Posts Tagged ‘credit repair’
From Discomfort to Opportunity
There is nothing pleasant about receiving a collection letter. But there is a powerful credit repair technique, known as debt validation, which can turn your discomfort into opportunity. Like most credit repair techniques debt validation should be done carefully and only in circumstances conducive to success.
Your Rights
Debt validation is the right to challenge a debt and receive written verification of a debt from a debt collector. This right is granted by the Fair Debt Collection Practices Act (FDCPA), Section 809. The intent of the law is to prevent errors in collection of debt, including billing the wrong person, the wrong amount, or for debt that has previously been paid.
Timing Your Validation
It is important to know that you only have 30 days to exercise the right to validate debt under the FDCPA. Practically speaking, collectors are sensitive to the 30 day time limit and if you ask for validation beyond the time limit it is highly likely that your request will be ignored.
Avoiding Action
Before attempting debt validation you should investigate the statute of limitation (SOL) on the debt and establish the extent of your legal exposure. The SOL is the length of time a collector can force the payment of a debt through the courts. Understanding SOL is helpful for all credit repair efforts, as beyond the SOL, a collector cannot sue you. Or if they do, you will prevail in court by claiming the SOL defense.
State Differences
The statute of limitation varies from state to state as well as by debt type, so you will have to research your specific SOL on the Internet. If the debt was incurred in a state other than that of your current residence, check both state SOL rules, as a collector may apply the one that is most favorable to their cause, i.e. the longer one.
Settlement Opportunities
The importance of knowing your SOL is considerable. Validating a debt that is beyond the SOL is not likely to set in motion unwanted legal activity, such as a lawsuit. Conversely, be aware that some collectors treat debt validation as a trigger for the intensification of collection efforts. Debt validation within the SOL is still a valuable credit repair technique, but you might chose to limit your efforts to debts that you are prepared to settle.
Preparing Your Letter
Once you have researched the SOL and decided to move forward, it is time to prepare your validation letter. Keep your letter as simple as possible. Like other credit repair communications, there is no benefit to sharing your life story. There is also no value, at least in your initial communication, in taking an aggressive stance. Be polite and ask them to validate the debt and provide a bulleted list of specific requests including documentation that the collector owns the debt and an accounting of the amount due.
The Outcome of Validation
Per the FDCPA, if the collector has not reported your debt to the credit bureaus they are not allowed to do so until they provide validation. And if have already reported and are unable to validate the debt they must cease collection efforts and stop reporting.
Following Through
Debt validation is a powerful credit repair tool which, in most cases will produce excellent results. But you should also be aware that legal precedent defining the obligations of the collector is inconsistent. As a result, some collectors will provide only minimal documentation and consider their job done. In addition, as there is no time limit for a collector to respond, you may occasionally need to press the issue.
By federal law, credit repair company, must give a copy of Consumer Credit Rights Under State and Federal Law before you sign a contract. These organizations also must give you a written contract that spells out your rights and obligations. The law contains specific protections for consumers.
A credit repair company can not:
- Making false claims about their services.
- Not debit until they have completed the promised services.
- Perform any services until they have your signature on a written contract and have completed the waiting period of three days. During that time, you can cancel the contract without paying any fees.
Your credit contract should specify:
- The terms of payment for services, including the total cost.
- A detailed description of the services are performed.
- The period of time to achieve its results.
- Any guarantees they offer.
- The name and address of the company.
Do you Have You Been Victimized? Many states have laws strictly regulating the credit repair companies. The state government can help if you have lost money on credit repair scams. If you have had problems with a credit repair company, do not be embarrassed to report the situation. If you think that contacting the government will only worsen your problem is wrong. The laws are there to protect him. Contact the Office of the Attorney General of your state.
No one can legally remove accurate negative information from your credit history. The law allows you to request an investigation of information in your credit report that you dispute as inaccurate or incomplete. There is no charge for making this investigation. Everything a credit repair clinic can do for you legally, you can do yourself for a low cost. From as established by the Fair Credit Reporting Act:
- You are entitled to a free copy of your credit report if denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit reporting agency, the company with which you filed the application must provide the name, address and telephone number of the credit reporting agency that provided the information.
- You can dispute erroneous or outdated items for free. Ask for a dispute form to the credit reporting agency or submit their written submissions, together with any documentation supporting its contention. They do not send original documents, keep the originals and send copies.
Clearly identify each item in his report dispute, explain why you dispute the information and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of your credit history will be sent to anyone who received a copy of its report within the past six months. Job seekers can request corrected reports sent to those who received the incorrect report for employment in the past two years.
When the reinvestigation is complete, the credit bureau must give you written results and must give you a free copy of your report if the result of the dispute involved a change. If something has changed or is out of his report, the credit reporting agency can not put the disputed information back in your file unless the information provider verifies its accuracy and completeness and that the credit bureau will give a warning writing containing the name, address and telephone number of the supplier.
You should also tell the creditor in writing that you are disputing something on your credit history. Many providers of information assigned a specific address to which disputes should be sent. If the provider reports the matter to any credit bureau must include a notice of your dispute. Also, if you are correct “information is incorrect” information provider can not re-use that information. If the reinvestigation does not resolve your dispute, have the credit reporting agency to include its version of the dispute in your file for future reports. Remember that there is no charge for a reinvestigation.
Accurate negative information generally can stay on your report for seven years but there are exceptions:
- The Bankruptcy information may appear on your credit history for 10 years.
- Credit information reported in response to a request for a job with a salary of $75,000 or more have no time limit.
- Credit information reported because of an application for credit or life insurance valued at an amount exceeding $150,000 has no time limit.
- Information about a lawsuit or a trial against him can be reported for seven years or until the deadline of the statute of limitations reported, whichever occurs later.
- The default information concerning student loans insured or guaranteed by the Government of the United States can be reported for seven years after certain actions that the company guarantees the loan to take.