditor? Learn How to Fight a Debt Lawsuit

Last Updated: October 26, 2011

With many collection agencies and JDBs turning to the legal system to collect, more and more people are talking to me about lawsuits over debts. This article will cover the best way to handle the situation if you find yourself with a summons. This article covers lawsuits dealing with DEBT ONLY. You might also watch to watch our video on being sued.

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in some cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

What To Do If You Are Served a Lawsuit

If you have been served with a lawsuit, the time to send a debt validation letter is OVER. People always think that sending a debt validation letter to the law firm/collection agency/junk debt buyer will somehow stop the court case or serve as a proper answer to the summons. IT DOES NOT. At this point, your priority should be writing your answer to the court addressing each point in the complaint. If you don't do this, you automatically lose the case. Your time to answer the complaint is limited, usually 20-30 days from the day you are served. Don't waste this precious time on debt validation.

What is a Summons and Complaint?

In the packet of papers you received from the process server, you will find:

A paper telling you when your court date is, Some kind of certification that you were served (meaning it goes over how you were notified of the lawsuit: in

person, by mail, etc.), Instructions for answering the complaint or a form to fill out, Any evidence the Plaintiff (i.e. collection agency) is submitting. There could be documents such as affidavits from

the collection agency. There might also be documents from the original creditor, although this is extremely rare, A list of allegations, which constitutes the complaint. The paper may or may not be titled "Complaint". Next we

will go over the steps to identify the complaint in the paperwork. There will ALWAYS be a complaint in your paperwork. Please look for it.

Complaint

If you are still having trouble finding the complaint, this next information may help. Most complaints will look like the following.

Complaint Number #XXXXXXX

Collection Attorney Plaintiff vs. YOU Defendant

Allegation 1: <Gives plaintiff's name, address>Allegation 2: <Gives your name and address>Allegation 3: Typically, this next allegation will say something like "Defendant obtained a credit card from Credit card Company X"Allegation 4: Typically, this next allegation will say something like "Defendant used the credit card to obtain goods and services using the card"Allegation 5: Typically, this next allegation will say something like "Defendant racked up charges totally $XX and then refused to pay"

Answer

The most important thing you can do is to answer the complaint by the due date. This is the most important thing you can do when you receive a summons.

Once you've identified the paperwork which constitutes the complaint, you must answer it. You merely reply by stating whether or not you agree with the statements in the complaint and why. Don't hide your head in the sand, you have NOTHING to lose by answering the complaint, even if you don't do it exactly right. You must do it quickly, you only have 20-30 days (depending on your court) to answer the complaint. If you do NOTHING, you automatically lose and the collection agency has a judgment against you.

You MUST answer the complaint. It will cost you next to nothing to answer, and it's pretty easy to do. If you do nothing, you AUTOMATICALLY LOSE. By answering, you have a good chance of winning.

Answering the Complaint Correctly

You can write your answer on a plain piece of paper, or type them up on your computer. No fancy or legal format is necessary. As long as your answer is clear, it will be fine. In some court systems, they provide written forms for you to fill out. You can use them and attach a more detailed answer. A sample answer is posted at the bottom of this page.

IMPORTANT: You must ADMIT or DENY each allegation. Failure to deny an allegation means that you are admitting to it.

In the above complaint example

Your answer to Allegation number 1 can be:In your answer, you would ADMIT allegation 1, that the plaintiff is who they say they are.

Your answer to Allegation number 2 can be:You would also ADMIT allegation 2: that you (the defendant) are who Plaintiff says you are.

Your answer to Allegation number 3 can be:We are assuming in allegation 3, that you opened a credit card account with them, has been backed up by zero evidence. For instance, some lawsuits are filed by Junk Debt Buyers acting as collection agencies who don't even list the account number of the original credit card. They don't have any statements from the credit card companies, nothing. They've provided no proof so you, as a result, have no idea what they are talking about. The same holds true for allegations 4 and 5.

ADMIT in part. I did have an account with Bank X. DENY in part, I have been presented no evidence that the account I had with Bank X is the same account as the debt alleged in this complaint.

-or-

DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of "the credit card" and "the account."

Your answer to Allegation number 4 can be:DENY. This request calls for admission of matter defendant has denied and thus it is improper.

-or-

DENY. Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of "the credit card" and "the account."

Your answer to Allegation number 5 can be:

DENY. This request calls for admission of matter defendant has denied and thus it is improper.

Affirmative Defenses

Affirmative defenses are legal reasons why the complaint should be thrown out. Some of the best affirmative defenses are:

Failed to state the basis of the lawsuit: They did not cite an actual state law which was violated. Debt is Time-barred: The statute of limitations has passed. Statute of Frauds: No contract exists as proof. Failure of Consideration: No exchange of money or goods occurred between the plaintiff and the defendant. Lack of Privity: No relationship exists between the collection agency and you. You never signed a contract or

agreement with the collection agency, remember?

You can list these affirmative defenses at the bottom of your answer, after the specific responses to the allegations.

File Your Answer

You will need to send a copy of your answer to the courts and the lawyer listed in the complaint. Make sure you send them within the time allowed and send them registered mail! As another option for selected states, here is a service where you can submit your court filing online.

A sample answer is posted at the bottom of this page.

Requests for Discovery

In some courts, you need to file any counter-suit along with your answer. In addition, if you intend to ask for discovery (request disclosure of information and documents from the Plaintiff), you may need to send it along with your answer. Every court's rules are different, you need to look this up. Which brings us to the next item.

Look up Courts Rules of Procedure

Most courts have online instructions and information. Take the time to read it. You will at least need to know the timetable of your case.

Evidence Included in the Summons and Complaint

Most often you will be presented with exhibits (documentation which serves as evidence) in the case file, such as credit card agreements and affidavits of debt. Usually you can object to this evidence and get it thrown out of the case based on hearsay. If you are successful getting this evidence thrown out (struck from the records), the Plaintiff will have no evidence against you. If they have no evidence, they cannot win.

Tips for Filing Your Answer

Many courts will let you handle everything via the U.S. Mail. There is no need to take time off of work to personally file your answer. Send everything certified mail, return receipt requested; one copy to the court, one copy to the lawyer representing the Plaintiff.

Another good idea is to include a self-addressed stamped envelope and one extra copy with your answer to the court. In some cases, if you made a mistake in your answer, they will let you know immediately. If nothing else, they will send you a an endorsed-filed copy of the filing so you know it was entered. One of our readers received a hand written note from the clerk asking my reader to call so the clerk could help correct the filing.

Testimonial That This Advice Works!

I want to say THANK YOU!!!!! I was recently (11/06/08) sued by a Debt Collection agency and taken to my local District Judge for an old credit card account of just under $2500. This account was originally opened in the early 90s and I last made a payment to a collections dept. in 2002. Well, a junk debt buyer bought it and have been harassing me since 2004. I received a summons in the mail to appear in court, which I promptly replied that I would defend since referencing your creditinfocenter website.

I not only built a case using the SOL argument and re-aging, but embarrassed the counselor that showed up against me by asking for signatures, original documents, account histories, etc. He showed up with GENERIC documents w/ no signatures and I won the case!!!!

Thank you SOOOOO much. The best part was when the counselor stopped me after the judge left and said how impressed he was with my preparedness and that no one usually knows about those items!! Thanks so much.

Thanks again!

M. (Pittsburgh, PA)

You can also read this detailed description of what it's like to go to court against the big boys and WIN. The story is enlightening, educational and ENTERTAINING.

Sample Answer PLEASE DO NOT JUST CUT AND PASTE THIS - Every complaint is different. One size DOES NOT fit all. If you merely cut and paste, you WILL LOSE.

Complaint number #XXXXXXXCollection Attorney Plaintiff vs. YOU Defendant

Defendant's Answer to Complaint

Allegation 1: AdmitAllegation 2: AdmitAllegation 3: Denied: Responding Party objects to this request on the ground that it is vague, ambiguous and unintelligible in that Responding Party has to speculate as to the meaning of "the credit card" and "the account."Allegation 4: Denied: This request calls for admission of matter defendant has denied and thus it is improper.Allegation 5: Denied: This request calls for admission of matter defendant has denied and thus it is improper.FUTHERMORE, Defendant DENIES every other allegation not previously admitted, denied or controverted.

AS AND FOR AFFIRMATIVE DEFENSES

1. Plaintiff fails to state a cause of action against the defendant.2. Plaintiff, as the defendant is informed and believes, lacks the legal standing to bring and maintain this action.3. The action is barred by the Statute of Frauds.4. The action is barred by the Statute of Limitations.5. The court would unjustly enrich the plaintiff by granting the relief sought herein.6. The plaintiff has not proven the debt is valid or the amount of the debt is accurate. The plaintiff must prove that the principal, interest, collection costs, and attorneys fees are all correct, agreed to in your contract, and lawfully charged. Defendant also insists that the plaintiff come up with the contract, account statements and purchase receipts to prove the amount of the debt.

WHEREFORE, the defendant asks the Court for judgment:a. dismissing the complaint herein with prejudice

Process Service Requirements by State

Last Updated: October 24, 2011

When a lawsuit is filed, a copy of the suit must be served to the defendant in the lawsuit. If you are sued, and you were not served properly, this fact can get your case thrown out of court or help you to vacate a judgment. In fact, the best resaon to vacate a judgment would be improper service.

History of Process Service

First of all, service of due process is a privilege set forth by the Constitution. This means that all citizens of the United States hold the right to be informed of being summoned as specified in the fifth and sixth amendments of the Constitution. A process server is the messenger who "serves" a person with the notification that states the legal issues involved in a lawsuit. A process server delivers these papers in a timely manner and there is then a verification a defendant was served a Summons and Complaint.

Why is Service of Process Important?

Service of process is necessary for many reasons, but the primary reason is to make sure that the due process of law is upheld in United States. If papers aren't served properly, the court is not able to rule on a case relating to an individual if they were not legally made aware of it. If service is determined to be improper, the entire case may be thrown out. This makes it even more essential to be aware of the laws of your state pertaining to the correct way to serve a defendant legally.

Another reason service of process is important is because being properly "served" gives legal proof a defendant received the notice for which they are being sued. As stated before, if a defendant is not properly served a Summons and Complaint, their legal rights have not been upheld and the lawsuit can be thrown out of court.

Process Service Requirements by State

Below are the Service Process Requirements listed out by state. Please note that the below service rules apply to adult individuals who are mentally competent, and not incarcerated. These rules of service do not apply to businesses or corporations. As in everything you do with regards to legal procedures, you should always check your states Judicial Branch website for the most up to date rules. And, a consultation with an attorney or other legal resource is also recommended if you are ever served a Summons and Complaint.

DC Service may be any of the following:

A. personal, including delivery to a responsible person at the office of counsel;

B. by mail;

C. by third-party commercial carrier for delivery within 3 calendar days; or

D. by electronic means, if the party being served consents in writing.

FL 1. Service of original process is made by delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading

or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents. Minors who are or have been married shall be served as provided in this section.

2. Employers, when contacted by an individual authorized to make service of process, shall permit the authorized individual to make service on employees in a private area designated by the employer.

MD Service of process may be made within this State or, when authorized by the law of this State, outside of this State (1) by delivering to the person to be served a copy of the summons, complaint, and all other papers filed with it; (2) if the person to be served is an individual, by leaving a copy of the summons, complaint, and all other papers filed with it at the individual's dwelling house or usual place of abode with a resident of suitable age and discretion; or (3) by mailing to the person to be served a copy of the summons, complaint, and all other papers filed with it by certified mail requesting: "Restricted Delivery--show to whom, date, address of delivery." Service by certified mail under this Rule is complete upon delivery. Service outside of the State may also be made in the manner prescribed by the court or prescribed by the foreign jurisdiction if reasonably calculated to give actual notice.

NC (1) Natural Person. -- Except as provided in subsection (2) below, upon a natural person:

a. By delivering a copy of the summons and of the complaint to him or by leaving copies thereof at the defendant's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein; or

b. By delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to be served or to accept service of process or by serving process upon such agent or the party in a manner specified by any statute.

c. By mailing a copy of the summons and of the complaint, registered or certified mail, return receipt requested, addressed to the party to be served, and delivering to the addressee.

NY Personal service upon the state shall be made by delivering the summons to an assistant attorney-general at an office of the attorney-general or to the attorney-general within the state.

PA Original process may be served upon a defendant who is an adult

1. by handing a copy to the defendant; or 2. by handing a copy

a. at the residence of the defendant to an adult member of the family with whom the defendant resides; but if no adult member of the family is found, then to an adult person in charge of such residence; or

b. at the hotel, inn, apartment house, boarding house or other place of lodging at which the defendant resides to the manager or other person authorized to accept deliveries of United States mail; or

c. at any office or usual place of business of the defendant to the defendant's agent or to the person for the time being in charge.

TX Unless the citation or an order of the court otherwise directs, the citation shall be served by any person authorized by Rule 103 by

1. delivering to the defendant, in person, a true copy of the citation with the date of delivery endorsed thereon with a copy of the petition attached thereto, or

2. mailing to the defendant by registered or certified mail, return receipt requested, a true copy of the citation with a copy of the petition attached thereto.

Upon motion supported by affidavit stating the location of the defendant's usual place of business or usual place of abode or other place where the defendant can probably be found and stating specifically the facts showing that service has been attempted under either (a)(I) or (a)(2) at the location named in such affidavit but has not been successful, the court may authorize service

1. (1) by leaving a true cope of the citation, with a copy of the petition attached, with anyone over sixteen years of age at the location specified in such affidavit, or

2. in any other manner that the affidavit or other evidence before the court shows will be reasonably effective to give the defendant notice of the suit. (Amended Aug. 18, 1947, eff. Dec. 31, 1947; July 22, 1975, eff. Jan. 1, 1976; July 11, 1977, eff. Jan. 1, 1978, June 10, 1980, eff. Jan. 1, 1981; July 15, 1987, eff. Jan. 1, 1988; April 24, 1990, eff. Sept. 1, 1990.)

VA By delivering a copy thereof in writing to the party in person; or

By substituted service in the following manner:

1. If the party to be served is not found at his usual place of abode, by delivering a copy of such process and giving information of its purport to any person found there, who is a member of his family, other than a temporary sojourner or guest, and who is of the age of sixteen years or older; or

2. If such service cannot be effected under subdivision 2 a, then by posting a copy of such process at the front door or at such other door as appears to be the main entrance of such place of abode, provided that not less than ten days before judgment by default may be entered, the party causing service or his attorney or agent mails to the party served a copy of such process and thereafter files in the office of the clerk of the court a certificate of such mailing. In any civil action brought in a general district court, the mailing of the application for a warrant in debt or affidavit for summons in unlawful detainer or other civil pleading or a copy of such pleading, whether yet issued by the court or not, which contains the date, time and place of the return, prior to or after filing such pleading in the general district court, shall satisfy the mailing requirements of this section. In any civil action brought in a circuit court, the mailing of a copy of the pleadings with a notice that the proceedings are pending in the court indicated and that upon the expiration of ten days after the giving of the notice and the expiration of the statutory period within which to respond, without further notice, the entry of a judgment by default as prayed for in the pleadings may be requested, shall satisfy the mailing requirements of this section and any notice requirement of the Rules of Court. Any judgment by default entered after July 1, 1989, upon posted service in which proceedings a copy of the pleadings was mailed as provided for in this section prior to July 1, 1989, is validated.

3. The person executing such service shall note the manner and the date of such service on the original and the copy of the process so delivered or posted under subdivision 2 and shall effect the return of process as provided in \u00a7\u00a7 8.01-294 and 8.01-325.

Affirmative Defenses

Part 2 in Our "I've Been Sued" Series

Last Updated: November 15, 2011

In Part 1 of our "I've Been Sued" series of articles, we went over the mechanics of what to do if you are served a Summons and Complaint. An important part of filing your Answer is to include a list of "Affirmative Defenses". Affirmative defenses include any defense, in fact or law, that would prevent the Plaintiff from winning his case. These defenses should be listed at the end of your answer after the section where you have responded to each and every individual complaint made by the Plaintiff. (Here is a sample answer to review)

Affirmative defenses should ALWAYS be used when you file your answer with the court. If you do not give them in your answer, you lose the right to bring them up in court later.

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in some cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

USE AT YOUR PERIL!

You need to look up the rules of civil procedure in your state to see if it is proper to use any of these defenses and customize them to be specific to your state's laws. Many of these defenses will not be relevant to your case and some courts may not allow them. Using the entire list is total overkill, and could make you look like you don't know what you are doing. This could really hurt your case. Please tailor your defenses -- DON'T JUST CUT AND PASTE. If you do not understand fully what a defense means, don't use it. You may be asked in court why you chose a particular defense, so be prepared.

Most Common Affirmative Defenses to Use in a Debt Lawsuit

The following list is by no means an exhausting listing of defenses but rather the most common and useful ones to use in a debt lawsuit. A complete list can be endless and would include any and all defenses you can use which would likely prevent the Plaintiff from winning his case. You need to make sure you not only list your affirmative defense by name but you also add facts to support this defense.

Failure to State a Claim Upon Which Relief May be Granted: Either no statute was cited or the complaint fails to state facts sufficient to constitute a cause of action as against this defendant. In general, listing the facts of the case is enough for basis of claim. Use this if the Plaintiff merely says you owe the money and not much else.

Failure to Migate Damages: Plaintiff failed to mitigate their damages, if indeed it had any at all.

Statute of Limitations : Suit was brought on after the statuatory limit has passed.

Failure of Consideration: No exchange of money or goods occurred between the Plaintiff and the Defendant. Failure of consideration will void contracts in some cases.

Lack of Privity: Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. No relationship exists between the collection agency and you. You never signed a contract or agreement with the collection agency, remember?

Unclean Hands : If the Plaintiff is giving falsified evidence or producing false witnesses, definitely invoke this defense.

More Affirmative Defenses You Can Use in a Lawsuit

Consider each of the below affirmative defenses to see if they potentially apply to your case. The vast majority of these may not apply to your specific case, but reviewing these may help you brainstorm and think of some other defenses you may be able to use. Again, these are not a "one size fits all" type of defenses, make sure to tailor them to fit your particular case.

Plaintiff admits to purchasing the defaulted debt allegedly owned by the Defendant, causing Plaintiff's injury to its own self, therefore Plaintiff is barred from seeking relief for damages.

Defendant alleges that the Complaint includes references to alleged agreements made outside of the alleged written contract, violating the Parole Evidence Rule.

Plaintiff's complaint fails to allege a valid assignment and there are no averments as to the nature of the purported assignment or evidence of valuable consideration.

Plaintiff's complaint fails to allege whether or not the purported assignment was partial or complete and there is no evidence that the purported assignment was bona fide.

Plaintiff's complaint fails to allege that the Assignor even has knowledge of this action or that the Assignor has conveyed all rights and control to the Plaintiff. The record does not disclose this information and it cannot be assumed without creating an unfair prejudice against the Defendant.

Plaintiff is not an Assignee for the purported agreement and no evidence appears in the record to support any related assumptions.

Defendant claims Accord and Satisfaction as Defendant alleges that the original creditor accepted payment from a third party for the alleged debt, or a portion of the alleged debt, or that the original creditor received other compensation in the form of monies and/or credits.

Plaintiff is not authorized or licensed to advertise or solicit, either in print, by letter, in person or otherwise the right to collect or receive payment of a claim for another, nor to seek to make collection or obtain payment of a claim on behalf of another. The Complaint fails to allege any exception or exemption to these requirements. The Plaintiff is not any of the following: an attorney at law; a person regularly employed on a regular wage or salary in the capacity of credit men or a similar capacity, except as an independent contractor; a bank, including a trust department of a bank, a fiduciary or a financing and lending institution; a common carrier; a title insurer or abstract company while doing an escrow business; a licensed real estate broker; an employee of a licensee; nor a substation payment office employed by or serving as an independent contractor for public utilities.

Defendant alleges that Plaintiff's complaint, and each cause of action therein is barred by the Doctrine of Estoppel, specifically Estoppel in Pais.

Defendant alleges that Plaintiff's actions are precluded, whereas Plaintiff's demands for interest are usurious and violate state and federal laws.

Defendant alleges that Plaintiff or the person or entity that assigned the alleged claim to the Plaintiff is not entitled to reimbursement of attorneys' fees because the alleged contract did not include such a provision, and there is no law that otherwise allows them.

Defendant invokes the Doctrine of Laches as the Plaintiff or the person or entity that assigned the claim to the Plaintiff waited too long to file this lawsuit, making if difficult or impossible for the Defendant to find witnesses or evidence or that evidence necessary to provide for Defendant's defense has been lost or destroyed.

Plaintiff has no Fiduciary Duty.

Plaintiff has failed to name all necessary parties.

Plaintiff's complaint alleges damages are the result of acts or omissions committed by non-parties to this action over whom the Defendant has no responsibility or control.

Plaintiff's complaint alleges damages are the result of acts or omissions committed by the Plaintiff.

Defendant alleges that the granting of the Plaintiff's demand in the Complaint would result in Unjust Enrichment, as the Plaintiff would receive more money than plaintiff is entitled to receive.

Plaintiff's complaint alleges damages are limited to real or actual damages only.

Defendant invokes the Doctrines of Scienti et volenti non fit injuria (a person who knowledgeably consents to legal wrong has no legal right) and Damnum absque injuria (harm without injury).

Have you sued these folks before and won? If so, include this defense.

Since under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case, plaintiff’s claims are barred.

Since a court will not grant a judgment or other legal relief to a party who has not acted fairly by having made false representations or concealing material facts from the other party, we maintain that equitable estoppel bars plaintiff's claim.

Defendant reserves the right to amend and/or add additional Answers, Defenses and/or Counterclaims at a later date

Failure to State a Claim - Affirmative Defense to Use in a Debt Lawsuit

Last Updated: October 27, 2011

Failure to state a claim is an affirmative defense which can be used by a Defendant to argue his case in a civil suit. In our "I've Been Sued" series of articles, we went over how to file an answer to a complaint and the most important items to include in your answer are affirmative defenses.

The general rule in appraising the sufficiency of a complaint for failure to state a claim is that a complaint should not be dismissed "unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of his claim which would entitle him to relief". So failure to state a clam could be failure to state a specific law or civil procedure, or just provide enough evidence to prove their case.

Examples Where You Could Use This Defense

An essential element is missing from the complaint. For example, in some jurisdictions, demand must be made for an outstanding debt. If no demand is alleged in the complaint, then the complaint fails to state a claim upon which relief may be provided.

On the other hand, it may mean that legally, relief cannot be afforded under the circumstances. For example, if a plaintiff sued a credit card company under the FDCPA, the complaint would fail to state a claim. This is because the FDCPA does not apply to original creditors, only collection agencies.

Let's say the plaintiff claims that the defendant entered into a contract with them. The suit claims the defendant broke that contract. However, no copy of the contract was provided nor was proof included that showed that the defendant entered into this contract. This would also meet the "failure to state a claim" criteria.

In most jurisdictions, it is not necessary to allege failure to state a claim as an affirmative defense. Some courts say it is an "unwaivable" defense, others say it may be raised for the first time on appeal. Most lawyers include it anyway because they want to be accused of having waived something that is unwaivable.

Go ahead and include it in your answer. If you get discovery on it, you can say that the complaint fails to allege the terms of any contract as no contract is attached and it does not properly allege that you assented to its terms

Statute of Limitations on Debts

Last Updated: June 6, 2012

Below are the State Statutes of Limitations for various kinds of agreements. All figures are in years.

Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, "handshake agreement"). Remember a verbal contract is legal, if tougher to prove in court.

Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed.

Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note.

Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Please note: a credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act:

TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part A > § 1602§ 1602. Definitions and rules of construction(i) The term “open end credit plan” means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a

finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time.

Keep in mind, though, that the state statute of limitations on a credit card may come down to whether the agreement is in writing or not; whether it meets the required elements of a written contract. For instance, in Missouri if the creditor is able to produce a written credit card contract, then the 10 year statute applies. If the creditor cannot show the existence of a written contract, then the 5 year statute would apply - credit card or not. Here is case law in Missouri to illustrate this point:

In Capital One Bank v. Creed, 220 S.W.3d 874 (S.D. Mo.2000), the company alleged the parties entered into a contract, whereby the company would extend credit to the customer. The company alleged that the customer breached the terms of her contract by failing to pay the amounts for which credit was extended. The customer denied the allegations and asserted the affirmative defense that the action was barred by the statute of limitations. The appellate court ruled that the action was barred by the five year statute of limitations under Mo. Rev. Stat. § 516.120 (2000). The customer made a partial payment on December 2, 1999, and the company's petition was not filed until January 3, 2005. The ten year statute of limitations under Mo. Rev. Stat. § 516.110 was not applicable because the company did not produce a written promise by the customer to pay money.

State Oral Written Promissory Open-ended Accounts

State Statute: Open Accounts

AL 6 3 6 3 §6.2.37

AR 3 5 3 5 §4-3-118

AK 6 3 3 3 §09.10.053

AZ 3 6 6 6 HB 2412

CA 2 4 4 4 §337

CO 6 6 6 6 §13-80-103.5

CT 3 6 6 6 Chapter 926 Sec. 52-576

DE 3 3 3 3 Title 10 Sec.8106

DC 3 3 3 3 §12-301

FL 4 5 5 4 §95.11

GA 4 6 6 4** §9-3-25

HI 6 6 6 6 HRS 657-1(4)

IA 5 10 5 10 §614.1.5

ID 4 5 5 5 §5-216

IL 5 10 10 5 or 10*** 735 ILCS 5/13-206

IN 6 10 10 6 §34-11-2-9

KS 3 3 3 3 §60-512

KY 5 15 15 5 or 15 §413.120 & 413.090

LA 10 3 10 3 §2-3494-4

ME 6 6 6 6 §14-205-752

MD 3 3 6 3 §5-101

MA 6 6 6 6 §260-2

MI 6 6 6 6 §600.5807.8

MN 6 6 6 6 §541.05

MO 5 5 5 5 §516.120

MS 3 3 3 3 §15-1-29

MT 5 8 8 8 27-2-202

NC 3 3 5 3 §1-52.1

ND 6 6 6 6 28-01-16

NE 4 4 4 4 §25-206

NH 3 3 3 3 382-A:3-118

NJ 6 6 6 6 2A:14-1

NM 4 4 4 4 §37-1-4

NV 4 4 4 4 NRS 11.190

NY 6 6 6 6 §2-213

OH 6 6 6 6 §2305.07

OK 3 3 or 5 5 3 or 5 §12-95A(1), (2)

OR 6 6 6 6 §12.08

PA 4 4 4 4 42 Pa. C.S.5525(a)

RI 10 10 10 10 §6A-2-725

SC 10 10 3 3 SEC 15-3-530

SD 3 6 6 6 §15-2-13

TN 6 6 6 6 28-3-109

TX 4 4 4 4 §16.004

UT 4 6 6 4 78-12-25

VA 3 5 6 3 8.01-246

VT 6 6 5 6 §9A-3-118

WA 3 6 6 6 4.16.040

WI 6 6 10 6 893.43

WV 10 10 10 10 §55-2-6

WY 8 10 10 8 §1-3-105

** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable

*** An Illinios appeals court ruled on May 20, 2009, that the statute of limitations on a credit card debt without a written contract was 5 years.

The material provided in this table for informational purposes only and should not be construed as legal advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

__________________

Why should you care about the Statute of Limitations (SOL)?

Every day, consumers pay off collection accounts and charge-offs which they do not have to pay off because the Statute of Limitations has already expired for the open account. Consumers pay off these accounts because the accounts still appear on their credit reports.

This information can be a powerful weapon in unburdening yourself of old debts, as creditors have a limited time in which to sue you. Remember: the Statute of Limitations begins to run from the day the debt - or payment on an open-ended account - was due. Also, this has nothing to do with how long an negative credit item can remain on your credit report. To view these credit reporting rules, click here.

Consumers also pay off these accounts when they are not on their credit reports. Even though an account was removed from their credit file, a collector watched their credit report for any activity (actually the computer was watching any credit activity). When the collector spotted the activity, he called the consumer for payment. All the consumer needed to say to the collector was, "I have an absolute defense--the Statute of Limitations has expired."

The Statute of Limitations does not cause your debt to go away after it expires. If the creditor files suit, the consumer has an absolute defense. The consumer must offer the new evidence to avoid a judgement. The evidence will consist of papers the consumer files to support his claim. If the creditor sues you, and you do not prove to the court that the Statute of Limitations expired, you will have a lost lawsuit and a judgment against you.

When does the Statute of Limitations start?

You might be asking yourself, "It has been such a long time since my "open account" has had any activity. When does my Statute of Limitations started ticking."

There are various opinions on when the SOL starts:

The first time you fail to make a payment on your account. The credit card company sends you a demand letter for the full amount.

Any can be true, depending on the credit card agreement. Here's why:

The length of the statute varies from state to state and depends on the type of agreement, i.e. oral, written, etc. The one aspect of a statute of limitations that is pretty constant throughout all of US states' laws is when it begins to run.

A statute of limitations, or limitations of action statute, begins to run when a cause of action accrues. In plain English, that means the statute begins to run when you have done something contrary to the terms of your agreement for which you can be sued. Most of the time, that "something" is failure to pay your bill. When you don’t make your payment on time, you have violated the terms of your agreement and you have given the creditor a cause of action.

Some credit agreements include an acceleration clause which must be invoked before a creditor has a cause of action. The acceleration clause could be activated by the creditor sending you a demand for payment in full by a certain date. In these instances, you must fail to pay the creditor after it has invoked the acceleration clause before the creditor has a cause of action, and the statute of limitations starts to run. You need to become familiar with the terms and conditions of your specific agreement to know for sure which event triggers a cause of action and thus, begins the running of the statute of limitations.

In any case, if the creditor fails to sue you in the time allowed by the applicable statute of limitations, you have an affirmative defense against the creditor's claim which can serve as a bar to recovery of the delinquent debt.

Calculating When the Statute of Limitations (SOL) is Over

1. Take the date cause of action begins (date of last payment or demand letter): 2. Add the number of years of the statute of limitations in your state.

Example:You last stopped paying on a credit card on Jan 15, 2001. The company sent you a demand letter for the full amount on July 15, 2001. The statute of limitations for credit cards (usually regarded as open accounts) in your state is 6 years.

The date at which you are "safe" from having a creditor sue you over this debt is:

No Acceleration clause: Jan 15, 2001 + 6 years = January 15, 2007Acceleration clause: July 15, 2001 + 6 years = July 15, 2007.

Does a Partial Payment Restart the SOL?

Depending on what state you live in, if you make a partial payment, you could be postponing the Statute of Limitations' taking effect on your collection account or charge-off. A collector might call you one day and say you waived your rights when you made a deal with the collection agency. Do not take anything a collector tells you for granted. Make them prove it to you, in or out of court. For about half the population, the Statute of Limitations started ticking the day they made the last payment for their account.

Some states have laws which specify that a partial payment does not restart the clock on the SOL, unless there is a new written promise to pay. What that means is that you actually write out a new agreement with the orginal creditor and/or collection agency. If you live in one of these states, simply sending in a check doesn't restart the clock. The statute of limitations is only extended by new written promise to pay in these states:

Arizona, California, Florida, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New York, Texas, Virginia, West Virgina, Wisconsin.

Please review the exact state statutes and the fine print associated with them before relying on this website's info. Your situation may not apply.

What state should I use in figuring out the Statute of Limitations?

According to Ron Opher, of www.ron4law.com: In my opinion, the FDCPA applies, and so the only relevant jurisdictions are where the consumer signed the loan application and where the consumer currently lives (bank location is irrelevant). If those states are different, I believe the creditor has the choice of where to sue and can select the state with the longer SOL. There may also be an argument that the contract was signed "under seal" which might lead to a longer Statute of Limitations than an ordinary contract.

Summation:

Even though a debt is an absolute promise to pay, if the Statute of Limitations expiring is in force and the creditor tries to force you to pay the debt, you have the right not to fulfill the promise (debt).

You may also read the FTC's publication on Time Barred Debts.

Unclean Hands or Clean Hands Doctrine

Last Updated: October 27, 2011

As part of our "I've Been Sued" series of articles, we discussed how to Answer the Complaint or lawsuit that was presented to you. As part of your Answer, a list of affirmative defenses should be included. One such affirmative defense is the unclean hands or clean hands doctrine.

What is the Clean Hands Doctrine?

The clean hands doctrine, also called unclean hands, is a defense to a claim for equitable relief, typically an injunction. The Defendant can argue that the Plaintiff has no grounds to obtain relief because he has acted unethically or in bad faith with respect to the subject of the complaint. The Defendant has the burden to prove that the Plaintif is not acting in good faith, or that his hands are unclean.

Other Definitions of Unclean Hands

The clean hands doctrine is a rule of law that someone bringing a lawsuit or motion and asking the court for equitable relief must be innocent of wrongdoing or unfair conduct relating to the subject matter of his/her claim. It is an affirmative defense that the defendant may claim the plaintiff has "unclean hands". However, this defense may not be used to put in issue conduct of the plaintiff unrelated to plaintiff's claim. Therefore, plaintiff's unrelated corrupt actions and general immoral character would be irrelevant. The defendant must show that plaintiff misled the defendant or has done something wrong regarding the matter under consideration. The wrongful conduct may be of a legal or moral nature, as long as it relates to the matter in issue.

A legal doctrine which is a defense to a complaint, which states that a party who is asking for a judgment cannot have the help of the court if he/she has done anything unethical in relation to the subject of the lawsuit. Thus, if a defendant can show the plaintiff had "unclean hands," the plaintiff's complaint will be dismissed or the plaintiff will be denied judgment. Unclean hands is a common "affirmative defense" pleaded by defendants and must be proved by the defendant.

Unclean hands, sometimes clean hands doctrine or dirty hands doctrine is an equitable defense in which the defendant argues that the plaintiff is not entitled to obtain an equitable remedy on account of the fact that the plaintiff is acting unethically or has acted in bad faith with respect to the subject of the complaint—that is, with "unclean hands". The defendant has the burden of proof to show the plaintiff is not acting in good faith. The doctrine is often stated as "those seeking equity must do equity" or "equity must come with clean hands".

Examples of the Clean Hand Doctrine

For example, if a seller sues a customer for payments on a contract, defendant may claim plaintiff has unclean hands because he fraudulently induced him to sign the contract. A court of equity will not decide issues of fairness and justice if it is shown that the person asking for such justice has acted wrongly in regard to the issue at hand.

In another example, when a brokerage firm claimed that its confidential client information was being pilfered by the competition, the court held that the firm did not come to court with "clean hands" since the court found that firm demonstrated a similar lack of regard for the competitor's confidential client information when it snared the same broker six years earlier.

Hank Hardnose sues Grace Goodenough for breach of contract for failure to pay the full amount for construction of an addition to her house. Goodenough proves that Hardnose had shown her faked estimates from subcontractors to justify his original bid to Goodenough.

This includes attempting to deprive defendant of his right to petition the government through use of litigation to harass him, falsification/concealment of crucial evidence, improper attempts to depose Main Action jurors and court personnel, efforts to deprive defendant of counsel, key witnesses and evidence, and subjecting him to the "Fair Game" policy

Pretrial Discovery - What Is It?

Last Updated: October 26, 2011

The early stages of a lawsuit involve the disclosure of evidence by each party which is known as pretrial discovery. Discovery is meant to eliminate surprises and to clarify what the lawsuit is about, should either party realize they should settle or drop the lawsuit.

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in come cases, you can get free help. If you cannot afford it,

though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

Generally, most civil cases in the U.S. are settled right after discovery. After discovery, both sides are often in agreement regarding the strengths and weaknessness of the case and this results in a settlement which eliminates the expense of a trial.

Types of Discovery

There are four types of formal discovery tools that are frequently used in lawsuits. They are:

Requests for Production of Documents - This is generally how discovery will take place in anything you might do. You will be asking for any proof that a creditor has regarding the debt. Requests for production are usually used to gather pertinent documents, such as contracts, employment files, billing records, or documents related to real estate.

Depositions - In a deposition, the parties meet face-to-face and answer questions under oath. The questioner can be either the party taking part in the lawsuit or the party's lawyer. The questions and answers are recorded and used as evidence. Typically, in consumer credit lawsuits, depositions are not used.

Interrogatories - An interrogatory is a written list of questions which must be answered. In some states, an interrogatory is sent to a consumer along with a summons to trial. They are used exactly like depositions - any answers to questions in an interrogatory can and will be used against you.

Requests for Admission - In a request for admission, one party asks the other party to admit, under oath, that certain facts are true or certain documents are genuine. The request for admission is also usually sent along with the summons and is required to be filed along with an answer.

Damages Awarded in Lawsuits

Last Updated: October 26, 2011

In law, damages is an award of money to be paid to a person as compensation for a loss or injury. In civil cases, the disputes are typically between individuals regarding legal duties and repsonsibilites they owe one another. A person or company can sue another person or company for damages as set forth in the FDCPA. The FDCPA allows someone to sue for "actual damages" which arise due to actions taken by a collection agency. Another term for "actual damages" is compensatory damages. However there are other kinds of damages which can be awarded in these types of cases.

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in come cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

Compensatory Damages

Compensatory damages, also referred to as actual damages, is money that covers the actual injury or economic loss. Compensatory damages are intended to put the injured party in the position he was in prior to the injury. Compensatory damages typically include medical expenses, lost wages and the repair or replacement of property.

General Damages

General damages are intended to cover injuries for which an exact dollar amount cannot be calculated. General damages are usually composed of pain and suffering, but can also include compensation for a shortened life expectancy, loss of the companionship of a loved one and, in defamation cases (libel and slander), loss of reputation.

Nominal Damages

Nominal damages is a term used when a judge or jury finds in favor of one party to a lawsuit - often because a law requires them to do so - but concludes that no real harm was done and therefore awards a very small amount of money. For example, if one neighbor sues another for libel based on untrue things the second neighbor said about the first, a jury might conclude that although libel technically occurred, no serious damage was done to the first neighbor's reputation and consequentially award nominal damages of $1.00.

Punitive Damages

Punitive damages are sometimes called exemplary damages, awarded over and above special and general damages to punish a losing party's willful or malicious misconduct. Punitive damages are not awarded in order to compensate the Plaintiff, but in order to reform or deter the Defendant and similar persons from pursuing a course of action such as that which damaged the Plaintiff.

Special Damages

Special damages is an award that covers the winning party's out-of-pocket costs. For example, in a vehicle accident, special damages typically include medical expenses, car repair costs, rental car fees and lost wages. Often called "specials".

Statutory Damages

Statutory damages are required by statutory law. For example, in many states if a landlord doesn't return a tenant's security deposit in a timely fashion or give a reason why it is being withheld, the state statutes give the judge authority to order the landlord to pay damages of double or triple the amount of the deposit.

Treble Damages

Treble damages are lawyerspeak for triple damages. To penalize lawbreakers, statutes occasionally give judges the power to award the winning party in a civil lawsuit the amount it lost as a result of the other party's illegal conduct, plus damages of three times that amount

What is Mandatory Arbitration?Last Updated: June 23, 2011

We've written about Mandatory Arbitration a few times in our Blog. Recently, we've gotten a few questions about the process, which seems (and we agree) cloaked in secrecy. So what is Mandatory Arbitration? And what are the differences between arbitration and regular court?

Source: The Arbitration Trap: How Credit Card Companies Ensnare Consumers.

Court Trial Mandatory Arbitration

Service of process required: Due process requires actual notice through an official process server to initiate a claim.

Certified mail with signed receipt or by private carrier with receipt signed by “person of suitable age and discretion” deemed sufficient notice for arbitration even though many consumers remain unaware of cases pending against them.

Neutral decision-maker: Jury of peers or impartial, publicly employed judge with public record of decisions.

Biased decision-maker: Arbitrator chosen from a limited panel and paid by an arbitration provider selected and compensated by the company; no public

record of prior decisions generally available to consumers.

Open, public process that sets precedent. Closed, secretive process without public record or precedential value.

Due process rights to fair and reasonable discovery of information; hearings and motions filed at little or no cost.

Little discovery, at discretion of arbitrator. Other due process rights must be paid for on an à la carte basis.

Contingency fee system, generally in negligence cases or product liability cases, means plaintiffs’ attorneys, not consumer-plaintiffs, take on financial risks for duration of case.

Pay-to-play payment system means individual must shell out costs up-front at every twist and turn in case; Loser pays rule may further financially burden consumers when imposed.

Right to appeal a loss on the merits of the case or other grounds.

Very limited grounds for appeal, typically limited to fraud or corruption of arbitrator, unconscionable clause or contract, or failure of company to prove that consumer agreed to BMA.

Some Numbers to Illustrate the Unfairness of Arbitration

Arbitration Done in Bulk

In addtion, the report by Public Citizen noted that Joseph Nardulli, NAF’s busiest arbitrator in California, does bulk arbitration. Nardulli’s busiest day was Jan. 12, 2007, when he signed 68 arbitration decisions, awarding debt holders and debt buyers every penny – nearly $1 million – that they demanded. The same was true for his second-busiest day as well.

Consumers Win Less than .2% of the time in Arbitration Cases

In June, we documented a Business Week article which found that the rate of consumer wins in arbitration was shockingly low. Many of the the consumers lost in arbitration were not even aware they were being put into arbitration due to poor process serving. In addition, both Business Week and Public Citizen noted that arbitrators have a financial interest in ruling against a consumer. Unlike a judge who gets the same salary no matter how he or she rules on a case, an arbitrator is paid by the winning case.

Motion to Strike Affidavit of Debt - How to Write One

Part 3 in Our "I've Been Sued" Series

Last Updated: October 26, 2011

In Parts 1 and 2 of our "I've Been Sued" series of articles, we went over what to do if you are served a lawsuit and how to file your Answer. Part of what you will receive along with your Summons and Complaint is an Affidavit of Debt.

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in come cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

What is an Affidavit of Debt?

Let's start at the beginning so you fully understand what you are reading as you flip through all the legal pages contained in that lovely lawsuit a process server just handed you. It is bad enough he just spoiled your day, but now you have to read all of this mumbo-jumbo and make some sense of it all.

An "affidavit" is a sworn statment in writing, so therefore, an "affidavit of debt" is a sworn statement from an employee of the Plaintiff (i.e. Collection Agency) stating they are intimately familiar and/or aware of the methods of record keeping at the original creditor concerning the debt in question, and they can certify the information in the complaint is true. They also

usually state that they've examined the sale or assignment records which establishes the relationship between the original creditor selling/assigning to the collection agency or junk debt buyer.

Note: These affidavits are sometimes notarized, but their validity is unchanged whether or not this is the case.

If the Defendant (you) does not object to this affidavit, the court will assume the debt is valid, the debt collector then has the right to sue you, and the suit is proper. You will lose if this happens. Fortunately, most of the time these affidavits are fraudulent or contain false evidence, but you must file a "motion to strike" this evidence to get it thrown out of court.

An example of such an affidavit:

Plaintiff's Affidavit of Indebtedness and Ownership of Account

I am an authorized representative for ACME Collection Agency (hereafter the "Plaintiff") and hereby certify as follows:

1. I have personal knowledge regarding Plaintiff's creation and maintenance of its normal business records including computer records of accounts receivables. This information was regularly and contemporaneously maintained during the course of the Plaintiff's business. I am authorized to execute this affidavit on behalf of Plaintiff and the information below is true and correct to the best of my knowledge, information and belief based on business records maintained with respect to the account.

2. The records provided to Plaintiff have been represented to include information provided by the original creditor. Such information includes the debtors name, social security number, account balance, and identity of the original creditor and account number.

3. Based on the business records maintained on account XXXXXXXXXX (hereafter "account"), which are a compilation of the information provided upon acquisition and information obtained since acquisition, the account is the result of the extension of credit to "name" by original creditor, on or about (date of the origination). Said business records further indicate the account was then owned by ACME Huge Bank. Acme Huge Bank later sold and/or assigned portfolio 8044 to Plaintiff's assignor which included the defendant's account on (date of assignment). Thereafter, all ownership rights were assigned to, transferred to, and became vested in Plaintiff, including the right to collect the purchased balance owing $1487.64 plus any additional accrued interest.

4. To the best of my knowledge and belief, the Defendant is not a minor or mentally incompetent. 5. Based on business records maintained in regard to the account, the above stated amounts is justly and duly owed by

the Defendant to the Plaintiff and that all just and lawful offsets, payments, and credits to the account have been allowed. Demand for payment was made more than 30 days ago.

Signed,Clueless EmployeeACME Collection Agency

Sound scary? Don't worry - we will show you how this affidavit is nonsense and complete hearsay.

Think that a collection agency wouldn't file a document which technically doesn't hold up in court? In a report presented to the FTC by Daniel A. Edelman, "Collection Litigation Abuse", dated August 1, 2009, Mr. Edleman listed numerous cases where documents submitted as evidence were false, misleading, and sometime manufactured by collection agencies and junk debt buyers.

Court Cases Where Affidavits were Determined to be False or Fraudulent

Debt buyers regularly submit affidavits which purport to be made on personal knowledge but in fact are based on reading a computer screen. For example:

Luke v. Unifund CCR Partners, No. 2-06-444-CV, 2007 Tex.App. LEXIS' 7096 (2nd Dist. Ft. Worth Aug. 31, 2007).

Palisades Collection, LLC a/p/o AT&T Wireless v. Gonzalez, 10 Misc. 3d 1058A; 809 N.Y.S.2d 482 (N.Y.County Civ. Ct. 2005):

Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432 (6th Cir. 2006); Delawder v. Platinum Financial, 443 F. Supp. 2d 942 (S.D.Ohio March 1,2005); Griffith v. Javitch, Block & Rathbone, LLP, 1:04cv238 (S.D.Ohio, July 8, 2004); Gionis v. Javitch, Block & Rathbone, 405 F. Supp. 2d 856 (S.D.Ohio. 2005); Blevins v. Hudson & Keyse, Inc., 395 F. Supp. 2d 655 (S.D.Ohio 2004), later opinion, 395 F.Supp.2d 662

(S.D.Ohio 2004); Stolicker v. Muller, Muller, Richmond, Harms, Meyers & Sgroi, P.C., 1:04cv733 (W.D.Mich., Sept. 8, 2005).

In the Palisades Collection, LLC a/p/o AT&T Wireless v. Gonzalez case, an affidavit was submitted from a Ms. Bergman

who claimed to be V.P. of Palisades and familiar with business record keeping practices. Being familiar with records in the course of doing business is one way debt collectors can side-step the hearsay exception:

Ms. Bergmann does not claim to be familiar with AT&T's record keeping practices, but only with the method by which Plaintiff maintains the accounts it purchases from others. The mere fact the Plaintiff obtained the records from AT&T and then retained them is an insufficient basis for their introduction into evidence. Therefore, the Court cannot rely on the account statements which Ms. Bergmann proffered to establish Defendant's default.

How to Combat False Affidavits Based on Hearsay Rules

Attack the authority of the Affiant (person writing the affidavit):

1. Subpoena the Affiant (person writing the affidavit) to appear in court for testimony. Usually this person will be "unavailable."

2. File a subpoena for the employment record and resume of the Affiant. There may be some fighting by the Plaintiff's attorney but since they are claiming to be knowledgeable, this is not an unreasonable request.

3. Does the employee look like he or she has knowledge of record keeping? If this person has only been employed to contact debtors on the telephone, obviously there is no experience.

4. If the Affiant's experience looks questionable, pose the question as to how he/she can know the original creditor's methods of keeping records.

5. What if the Affiant is employed by original issuer of the credit card? Even if he/she is an employee of the original creditor, does he/she have proper experience to be a record keeper?

6. Cite the case law given here showing that affidavits are known to be false and misleading. 7. Stated in your motion filed with the court that "the Affiant's employment resume shows he/she cannot have

knowledge of the original creditor's bookkeeping practices, and the fact that she is not available to testify in court - and may not even exist along with the past used of falsified affidavits in other states by this JBD points to this affidavit of being highly suspect and should be stricken."

8. Does the Affiant have the necessary background to be a record keeper? If so, is there a claim they are familiar with the original creditor's record keeping? What is the proof for their statements?

9. Cite cases where affidavits are purported to be made on personal knowledge but in fact are based on reading a computer screen.

Luke v. Unifund CCR Partners, No. 2-06-444-CV, 2007 Tex.App. LEXIS' 7096 (2nd Dist. Ft. Worth Aug. 31, 2007).

Palisades Collection, LLC a/p/o AT&T Wireless v. Gonzalez, 10 Misc. 3d 1058A; 809 N.Y.S.2d 482 (N.Y.County Civ. Ct. 2005):

Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432 (6th Cir. 2006); Delawder v. Platinum Financial, 443 F. Supp. 2d 942 (S.D.Ohio March 1,2005); Griffith v. Javitch, Block & Rathbone, LLP, 1:04cv238 (S.D.Ohio, July 8, 2004); Gionis v. Javitch, Block & Rathbone, 405 F. Supp. 2d 856 (S.D.Ohio. 2005); Blevins v. Hudson & Keyse, Inc., 395 F. Supp. 2d 655 (S.D.Ohio 2004), later opinion, 395 F.Supp.2d 662

(S.D.Ohio 2004); Stolicker v. Muller, Muller, Richmond, Harms, Meyers & Sgroi, P.C., 1:04cv733 (W.D.Mich., Sept. 8,

2005). 10. File your motion to strike the affidavit of debt with the court. 11. At this point, the affidavit should be stricken, and hopefully the case will be dismissed.

Sample Motion to Strike Affidavit of Debt

PLEASE DO NOT JUST CUT AND PASTE - Every motion is different. One size DOES NOT fit all. If you merely cut and paste, you WILL LOSE. In addition, you need to review and UNDERSTAND your state/county Rules of Civil Procedures when filing your motion. Improper filing of your motion will cause it to be denied.

IN THE JUSTICE COURT OF (City Name)County Name, STATE OF

Case Number: XXXXXXXCollection Agency,Plaintiff

vs

John Q. Public,Defendant

MOTION TO STRIKE AFFIDAVIT OF DEBT IN SUPPORT OF PLAINTIFF'S CLAIMS

Comes now, Defendant and respectfully states the following:

1. Plaintiff has submitted into evidence an affidavit claiming that the affiant has personal knowledge of business records related to the aforementioned debt. AFFIDAVIT OF DEBT IN SUPPORT OF PLAINTIFF'S CLAIMS (hereinafter referred to as "EXHIBIT A").

2. The affiant writing the AFFIDAVIT OF DEBT (Exhibit A) does not explain how the business records came into her possession, only that to the best of her belief they "represent" the actual records from the original creditor, Gigantic Credit Card Company.

3. Affiant of AFFIDAVIT OF DEBT does not claim to have personal knowledge of how business records were kept at the original creditor.

4. Affiant of AFFIDAVIT OF DEBT does not claim to have personal knowledge of the sale or assignment of the debt from the original creditor to ACME Collection Agency.

WHEREFORE, the Defendant prays this Honorable Court that Plaintiff's "Exhibit A" be stricken from evidence in the above action.

I state under penalty of perjury that the foregoing is true and correct.

Defendant Name.

By: _______________________________ Date:____Defendant Name, DefendantAddressPhone

I CERTIFY that I mailed / delivered a copy of this MOTION to: ACME Collection AttorneyAddressPlaintiff's attorney at the above address or Defendant's attorney

By: _______________________________ Date:____Defendant Name, Defendant

I Won Against Midland Funding!

This post was taken from our discussion boards and bears repeating and showcasing. The link to the post is: http://www.creditinfocenter.com/forums/there-lawyer-house/306292-i-won-went-trial-i-won.html.

That's right! I FINALLY had my trial with Midland funding. I never posted about it on the board until now, but I also successfully fought off a Motion for Summary Disposition and went through the accompanying oral argument just prior to trial as well.

Summary of Pre-Trial

I believe I stopped posting about my case after a pre-trial conference and just after the plaintiff supplied a stack of alleged credit card statements along with a letter saying I could call to discuss settlement. At that pre-trial hearing I refused to settle, informed the court that in my opinion no account stated exists and that it was ultimately a matter for trial. The judge agreed and then set a trial date. That's about where we left off.

Motion for Summary Disposition

Not long after that (and I never did post about this here on the site) the Plaintiff's attorney filed a Motion for Summary Disposition, which is really just Michigan's version of a motion for summary judgment. For those that don't know, a motion for summary disposition/judgment is a basically a motion saying to the court that there is no real reason for a suit to continue on and go to trial. In theory the moving party is saying "this case is already over and shouldn't go to trial and waste the courts time because . . ."

In their motion the Plaintiff claimed there were no genuine issues of material fact and they were entitled to judgment as a matter of law. They set the motion hearing for this on a Monday and the Trial was scheduled for the following Thursday.

Their brief in support of their motion for summary disposition wasn't too long but it was pretty intimidating at first glance. In it they cited some MI cases about account stated (which was the basis for their claim). They also stated that I had requested a copy of a signed application, which was true. They then stated they didn't need this under an account stated anyway (which is also true). They also pointed out there is a statute that says the OC doesn't have to retain the application for more than 24 months after the account was opened (also true). They then argued that they only need to show I had received statements and failed to object to them in a reasonable time and/or that they also need only show I used (or authorized use of) the card. They also argued that one of the alleged statements showed a payment made and they pointed out some case law that seemed to show a voluntary payment is enough to establish acceptance of the account balance alleged due and an account stated.

Breach of Contract

I thought it was odd that in their motion for summary disposition they threw in the allegation of "breach of contract" and it is NEVER mentioned in their complaint. I can only assume they had realized I was kicking the legs out of their account stated theory and decided to try to add breach of contract. They claimed I failed to perform and breached the terms of the contract without ever describing what the terms were. I had even requested a copy of the alleged credit card agreement in Discovery months earlier and they never did supply it.

It's weird that the document I thought would be the easiest for them to provide was the one they never would give me. I really expected them to at least throw a generic agreement from years after the account was opened at me the minute I requested a copy of an agreement.

At the close of their brief in support they argued that I had never made any objections to the account, that no written dispute was ever received, and that there were no outstanding issues of material fact to be decided at trial. Those were all outright lies.

At first I was pretty intimidated but I sat on things a day or two to calm down and then I started researching how to defeat a motion for summary disposition. I realized there are several different ways, or combinations thereof, that a motion for summary disposition can be brought. The Plaintiff's Motion in this case was brought pursuant to MCR 2.116(C)(10) which basically says that: "Except as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law."

Objection to Motion for Summary Disposition

After finding and reading many objections to a motion for summary disposition and supporting briefs (there are literally

hundreds or thousands of examples on the internet) it quickly became obvious that under MCR 2.116(C)(10) all I had to do was show there was one single genuine issue of material fact remaining for trial. The catch is you have to provide documentation or sworn affidavits to prove any of your objections or arguments.

For example, if in a motion for summary disposition/judgment the plaintiff says you never disputed the account in question it's not enough to simply say yes you did. Just like at trial, you need to have some sort of proof. You'd need to attach proof of a letter of dispute or something similar. In some cases you'd need to write up an affidavit if it was hard to prove something or you had little documentation to back it up. The bottom line is you can SAY anything you want in an objection to a motion for summary disposition/judgment, but you have to have proof to back it up.

In my response in opposition to the Plaintiff's Motion for Summary Disposition technically all I had to show was that there was at least one remaining genuine issue of material fact for the judge to decide at trial. This was not difficult because I had objected to and denied pretty much everything and everything was in dispute. When the plaintiff's attorney whined about "limiting the issues" for trial even the judge had commented that it seemed like all was fair game and that since I had denied, everything was up for debate at trial.

Rather than just lay out a single genuine issue of material fact to defeat their motion I decided to pretty much lay out all of the remaining issues and any relevant arguments I had to oppose. A motion for summary disposition and any objection are pretty much a trial on paper. Since my trial was only a few days after the hearing on the motion for summary disposition, I decided to pretty much lay out all remaining issues and any arguments relevant to their motion. It's basically just outlining how the trial would likely proceed so it was great preparation for argument at trial anyway. If the Plaintiff files a motion for summary disposition very early in the proceedings then you may not necessarily want to go "all in" and show them your entire hand before trial. I figured I was safe enough that if I waited until the last day to serve my opposition and file it, they wouldn't have much time to read and respond.

In my arguments I went through and picked apart their arguments and looked up all the cases they cited. It's a lot less intimidating when you go through and find all of the holes in the Plaintiff's arguments. You seen realize they haven't spent much time on things at all! I listed any major arguments to contradict theirs in my brief and made notes of all the others to bring up at trial because I assumed they'd probably rely on most of the same arguments and cited case law.

I did a ton of work and research and my response in opposition and accompanying brief were about 20 pages in length. I was a little nervous about submitting something too long but I've been noticing the Court probably just skims things over and most of the work is done at oral arguments. From what I've seen you make major arguments orally and then can rely on your written brief if need be. If the court can't make a decision on a motion at the close of the motion hearing I believe they can take time to read through the documentation in greater detail and render a decision after analysis.

So I must have done something right with my "Response in Opposition to Plaintiff's Motion for Summary Disposition". We had the motion hearing and the judge pretty promptly denied their motion.

Disposition of Outstanding Motions

The Plaintiff's attorney was the first attorney that originally showed up and who I hadn't seen for months. He called me out in the hall prior to the hearing and basically tried to intimidate me. He said, "Of course the court wants us to resolve this between ourselves if possible. Is there even any point in having this conversation?" I mentioned that the previous attorney had mentioned a settlement number that was just a slight discount of the alleged balance due. I told him based on that number and what I'd seen, there was no way I was going to settle for that amount. I also reminded him that I didn't even believe this account was mine or that the plaintiff truly even owned it. He just said, "Ok". Then as I turned to go back into the court room he threw in, "So you're prepared to argue these briefs?" I just said, "Yeah...the best I can" and went back in and sat down awaiting my turn.

We were shortly called up by the judge. By now the judge was pretty familiar with the case and my face simply because I've shown up for EVERYTHING. Since he recognized this wasn't the usual attorney, the judge immediately complained to the plaintiff's attorney that "It would be nice if we could have some continuity with an attorney in this matter". The plaintiff's attorney just replied, "Yeah." lol WTF? Nice response, buddy.

Then the judge flipped to the beginning of the file and noted that this attorney was the first to appear and he seemed just a little less pi$$ed.

The judge then said he noticed we went out in the hall to discuss things while he was dealing with the previous case, and he asked if there was any progress. I am quickly learning not to talk unless there is an absolute need to do so. (Read more on what not to say in court.)

I let the plaintiff's attorney whine a little. He informed the court that there was no resolution and that I was not receptive to settling and that ultimately "The Defendant feels it's a matter of proofs." DUH Dip$hit. Your plaintiff bought an alleged

BAD debt and then sued me. Of course you need to prove it...why would I roll over and hand over money I don't have to someone who can't prove this debt is mine or that they even own it?!?

The judge addressed the Plaintiff and said, "This is a relatively small amount. I know a lot of times in these cases one of the biggest issues is the matter of unreasonably high interest rates and fees. Did your client give you any leeway or negotiation with those?" The attorney said they did but basically that there wasn't much to negotiate with me. The judge then asked me if I had any interest in settling the matter without court intervention because the trial was later that week and "Generally the time to settle the matter is before and not AT trial". I said I'd discuss the matter again but basically there was no way I would settle on a debt that I didn't know was mine and definitely not at the amount they keep mentioning. We moved on pretty quickly after that.

Motion to Strike the Affidavit

Since I still had an outstanding Motion to Strike the plaintiff's affidavit of debt that hadn't been heard, I noticed it for the same day as this hearing. The judge immediately brought it up as one of the issues at hand for the day. He pretty quickly shot it down as being premature. He looked at me and said, "it hasn't technically been entered into evidence yet so there's really nothing to strike. You can wait until trial and then raise your issues then." Out of the corner of my eye I saw the Plaintiff's attorney's head turn toward me and he looked at me with a big stupid Cheshire cat grin.

While the judge was technically right about the affidavit not being evidence, I believe I had a pretty strong argument for it to be stricken anyway since it was a document attached to the complaint that failed to comply with court rules for proper format of a pleading. The affidavit of debt referred to documents and written instruments but none of them were attached. There is a Michigan court rule that says when defense or claim in a pleading refers to a written instrument it must be attached as an exhibit. MCR 2.113(F)(1) If not the pleading fails to comply with court rules and the pleading, or parts of the pleading are subject to a motion to strike MCR 2.115(B). Since the affidavit was attached to the complaint it was part of the pleading MCR 2.113(F)(2).

Although I believe these were all valid reasons to have the affidavit stricken I believe the stronger reasons were reasons of hearsay etc. I was entirely prepared to argue this at trial and just read from my brief supporting the motion to strike if need be. I could raise the issue of not having the written instruments attached as a last resort at trial. After the judge had already given the attorney a hard time I could sense things might be going my way so I didn't push the motion to strike argument. I just politely told the judge I was happy to object to the affidavit at trial and kept my mouth shut and didn't push the issue.

Denying the Plaintiff's motion for Summary Disposition

Boy am I glad I didn't push the issue because the tables quickly turned on the Mr. Cocky attorney who had been smirking at my motion to strike a moment earlier.

Now it was his turn to argue his motion for summary disposition and it was pretty obvious the Plaintiff's attorney hadn't even really bothered to read up on the file or even really get himself up to speed with what was going on. It's almost like these goons think they are entitled to a win just because they showed up and are licensed attorneys and we aren't.

I don't even think this guy understood the concept of how their motion was brought. It was brought pursuant to MCR 2.116(C)(10) and basically claimed that there were no genuine issues of material fact remaining to be decided. All I had to do was show there was a single major remaining issue pertinent to the resolution of the case for the judge to decide at trial to defeat their motion. He made some general arguments that basically said statements were sent, I didn't object, one of the statements showed a payment, and the plaintiff was entitled to judgment.

I was prepared to start countering with all of the counter arguments I made in my brief but the judge pretty much did it for me. I was trying to rely on my written brief as much as possible but I did rehearse ahead of time to try and outline what I'd say.

Before I could bother the judge asked the plaintiff's attorney most of the issues I raised in my brief. I had to do very little talking. The judge then said, "Well based on what I've seen there were, issues remaining to be decided at trial and I'm going to deny the Plaintiff's motion for summary disposition".

Boy did that trigger the whining from the other side. "Your honor, if you aren't going to award a full motion for summary disposition then at least award a partial disposition based on what issues aren't in dispute." I almost crapped in my pants because I didn't even realize there was such a thing

The judge looked at me and I quickly pointed out pretty much everything is in dispute and we don't agree on anything. He didn't look impressed with that answer. I was worried I was going to have the tables turned on me so I started laying out some of the outstanding issues remaining just in case the judge didn't read through my entire brief in detail.

I got to the part where as a last resort I pointed out that the plaintiff admitted in Discovery that there was an arbitration clause in the alleged credit agreement that if exercised by either party precluded litigation. The plaintiff's attorney jumped on it and laughed and said, "Your Honor nobody has elected arbitration". The judge looked at me and sternly said, "It's a little late to be electing arbitration now."

I replied, "With all due respect your honor I can't elect arbitration when I have no copy of the agreement to even read the clause and see how it's worded." I pointed out that I had asked for the alleged credit card agreement before and that it wasn't provided. The judge replied that he didn't recall me making the court aware of it in pre-trial and I agreed that other in Discovery I probably hadn't. The judge then got mad and said when we set the trial date I should have simply told him there was outstanding Discovery and that I wasn't ready for trial. I realized we were starting to get off topic and that I just might orally argue my way into a hole so I once again played my "silence is golden" card.

I informed the judge that it didn't matter, since this had gone on for well over 7-8 months that I just wanted to go to trial and have it be over with. The judge denied their motion for summary disposition and then gave both the plaintiff and attorney reasons why we perhaps we didn't want this to go to trial.

I've been continually attacking the bill of sale and everything else. They simply attached a paper with the alleged account number and my name in an attempt to make the bill of sale look like it specifically applied to the alleged account in this case. The judge turned to me and said, "Suppose you are right about this bill of sale. I'm not saying you ARE, but for the sake of argument suppose you ARE right. In all likelihood all that will happen is this matter be dismissed and the will get refiled." I knew he was right so I just nodded in agreement.

He then turned to the Plaintiff's attorney and said, "You'd better have someone here on Thursday. We are generally going to need some sort of witness rather than simply having a trial based on the pleadings." It was then I sort of knew that all my complaining about lack of authentication and hearsay were probably going to be right on track. With that the judge said he'd see us on the day of trial.

I couldn't believe I made it through all that without having my arse handed to me by the judge or a licensed attorney. The attorney hurried out ahead of me struck up a conversation with another attorney in the hall. I made my way out to the elevators and he asked "Are you sure you don't want to talk about this?"

I walked over and said "Not unless your settlement number is going to be around a hundred bucks." I did not want to settle but I figured I'd still have a dozen or more hours of preparation before trial so I didn't panic before the judge. I also realized that even if I won it was going to be nothing more than a dismissal since I didn't have any counterclaims. I figured a Ben Franklin might be worth trading for a dismissal with prejudice and saving myself the time, copying costs, mileage, etc preparing for trial.

We never got that far in our "discussion". He grabbed his briefcase and said "Ok. Fine. I'll just put you up there on Thursday and you can tell the judge this is yours" and he stormed off. I told his back to have a nice day and then walked out feeling a little shell shocked but happy with my mini victory!

Although I'm no attorney and it wasn't perfect, I was proud of myself for defeating the motion for summary disposition on my own! It took a bunch of research and a little common sense. It just goes to show what we can accomplish as pro se litigants with a lot of determination and research!

Arriving at the Courthouse for the Trial

It took me nearly twice as long as normal to get to the courthouse because we had a huge snow storm that week and the roads were terrible. In fact many courts in the surrounding area were closed the day before. To be sure I didn't risk a trip to the court for nothing I even called the court just prior to closing the day before my trial to make sure the Plaintiff's attorney didn't ask for a continuance etc. due to the nasty weather. No such luck.

I got to court and the plaintiff's attorney showed up (this time was the other attorney that had dealt with most of the case). I was 80% sure they'd let me get all worked up for trial and then dismiss at the last minute. To my surprise that was not the case. She came up to me and said "Obviously the court wants us to resolve this issue if we can. I've been authorized to offer you a settlement of 50% of the balance plus our costs payable over 6 months. I have been authorized to offer that or we can have the judge come out and render a verdict."

I informed the attorney that I had already had a discussion and threw out a low settlement number with the other attorney at the motion hearing for the motion for summary disposition. I informed her it was only because I didn't want to have to research and prepare myself to argue against a licensed attorney at trial. I explained that I had now already gone through all the preparation for trial and I wasn't willing to settle. I did note that I was most interested in a dismissal with prejudice but it wouldn't be for the proposed 50%.

I politely informed her that while going to trial before the judge wasn't the most pleasant idea, it was a must. I said, "The idea doesn't thrill me and I know you are much more experienced at this than I am". She laughed and replied in a friendly manner, "It's not really a matter of experience. It's a matter of me thinking it's going to go one way and one way only." I wanted to say, "Me too" but I wasn't quite that confident!

We left it at that and that's when the 'Oh crap, we are really going to do this!' thoughts started entering my mind. I tried to push the images of the judge ripping me a new one and this attorney going Perry Mason on me out of my mind.

I noticed the Plaintiff walked away and exchanged glances and greetings with a gentleman in a shirt and tie in the front row of seats and then she proceeded to the back. I started to worry that this might be a witness to authenticate documents or records. Maybe she was just sitting away from him to throw me off. I did NOT expect them to fly in a witness but I had prepared some questions to ask the witness on cross examination just in case they did. I flipped through my paperwork to find it and review some of the questions while we waited for the judge.

The first matter before the court was some sort of basic civil issue (I don't remember what) and the well dressed gentleman I was worried about being a witness was actually the attorney for the defendant in that case. Relieved, I switched gears and went over what I would briefly say in my opening statement.

The Trial

I went into court armed with a bunch of paperwork and all of my exhibits prepared and easily sorted in separate files. I had watched some YouTube videos of opening and closing statements etc. I had also gotten my hands on a PDF file of the juror's handbook for this court which broke down the basic procedures pretty well. I had a basic idea of the order of things and how things were supposed to go. Apparently the Plaintiff's attorney hadn't watched these same videos or read the same book. In fact, I'm not so sure she's ever actually been all the way to a trial in one of these cases. The trial didn't really proceed like a trial is supposed to.

She opened by apologizing to the court and me for not being at the motion hearing but something came up. I could care less and it seemed like the court wasn't interested either. She then started her opening statement by complaining to the judge that she was still unable to come to a resolution with me on this matter. (Just like she started EVERY pre-trial conference.) The judge interrupted, "Yeah, I know. That's why it's scheduled for trial TODAY." I successfully extinguished my urge to turn to her and exclaim "In YOUR FACE!"

She then attempted to introduce the case background and told the Judge the Plaintiff filed an "8 allegation complaint". I was going to interrupt because their original complaint is basically one allegation or claim backed up with some statements. Instead I made a note that I needed to address the issue in my opening statement/argument. The judge was pretty much right with me. He questioned, "8 allegations?" Then he flipped to the front of the file and said, "You mean ONE single allegation in the complaint that is 8 paragraphs or statements…right?" The judge sort of looked at me like WTF is she talking about. She agreed that is indeed what she meant.

She then started to outline the complaint and the judge interrupted her. "I don't need you to rehash the entire case. The court has read the file and all the pleadings. It's all in the file which is, I don't know: 3 inches thick?" He then held up the file and I had to laugh a little.

The Plaintiff's attorney then started to mention the statements etc. and the judge cut her pretty short. The courtroom was basically empty except for us when the judge called our case. He said, "I don't see anyone else in the courtroom besides you and the defendant. Do you have any sort of witness?" He flipped through the file and said "I don't know if an affidavit from a . . . "legal $specialist$t" is going to cut it from a legal standpoint. Is there anyone here for the defendant to cross examine or question?" She confirmed that there was not.

She then whined that I should be put under oath. Since things were going my way I didn't put up a fight when the judge asked me about it. He put me under oath and she proceeded to ask me several questions in the most half @$$ed monotone voice I've ever heard in my life. "Mr SO AND SO did you receive capital one credit card statements on this account from capital one." I replied, "Not to my recollection, no." "Did you receive statements from the plaintiff regarding this account?" My answer was, "Other than the ones provided to me in Discovery, no not to my recollection."

She asked a couple more of the same types of questions, obviously doing it on the fly. She then tried to get cute with some weird question about whether or not I received statements about the statements on the account from the plaintiff. I had no idea what the heck she was asking so I politely informed her I didn't understand the question and asked her to ask it again. She sighed and just blurted out, "Mr. So and So, did you have this Capital One credit card?" I just said, "No not that I recall".

She then started to whine a little and said she was "at a loss for how to proceed". That she had provided me with most of the info I asked for. She then followed it with, "I guess the Plaintiff is unable to proceed with anything other than what we've

already provided." Then there was a pause and silence. I stood there and realized this must have been her pretty much resting her case on her opening statement/argument.

I was waiting for something like, "Your honor, this is Plaintiff's Exhibit #1, copies of credit card agreements" or "Plaintiff's Exhibit #2 a copy of the bill of sale". . .nothing!

After I realized she was done I figured I'd use a great little tool brought to my attention by MustangGrrL027: the Motion for a Directed Verdict. I remembered reading her victory thread from her case with Midland and the directed verdict technique. I had looked up the court rule and how I needed to present it and how it had been used in my state.

Motion for a Directed Verdict

From reading the MI rules of civil procedure, a motion for directed verdict is to be used at the close of the opposing party's evidence. At that point you can ask the court/jury to render a decision in your favor right then and there based only on the evidence presented to that point. If the court agrees it renders a decision in favor of the defendant right then and there and the defendant doesn't even have to argue or present their opposing evidence. If the court does not agree a directed verdict is warranted, the trial just continues as normal and you present your arguments and evidence.

I was already planning on trying a motion for a directed verdict but I was waiting for the attorney to present her evidence. I planned to object and orally argue a motion to strike for everything as she went along. I was prepared as possible with applicable court rules and case law in support. After we were finished with that I planned to ask for a directed verdict based on the fact that most of her evidence was inadmissible and the plaintiff failed to support its claim with any prima facie evidence. We never got that far. She just put up a half a$$ed opening statement and didn't really present ANY evidence.

After her little "unable to proceed" comment I summoned what little confidence I had and said, "Your honor I move for a Directed Verdict based on the grounds that the Plaintiff hasn't provided ANY evidence to prove ANYTHING at this point".

The motion for a directed verdict really seemed to make her mad. Her response was simply, "your honor we have". WTF? THAT was her big objection and opposition to my motion? I had even paused to make sure she wasn't going to continue on, "Sorry, but last I checked you never even officially entered anything into evidence at trial".

The Victory

After the judge was pretty much saying things were over she decided to continue on and argued that this was a trial that had to be based on the pleadings due to the nature of the case. She also whined that there had to be more to a defense than a defendant saying, "not me". I was prepared to fire back with a description of this was much more than a simple case of me saying "not me". I was going to say how they haven't even proven they had standing to bring the action, how there was no one there to authenticate any of their documentation, how my answer properly listed applicable defenses and affirmative defenses, how each was a very good defense to every one of their allegations, how I outlined all my valid arguments in my opposition to their motion for summary disposition if they had bothered to read it, and how there also has to be more to the basis of a lawsuit than the plaintiff's own word saying "yeah sure he owes this and this amount".

None of it was necessary. The judge said something to the effect of, "The Defendant has already denied knowledge or recollection of everything along the way. He's submitted a counter affidavit. You've had an opportunity to question the defendant and I believe his response was he doesn't recall this card or this debt. Based on that I'm going to grant the Defendant's Motion and I find no cause of action."

Boy did that tick her off! It's amazing how some of these so called "professionals" can throw a mild temper tantrum in the middle of court. There was a lot of heavy sighing, head shaking, and slamming shut of her file folders. I wanted to be elated but I was just sort of numb. It didn't really hit me what I had just accomplished until I was halfway home.

So there you have it. Not pretty but it at least temporarily kept these wolves at bay. As mad as she was I wouldn't be surprised if they refile it. I'm already prepared if they do!

Vacating a Judgment

Last Updated: June 29, 2011

Please Note: I AM NOT A LAWYER. If you are facing court, it's ALWAYS a good idea to hire an attorney or get some legal assistance. Depending on your area and circumstances, in come cases, you can get free help. If you cannot afford it, though, take heart. Lot of people have handled their cases pro per (in other words, without a lawyer.)

Did someone file a judgment against you? If they did, there is a chance you can get it dismissed or "vacated." Vacating a judgment is basically the equivalent of stamping a big fat red "VOID" on the judgment paperwork. When you file a motion to vacate a judgment you are basically filing an appeal to the court on the case.

Filing a motion to dismiss a judgment is like filing an appeal on the outcome of a jury trial. If the outcome was not fair, and you have good reason why the court should overturn its prior ruling, you should file a motion. Don't be intimidated by the thought that you are challenging a court ruling, it happens all of the time.

As with many collection agencies, many people who file lawsuits to collect money from you in court didn't follow the law. You may be asking yourself why the judge didn't know about this improper deviation. As in most professions, judges tend to specialize in one type of case. For the same reason that you can't expect a heart surgeon to know the best psychiatric medications to prescribe to a patient with schizophrenia, a judge doing small claims or injury lawsuits may not be intimately familiar with consumer law. Sure they know the basics, but one person can't know everything. Before deciding on a case, most judges need to look up and study existing statutes and case rulings. In addition, if the person who sues says they followed the correct procedure and the defendant or his lawyer does not dispute it, it's a sure bet they were given the benefit of the doubt.

Another thing to look out for: even if the person suing you followed all the right court procedures, you can still win on technicalities. The two biggest reasons a judgment is "won" are: A) the defendant failed to respond to the court summons with the proper paperwork in the allowed period of time, and B) the defendant failed to appear for their court date. This is calling winning by default. If you missed your court date, you may still not be out of luck.

If you receive a judgment or a writ of restitution and you believe you had a good reason for not responding to the eviction

summons or appearing at the "show cause" hearing, there still may be grounds for asking the court to vacate the judgment. If the court agrees that you may have had good reasons for not responding or appearing, the court may decide to set a hearing on your motion to vacate the judgment.

First some terms:

A judgment is the actual court decision stating that the person suing is in the right. It issues the method to "right the wrong," such as fines, the actions you need to take to correct the violation, or the amount of money you need to pay the plaintiff.

A writ of restitution is generally used only by landlords. It is basically a court order, in writing, that would be given to a sheriff to evict you if your landlord was trying to get you to move based on non-payment. You don't need to worry about this document if you are not being sued by your landlord.

1. Vacate basically means dismiss. 2. The plaintiff is the person suing you. 3. The defendant is the person being sued (you).

Prepare Your Motion to Vacate

The first thing you should be before preparing a motion to vacate is to look up your state's rules of civil procedure. It should spell out exactly what you need to do to file a motion. It will also tell you what reasons are valid, and may include the exact language you need to use. If you don't follow the procedures, you can get your motion thrown out on a technicality. Here's a good link:

http://www.law.cornell.edu/topics/state_statutes.html

You must prepare a Motion and Declaration to Vacate Judgment and an Order to Show Cause.

Motion and Declaration to Vacate Judgment

A sample document is included at the end of this article which can be used as a template to write up your motion. This document tells the court why the judgment against you should be vacated. First, you need to identify the case by name and court reference number and all the persons involved in the judgment.

Next, explain your reasons for bringing the motion. State your "procedural defenses," that is, the good reason(s) why you did not respond to the summons and complaint on time or appear at a "show cause" hearing. For example:

I was not served with a summons and complaint - you need to check your state laws here. Some states say that a non-certified letter delivered by US Postal service is all that is required to properly serve a complaint. Most states, however, require that you be served in person or at least get your summons sent certified, return requested mail. Here is a good link to double check you state and county procedures:

Process Service Requirements I responded to the summons and complaint in time, but a judgment was issued anyway without a hearing.

I was not able to answer the summons and complaint or appear at the show cause hearing because…

In the same space, also tell the court about your defense to the judgment (why the case would have been dismissed had you shown up in the first place). For example:

The collection agency never responded to my request for validation, therefore never providing proof that the debt was mine under the FDCPA.

The amount of the debt exceeded the state's usury interest limits

Please note that the court will only respond to violations of existing laws. They won't accept reasons like: "My insurance company was supposed to pay this debt and never did, therefore I shouldn't have to pay this medical bill."

File the Paperwork

Most likely, you will have to file your motion at the same court which granted the judgment in the first place, which means that if the judgment was granted in Anchorage, Alaska, and you now live in Miami, Florida, you will have to fly to Alaska to both file the paperwork and to attend the court trial.

Go to the courthouse with your typed document and tell the court clerk that you are filing a motion to vacate a judgment. There may be additional forms to fill out at the courthouse, and there will probably be a nominal filing fee. The clerk should

know exactly what needs to be done with your paperwork, and can answer all of your questions and even help you fill out the forms.

Once your paperwork is in order, the court will notify you of the upcoming court date. The person who originally sued you (the plantiff in the original suit) will typically have 35 days to respond.

Notify The Original Plaintiff

In some cases, once the paperwork is filed the court will notify the plaintiff and/or plaintiff's attorney. Be sure to ask if the court will serve notice or if you need to, as serving the notice of summons is crucial to winning your case. If it is your responsibility to serve notice, you can hire a third-party professional service company for a nominal fee (typically around $35).

What If They Offer to Settle Out of Court?

Very often the original plaintiff in your lawsuit will come back to you and offer to vacate the judgment, especially if they blatantly flouted the laws in winning the case in the first place and have no proof, say that you were properly served, or that they violated the FDCPA, etc.

If they offer to settle out of court, you should demand that they themselves file paperwork to dismiss the lawsuit. Also demand that they notify any collection agencies they may have hired to collect money and also notify the credit bureaus of the "mistake." It is also crucial before accepting any settlement offer (in writing, naturally) that they send you copies of any paperwork received from the courts about the judgment vacation or dismissal.

What Happens at Court?

In the best of all possible scenarios, the original plaintiff will not show up for the hearing to dismiss and you will win by default. If this happens, you shouldn't have to present anything to the court and should receive your dismissal automatically, especially if the original plaintiff never responded in writing to the summons.

In the second best of all possible worlds, they show up to the hearing and are unable to disprove your reason for requesting the dismissal:

1. They are unable to show proper documentation that you were properly served. 2. They are unable to show that the debt was legal in the first place (unable to show what the correct debt amount

should be, if a contract existed in the first place, etc.)

This means, of course, that you should have good documentation on the case and have it available to present in court. See Suing your Creditors.

What Happens When You Win?

You should receive a court document showing that the case was dismissed. Send copies of this document to any collection agency that's contacted you about the case and to the credit bureaus so they will remove any mention of the judgment from your credit report. Even though you demanded that the defendant do this, it only takes a few minutes and a few stamps to insure that it gets done promptly by doing it yourself.

Here is a sample letter "Motion to Vacate".

Motion to Vacate a Judgment - Sample Letter 16

The following is a sample motion to vacate a judgment. Before using it, make sure you read our information on Vacating a Judgment.

IN THE SUPERIOR COURT OF THE STATE OF [YOUR STATE]IN AND FOR THE COUNTY OF [YOUR COUNTY]

[The Original Plaintiff] Plaintiff,

vs.

[YOU] ,

Defendant.

No. [COURT REFERENCE NUMBER]

MOTION AND DECLARATION TO VACATE JUDGMENT

NOW COMES the Plaintiff, Pro Se and prays this Honorable Court to Deny the Defendant's Motion to Dismiss and Motion for Sanction for the following reasons:

1. Relief requested. The defendant(s) move(s) the court for an order vacating the judgment entered in this action and staying enforcement of the writ of restitution until the motion can be heard.

2. Statement of facts and issues. This motion is based on the following grounds: (Enter your reasons: you weren't properly served, the judgment was entered even though you filed the right paperwork)

Dated: .

______________________________Defendant(s) (Signature)

Defendant(s) Name (Print)

Address

Telephone Number

DECLARATION

I, [my name], declare as follows:1. I am the defendant in this unlawful detainer action.2. I request that the judgment entered in this action be vacated for the following reasons:Give your reasons: A) the collection agency never responded to my request for validation, therefore never giving any proof that the debt was mine under the FDCPA. B) The amount of the debt exceeded the state's usury interest limits

I certify under penalty of perjury under the laws of the state of YOUR STATE that the foregoing statement is true.

Signed in [CITY], [STATE] on [DATE].

__________________________________ Signature

Print or Type Name

Account Stated vs Contract Defenses in a Credit Card Lawsuit

Last Updated: October 26, 2011

In the old days, before the Internet and e-mail, a credit card agreement was signed by the consumer and sent into the bank for approval. However, these days many credit cards are issued online, and there is no signature needed. This lack of a written signed contract comes into play during lawsuits on defaulted credit card debt.

If you've been sued for a credit card debt, there are two different ways the Plaintiff can say you, the Defendant, entered into a contractual agreement with the original creditor. This is crucial, because if they say you became indebted via a contract, they will have to provide one in court in order to win.

Your method of answering the complaint will be different based on whether or not the Plaintiff is claiming "Account Stated" or "Entered into a Contract".

Why Account Stated Basis of Suit is Used by A Creditor

Most credit card companies cannot produce a contract with your signature, digital or other wise, as part of their case against you. This can get the case tossed out immediately. The easiest thing for a Plaintiff to do when suing you to declare that the contract is account stated. If they use account stated as the contractual agreement, no written contract is required as evidence. This makes it much easier to win their case.

The other big advantage to establishing an account as account stated is that the cause of action is the account stated aspect of the contract itself. If the Plaintiff is basing their claim on a contract, many times you can get the case thrown out because no cause of action was stated. If their case is based on account stated, the cause of action is built in.

Difference Between a Written Contract and an Account Stated Contract

To answer this question, we have to give you a mini legal lesson.

Classic contract law in general gives the definition of a purchase contract as: one party buys at an agreed-upon price and pays per the terms of the contract. From there, should a default occur, it's all a matter of how well the terms of the contract can be proven:

The most enforceable contract is the one where both parties sign a witnessed, signed written agreement. A signed but not witnessed contract is the next best thing. The least enforceable contract is an oral contract, since what exactly was agreed upon is difficult to prove. Somewhere in the middle between a signed contract and an oral contract is the account stated contract. It assumes

the use of an issued credit card means the consumer agrees to the credit card contract terms.

It should be noted, that once proved, all of the above contracts are equally legally binding. It's the difficulty of proof which distinguishes them.

How do You Know if the Plaintiff Maintains the Contract is Account Stated?

You ascertain what type of contract the Plaintiff is alleging by reading the allegations in the complaint. Remember, an allegation is every separate action the Plaintiff claims you did to harm them. The allegations are usually presented in a numbered list. The type of contract the Plaintiff is claiming is usually in the top three allegations. Based on the above

information, let's see if you can tell which kind of contract is indicated in each of these allegations.

Quiz - What Type of Contract?

(answers below)

1. Defendant is indebted to Plaintiff for goods and services plus contract interest purchased on an open account on a theory of account stated.

2. The Defendant owes a sum of $XXXX.XX dollars to Plaintiff for charges and/or cash advances incurred on a credit account as evidenced by the affidavit.

3. The defendant was indebted to Providian Bank and failed to make payments. 4. The defendant entered into a contract with the Plaintiff.

Answers

1. Account stated. 2. Most likely it would be an account stated, but without looking at the affidavit it's tough to know. Here's a typical

affidavit of debt. It's usually possible to get the affidavit thrown out. If the affidavit is thrown out, then the Plaintiff must produce the contract.

3. No method of contractual indebtedness was stated, so this would most likely be assumed to be a written contract. 4. This assumed a written contract.

How to Approach an Account Stated Lawsuit

Here is the full Account Stated Doctrine.Generally, an account stated is "an agreement based upon prior transactions between the parties with respect to the items composing the account, and the balance due, if any, in favor of one of the parties." To achieve an account stated, the agreement must amount to a recognition of a debt by a party, with a promise, express or implied, to pay the debt. This recognition can be established by a creditor delivering to a debtor a statement regarding the account and the amount owed. The receiver/debtor is bound to examine the statement, and if he admits it to be correct, a binding account stated is established. Once an account stated is established, it acts as an admission by both parties that the amount is due.

Stated simply, an account stated is generally established when a debtor fails to object to a bill from his creditor within a reasonable time.

Questions to Ask When Considering Defenses You Can Use to Attack the Validity of Account Stated Cases

How can the Plaintiff prove that the statement was held by the consumer without objection?

How can the Plaintiff prove that the consumer received the statement?

Is it sufficient for the Plaintiff to claim that a statement was mailed, but not paid?

The most common way to defeat an action for account stated is to show that the debt claimed is new, i.e., that there was no prior course of dealing between the parties or, at best, only a very short period with very few transactions. Therefore, the contract AND the statement of account are required (proof of the length of the debt).

What to Say to the Judge in Court

Last Updated: June 29, 2011

People are often scared out of their wits when faced with court. They don't know how to act or what to say when the judge asks them questions. Yes, it can make or break your case if you say the wrong thing, but you don't need to speak legalese or be experienced in court.

In general:

If you are not in the process of formally presenting your case, don't say ANYTHING unless judge asks you a question.

Don't EVER interrupt the judge. Call the judge "Your Honor" if addressing the judge directly. At other times, you can refer to the judge as "Your

Honor" or "the Court". Stand when you are speaking. If the judge asks you to go out in the hall to discuss a settlement with the Plaintiff's attorney, politely tell them you

don't want to settle. Insist on a court trial.

How to Answer Distressing Questions Truthfully, but in Your Favor

Judge: Is this your debt?You: Your Honor, the Plaintiff has provided no proof of this debt. To the best of my knowledge and evidence provided, this is not my debt.

Judge: Did you ever have a card with Bank A?You: Yes, I did Your Honor, but to the best of my recollection, this card was paid off. In addition, the Plaintiff has provided no proof the debt is unpaid or even that this PARTICULAR debt is mine.

Plaintiff's Attorney - Introduction of Evidence

Spoken Statements:if the Plaintiff is a collection agency or junk debt buyer, object to anything the attorney says as hearsay. The attorney and the plainiff do not have intimate knowledge of the creation of the debt.

Written Evidence:

1. If the Plaintiff's attorney shows anything wasn't included in the original summons/complaint package, object on the basis that it wasn't included in discovery. If the judge still allows it, see if it is authenticated.

If any evidence isn't authenticated, object to it as hearsay. Authenticated means there is a letter from Bank A stating that these are true copies of the original

Debt Collectors Suing Consumers Naming Capital One As Plaintiff

July 30th, 2008

This makes 3 in a row this week – I’ve listened to people who claim they are being sued by Capital One, when in fact it is an attorney’s office acting as a collector who is suing. What’s the difference? Plenty.

For one thing, it’s fraud. In each of the cases, the consumer called Capital One who confirmed they did not own the debt any more and had “assigned” the debt to Law Firm X. This changes the rules of the game in court significantly. If the Plaintiff in a lawsuit is a third party (not the original creditor), basically everything they say in court can be ruled as hearsay.

Why hearsay? The debt collector was not present when the debt was being formed and cannot give first-hand testify to the veracity of the debt, payments made or processed. Think about all the cases you’ve seen on Law and Order on TV. The debt collector’s testimony about a debt is tantamount to a witness who testifies that while he didn’t actually see a murder being committed, he heard about the details second hand. Second hand testimony is not valid and would be tossed out. In addition, the debt collector cannot present any documents unless they are authenticated as true and original copies by the original creditor, in this case Capital One. Can you see where this is going? With no evidence, they can’t win.

While a you can probably not get a case thrown out of court due to the “Incorrect Plaintiff” syndrome, you can:

1. Call your state’s Legal Bar Association and turn in the law firm and the attorney handling the case – this is strictly against the rules (it is fraud.) Make sure you inform the lawyer on the case that this is what you are doing. It could get them to back down and dismiss the case.2. Have you or your lawyer file a motion to dismiss or amend the original complaint to correctly reflect the right Plaintiff

How to tell if Capital One (or indeed any credit card company) is NOT the real Plaintiff:

1. Look at past correspondence from the law firm. Does it say “This is communication from a debt collector” on it? If so, you can positively identify the law firm as the real Plaintiff.2. How old is this debt? If it’s more than a year old, this is a red flag that the debt has been charged off. A phone call to the credit card company should confirm these suspicions.

Bankruptcy Alternatives to Filing Chapter 7 or Chapter 13 Bankruptcy

Last Updated: March 8, 2011

So many people have asked me about bankruptcy alternatives and bankruptcy debt that I've decided to publish my standard response. There is no easy way to get out of debt. Some hard choices are in front of you but there are always alternatives to the long-lasting effects of bankruptcy and bankruptcy debt.

There are five basic strategies for getting your debt back under control. I've listed them in order of best (1) to worst (5) in terms of the effect they will have on your credit:

1. If your credit isn't in terrible shape, can you reduce your other expenses while you pay the debt off? Perhaps some fairly painless changes to your lifestyle can bring your bills in line with your income. If not, some hard choices may be required. Some examples:

Do you really need things like cable T.V.? Get rid of the extraneous expenses. Ask a relative for a loan. Can you do without the second car? Sell it. Pull equity out of your home by refinancing. Apply for a non-secured signature loan. Sell your home, pay off your debts with the proceeds, and rent. Cash out your 401K/retirement benefits. Sell those family heirlooms/jewelry/guns that are too valuable to use anyway.

2. Sometimes the best way out of your financial situation, especially if your problem is credit card debt, is to just not pay your bills, and save the money you would have put towards minimum payments into a savings account. Really. Find out more about this here.

3. If you are willing to negotiate with your creditors (meaning long conversations on phones, letter writing, dealing with less-than-cooperative (or shall we say hostile?) customer service people) you can try and settle your debts yourself for less than you owe, sometimes without damaging your credit rating. Get all the details here.

4. If your credit is already hosed and the suggestions above won't make a dent in your debt, I'd suggest going through Consumer Credit Counseling Services (CCCS). Check your Yellow Pages for the local office. CCCS will give you a plan for paying off your debts as if you were in a Chapter 13 bankruptcy without ever filing a bankruptcy. More about CCCS.

5. If Consumer Credit Counseling Services (or CCCS) won't take you, you may want to consider bankruptcy. Doing a Chapter 13 bankruptcy takes longer, but your credit is in a little better standing than it will be if you file Chapter 7. You have up to 5 years to pay off your debts when you file Chapter 13 bankruptcy. Another plus is the bankruptcy drops off 7 years from the date you FILE, not finish. Therefore, you will have the bankruptcy for a maximum of 7 years.

6. If you are so far in debt that you will never be able to repay it, the best solution may be a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is the least desirable credit-wise but you are typically out of bankruptcy in 6 months and you don't have to repay any debt. One disadvantage is that this shows on your credit report for 10 years from the date of filing your bankruptcy. Another disadvantage is that creditors are starting to tighten their credit requirements. You may have a tough time getting financing in the future.

There is no magic solution for getting out of debt. Don't believe anyone who tells you otherwise.

Congratulations, Your Account is in Collections!

July 29th, 2008

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 I’m 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. Let’s see how.

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

2. If they are reporting on your credit report, it’s 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. It’s 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, it’s called pay for delete in the credit world.

4. It’s 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: here’s another good article on ways of dealing with collection agencies.

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. Pay for the Delete 2. Settle the Debt 3. Debt Validation 4. Dispute with the Original Creditor 5. 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. Back to Top

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. Back to Top

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. Back to Top

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. Back to Top

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. Back to Top

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.

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

Who Can Legally Pull Your Credit Report?

Last Updated: June 1, 2011

The last thing you want is for your credit report to fall into the wrong hands. Not only does your credit report contain information about you, such as your Social Security number, that identity thieves can use to incur debts in your name, it also contains a thorough record of your debts and accounts - something you aren't likely to want to share with anyone unless it's absolutely necessary. The Fair Credit Reporting Act (FCRA) protects each consumer's private information by restricting credit report access only to those who have permissible purpose to conduct a credit inquiry.

Banks and Credit Card Companies

Banks and credit card companies make a profit by loaning money to consumers and then collecting interest on the loan amount. When you apply for a loan or credit card, your lender reviews your credit record to determine how likely you are to

repay your debt responsibly. The lender then assigns you an interest rate based on your risk level via a process known as price-based risk assessment.

Your credit report contains all the information your lender needs to conduct a price-based risk assessment. Although many lenders will ask you for your permission before pulling and reviewing your credit report, they are not legally required to do so.

Prospective Employers

If you plan to apply for a new job in the near future, be aware of the fact that more and more prospective employers are reviewing applicants' credit records before making hiring decisions. Each employer's reason for conducting credit inquiries differs, but many look to see how responsibly you pay your debts since, for many, this is an indicator of how responsibly you will perform at your job. Still others look to credit reports to determine if your level of debt is high enough to make you a theft risk to the company.

A prospective employer must have your written permission before pulling a copy of your credit report. If the employer decides not to offer you the job based on information within your credit records, it must notify you of that fact and notify you of your federal right to a free credit report based on adverse action.

Debt Collectors

Your credit report contains your most recent address and your previous addresses for the past five years. If a debt collection agency cannot locate you, it may pull your credit report as part of the skip-tracing process. Debt collectors also conduct credit inquiries in order to evaluate your assets and determine if you make a good candidate for a lawsuit. Like lenders, collection agencies have permissible purpose to access your credit records and do not require your permission to do so.

Landlords

If you decide to rent a house or apartment, you can expect to undergo a credit check. Landlords check your credit to ensure that you pay your debts on time. Renters who pay other creditors on time are more likely to also pay their rent in a timely manner.

When reviewing your credit history, landlords pay close attention to any past evictions you have on file. Evictions are public records and, as such, appear on your credit report for up to seven years. Regardless of whether or not you pay your debts in a timely manner, a previous eviction serves as a red flag for many landlords and could negatively affect your ability to get approved for housing.

Pulling Your Own Credit

Companies you do business with are not the only ones who can access your credit history. The FCRA gives you the right to request one free credit report each year from the credit bureau of your choice. Some states, such as Georgia and California, provide residents with two free credit reports per year. Taking advantage of your right to a free copy of your credit report helps you identify any errors your report contains and work toward correcting them.

The FCRA prohibits the credit bureaus from releasing your credit history to any company or individual that does not have permissible purpose to view it. Should this occur, you have the legal right to file a lawsuit against the person or business that requested your credit report without your permission

What Are My Rights Regarding Collection Agencies?

Last Updated: July 28,2011

Like so many Americans these days, you are behind on your credit card payments and your balances are more than you can pay off. You have not made a payment on your credit cards in over 3 months and now your creditors have turned your case over to a collection agency. Now, instead of getting constant phone calls from your creditors, you are getting phone calls from some collection agency trying to collect on this debt. Do you have to put with this? Are they allowed to call you day and night? Can they contact your immediate family? These are all things the collection agency will try to get away with, but more often than not, they are in violation of the rules set forth by the Fair Debt Collection Practices Act (FDCPA).

The FDCPA was instituted to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with a way of disputing and obtaining validation of debt information in order to ensure the information's accuracy. The act created guidelines under which debt collectors may conduct business.

Prohibited Conduct by a Collection Agency

The FDCPA prohibits the following conduct when attempting to collect a debt:

Hours for Phone Contact - contacting consumers by telephone outside the hours of 8 a.m. to 9 p.m. local time is prohibited.

Failure to Cease Communication Upon Request - communicating with consumers in ANY way after receiving

written notice that said consumer wishes no further contact or refuses to pay the debt. Engaging a Person in a Telephone Conversation Repeatedly or Continuously - this is with intent to annoy,

abuse, or harass any person at the number called. Contacting a Person at Their Place of Employment - after having been told this is not acceptable and prohibited

by the employer. Contacing a Person Known to be Represented by an Attorney Communicating with Consumer After Request for Validation Has Been Made - communicating with the

consumer after receipt of a consumer's written request for verification of a debt made within the 30 day validation period (or for the name and address of the original creditor on a debt) and before the debt collector mails the consumer the requested verification or original creditor's name and address.

Misrepresenting the Debt - using deception to collect the debt by claiming to be an attorney or a law enforcement officer.

Publishing Consumers Name or Address - on a "bad debt" list. Seeking Unjustified Amounts - collection agency is demanding amounts not permitted under applicable contract

or law. Threatening Arrest or Legal Action - the threat to take any action that cannot legally be taken is prohibited. Using Abusive or Profane Language Contacting Third Parties - revealing or discussing your debt with neighbors, co-workers, family members (other

than spouse), or friends is strictly prohibited. Reporting False Information on a Consumer's Credit Report - or threatening to do so in the process of

collection.

Required Conduct by a Collection Agency

The FDCPA requires debt collectors adhere to the following actions:

Identify Themselves and Notify the Consumer - in every communication, that the communication is from a debt collector, and that any information obtained will be used to effect collection of the debt.

Give the Name and Address of Original Creditor - upon the consumer's written request and made within 30 days of receipt of the notice.

Notify the Consumer of Their Right to Dispute the Debt Provide Verification of the Debt - if consumer sends a written request for verification within 30 days, then the

debt collector must either mail the consumer the requested verification information or cease collection efforts altogether. Verification should include at a minimum the amount owed and the name and address of the original creditor.

File a Lawsuit in a Proper Venue - a debt collector may file a lawsuit, only in the place where the consumer lives or signed the contract.

Commonly Asked Questions Regarding Your Rights When Dealing with Collection Agencies

May a debt collector contact any person other than you concerning your debt?If you have an attorney, the debt collector may not contact anyone other than your attorney. If you do not have an attorney, a collector may contact other people, but only to find out where you live and work. Collectors usually are prohibited from contacting such permissible third parties more than once. In most cases, the collector is not permitted to tell anyone other than you and your attorney that you owe money.

What is the debt collector required to tell you about the debt?Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you, if you believe you do not owe money?A collector may not contact you if, within 30 days after you are first contacted, if you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What can I do if a bill collector violates the FDCPA?First, try to get the collector back on the phone and repeat whatever you said the first time that caused the collector to make the illegal statement(s). Have a witness listen in on an extension or tape the conversation. Taping is permitted without the collector's knowledge in all states except California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania and Washington.

Then file a complaint. You can even file a complaint if you don't have a witness, but a witness helps. File your complaint with the Federal Trade Commission, 6th & Pennsylvania Ave., NW, Washington, DC 20850, 202-326-2222.

Next, complain to your state consumer protection agency (who in some cases is your state attorney general's office).

Finally, send a copy of your complaint to the creditor who hired the collection agency. If the violations are severe enough, the creditor may stop the collection efforts. If the violations are ongoing, you can sue the collection agency (and the creditor that hired the agency) for up to $1,000 in small claims court for violating the FDCPA. You probably won't win if you can prove only a few minor violations. If the violations are outrageous, you can sue the collection agency and creditor in regular civil court.

Collection Agency Harassment - What are Your Rights?

Last Updated - June 24, 2010

You owe money, and a debt collector or collection agency is calling you night and day. Collectors are applying the thumbscrews -- often illegally -- as recent complaints to the Federal Trade Commission bear out. In this situation, it is important you know your legal rights.

Collection Agencies Are Not Allowed to:

Call your office; Call your home before 8 a.m. or after 9 p.m.; Address you in an abusive manner; Call family or friends in an attempt to collect your debt; Harass you; Make false or misleading statements; or Add unauthorized charges.

If any of the above is happening to you, tell the collection agency to stop harassing you. If it continues, ask for its name and address and report it to the Better Business Bureau, the Federal Trade Commission (see below), or your state's attorney general's office. The federal Fair Debt Collection Practices Act also states that you can demand that the collection agency stop contacting you, except to tell you that collection efforts have ended or that the creditor or collection agency will sue you. However, you must put your request in writing.

Please note: The FDCPA applies only to bill collectors who work for collection agencies, not the original creditors. You will not be able to get the collection department in your credit card company to stop calling you with a letter. Only New York City has a local consumer protection law that requires the original creditor to stop calling you after a written request to do so.

What if the Collector Breaks the Law?

If a bill collector violates the FDCPA, try and see if you can get the illegal behavior on tape. Taping is permitted without the collector's knowledge in all states except CA, CT, DE, FL, IL, MD, MA, MI, MT, NH, PA, and WA. At the very least, record everything the bill collector says in some form of a written log. Be sure to include the dates of the conversations. The next step is to file a complaint in writing. You can even file a complaint if you don't have a witness to any of these conversations, but a witness helps. The correct agency to file your complaint with is the FTC. You can even file a complaint online:

Federal Trade Commission6th Street & Pennsylvania Avenue NWWashington, DC 20850202-326-2222http://www.ftc.gov

Next, complain to your state consumer protection agency. Then send a copy of your complaint to the creditor who hired the collection agency. If the violations are severe enough, the creditor may stop the collection efforts.

If the violations are ongoing, you can sue the collection agency (and the creditor that hired the agency) for up to $1,000.00 in small claims court for violating the FTC regulations (note: you probably won't win if you can prove only a few minor violations). If the violations are outrageous, you can sue the collection agency and creditor in regular civil or small claims court.

Common Collections Tactics and Rebuttals

Some collection agencies do employ collection methods involving the use of false and misleading statements. Just like any other high pressure salesman, these guys will make lots of "helpful" suggestions to get you to close the deal NOW. They will always try to get you to pay up right then and there. Some examples:

Insist you FedEx or Express your check to them (can you really afford to add $12 to the debt you already can't pay?)

Charge it on your credit card (sure, charge up the old card - isn't this how you got into trouble in the first place?) They will try to get you to pay by "telecheck". This means you give them your checking account number, and they

deduct the amount electronically. Are you crazy? NEVER give out your checking account and check routing numbers.

While the FDCPA allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings, or the addition of such interest is allowed under state law, it is not necessary to spend the money or risk your checking account for any of the above methods. The three or four days it may take to mail a payment with a first class stamp, if they do decide to come after you for interest, won't break the bank.

What if You Can't Pay?

It is generally in your best interest to settle your debts as quickly as possible, or use the debt validation techniques outlined here, or by settling your debts. Before obtaining a court judgment, a bill collector generally has only one way of getting paid: Demand payment by calling you and sending you threatening letters. If you refuse, the collector can't do much else short of suing you. Once the collector (or creditor) does sue and gets a judgment, however, you can expect more aggressive collections actions:

If you have a job, the collector will try to garnish up to 25% of your net wages. The collector also may try to seize any bank or other deposit accounts you have. If you own real property (real estate), the collector will probably record a lien, which will have to be paid when you

sell or refinance your property.

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 a full payment check, even if she strikes out the words "payment in full," or writes "I don't agree" on the check, she can't come after you for the balance. The states in which this law is enforced include:

Arkansas Colorado Connecticut Georgia

Kansas Louisiana Maine Michigan

Nebraska New Jersey North Carolina Oregon

Pennsylvania Texas Utah Vermont

Virginia Washington Wyoming  Some states have modified this rule. In the following states, if a creditor cashes a full payment check and explicitly retains his right to sue you by writing "under protest or without prejudice" with his endorsement, then he can come after you for the balance. But those exact words must be used. If he writes "without recourse," communicates with you separately, notifies you verbally, or writes on the check that it is partial payment, it is not enough.

Alabama Delaware Massachusetts Minnesota

Missouri New Hampshire New York Ohio

Rhode Island South Carolina South Dakota West Virginia

Wisconsin

I Paid a Collection to Have it Removed – It’s Still on My Credit Report

Q. I have a collection on my credit report from a gas utility company. Two years ago, I told them I would pay the entire amount if they would remove it from my CR. When I called, the person said yes and was very eager to inform me they would update to the credit bureaus in a few days. They took my payment on credit card.

Two years later, the item is still on my credit report, listed as unpaid, amount past due $444, date opened is 7/2009, terms 1 month, payment history nothing listed except Sept 09. I spoke with the CA and they claimed there was no pay to remove agreement made, which I stupidly did over the phone, and that they had properly updated the credit bureaus to say I had paid the debt so it was not their problem.

My credit score has sat motionless at 650 for 2 years now all because of this item. I really have no idea what to attack to try to get it removed, and its really frustrating because I got screwed over 3 or 4 times now, by this one ridiculous debt. Any help will be greatly appreciated!!

A. So you were trying to use the technique “pay for delete“, where you’re basically bribing the collection agency to remove your listing from your credit report by paying them in full. This works if you have documentation – the agreement in writing and a copy of a check. Unfortunately, and you know this, you didn’t get a written agreement and paid over the phone, essentially leaving no written record.

The biggest thing you have going for you in your favor is that the balance is showing unpaid when in fact it was paid. This means the collection agency is in violation of the Fair Credit Reporting Act (FCRA) for showing an account status inaccurately. Technically, the collection agency owes you $1000 for each credit bureau showing you unpaid.

All you need to do is find your records showing that you paid the balance. Since you paid by credit card, you should be able to get a copy of the statement showing you paid.

You can write them a letter, along with a copy of proof you paid the account off, explaining the facts of life to them. Tell them that in lieu of the $1000s of dollars they now owe you, you will accept a deletion of the account off of your credit report. You can threaten to take them to court.

If they merely update it to “paid” with a zero balance, they better not re-age your account by showing the update as recent activity. That is illegal, and will hurt your listing. Updating your account properly, even without a deletion, will help your credit score. The older the account is, the less it will affect your credit score.

If they ignore you, your best bet would then be to take them to court for violations of the FCRA. This will definitely get their attention. For more information about how to take them to court, read our article on suing your creditors

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 NameYour AddressCity, State Zip

Collection AgencyCollection Agency AddressCity, 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

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 co-worker, 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.

How Long Do Negative Items Stay on My Credit Report?

Last Updated: May 28, 2010

We asume you're asking this question because you already have your credit report. Don't have your credit report yet? Here's our handy-dandy list of places to get it.

Accurate negative information generally can be reported for seven years, but there are exceptions:

Bankruptcy information can be reported for 10 years; Information reported because of an application for a job with a salary of more than $20,000 has no time limitation; Information reported because of an application for more than $50,000 worth of credit or life insurance has no time

limitation; Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of

limitations runs out, whichever is longer; and Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven

years after certain guarantor actions. Tax liens stay on 7 years from the date PAID.

Some other rules to keep in mind:

The Statute of Limitations has nothing to do with the length of time something can stay on your credit report, they are two TOTALLY separate things. Again, there is absolutely NO relationship.

The length of time a negative mark can stay on your credit report starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account. Some collection agencies update their reporting status on you to keep the account active with the bureaus to extend the time the account appears on your report. Very crafty and underhanded of them, because most often the account is updated and the period of time the account is active appears to be extended. This is illegal! Challenge this! If you do, bureaus will correctly remove it 7 years from origination. Period. In other words, paying a collection will not keep it on your credit report for a longer period of time.

We also received a letter from R. Stuart Phillips, who filed a class action lawsuit against the Big 3 credit bureaus. Here is a letter he received containing the latest interpretation from the FTC: - This is a staff interpretation letter.

R. Stuart Phillips, Esq. www.lawyerphillips.com

Division of Financial Practices

~

Clarke W. Brinckerhoff Attorney - 202-326-3224 UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTON, D.C. 20580

February 15, 2000

Ms. Alaina K. Amason 14155 Shire Oak San Antonio, TX 78247

Dear Ms. Amason:

This responds to your letter concerning the time limitations imposed by the Fair Credit Reporting Act ("FCRA") on the reporting of chargeoff accounts by a consumer reporting agency ("CRA," usually a credit bureau). We list your inquiries on this topic below in italics, with our replies immediately following each item.

1. What reporting limits does the FCRA provide with respect to chargeoffs, and how long have they been in effect?

Section 605(a)(4), which has been in effect since the FCRA became effective in April 1971, has always prohibited CRAs from reporting chargeoffs that are more than seven years old.(1) Section 623(a)(5), which became law in September 1997, requires a creditor that reports a chargeoff to a CRA to notify the agency (within 90 days of reporting the account) of "the month and year of the commencement of the delinquency that immediately preceded" the chargeoff. Section 605(c)(1) provides that the seven year period begins 180 days from that date. Both provisions were part of the major revision to the FCRA that were enacted in 1996.(2)

2. Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-chargeoff collection efforts by making a payment on the debt, or (C) the consumer disputes the account with a CRA? Does it matter whether the 7-year period has expired when any of these events occurs? No. In enacting the new provisions discussed above, Congress intended to establish a date certain -- 180 days after the start of the delinquency that led to the chargeoff -- to begin the obsolescence period. It did so to correct the often lengthy extension of the period that resulted from later events under the original FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson, 08/31/98) that discuss the impact of these provisions, and the legislative history relating to their enactment, in more detail. Because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed -- sale of the charged off account by the creditor, or a payment on or dispute about the account by the consumer -- changes the allowable period for a CRA to report a chargeoff.

3. Since Sections 623(a)(5) and 605(c)(1) provide new rules for calculating the 7-year period that became effective in 1997, do chargeoff accounts now have different obsolescence periods depending on when the chargeoff occurred? Yes. Section 605(c)(2) states that the section "shall apply only to items of information added to the (CRA) file of a consumer on or after" 455 days after enactment, or December 29, 1997. Therefore, a chargeoff reported to a CRA on or after that date is subject to the new commencement-of-the-delinquency method of calculating the obsolescence period set forth in Sections 623(a)(5) and 605(c)(1). On the other hand, a chargeoff reported to a CRA before December 29, 1997, is not covered by the new provisions, as discussed in one of the enclosed letters (Kosmerl, 06/04/99). If a credit account was reported as a chargeoff before that date, the Commission's view has been that it can be reported for seven years from the date the creditor actually charged it off.(3)

The opinions set forth in this informal staff letter are not binding on the Commission.

Sincerely yours,

Clarke W. Brinckerhoff

1. Section 605(b) provides that there is no time limit applicable to a report made in connection with credit involving a principal amount (or insurance with a face amount) of $150,000 or more, or employment for a salary of $75,000 or more. Prior to September 1997, those amounts were $50,000 and $20,000, respectively.

2. The Consumer Credit Reporting Reform Act of 1996 (Title II, Subchapter D, of Public Law 104-280, signed into law on September 30, 1996), made many other changes to the FCRA.

3. Commentary on the Fair Credit Reporting Act, 16 CFR Part 600 Appendix, comment 605(a)(4)-2. 55 Fed. Reg. 18804, 18818 (May 4, 1990

Here is the entire legal text of the Fair Credit Reporting Act pertaining to the credit reporting time period (if you quote it is "Section 605 of the FCRA"):

§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]

(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.

 

(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

 

(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.

 

(4) Accounts placed for collection or charged to profit and loss which antedate the report by

more than seven years.(1)

 

(5) Any other adverse item of information, other than records of convictions of crimes which

antedates the report by more than seven years.1

(b) Exempted cases. The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with

(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;

 

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or

 

(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

(c) Running of reporting period.

(1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

 

(2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996