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PSYCHDOC'S CREDIT REPAIR SCHOOL FOR BEGINNERS
by Randy Padawer (PsychDoc)...
CREDIT 101: The Ethics of Credit Repair, 9/8/2005
CREDIT 102: A Consumer Law Overview, 9/22/2005
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005
CREDIT 104: Triaging Your Reports, 10/20, 2005
CREDIT 105: FCRA Street Fighting, 11/3/2005
CREDIT 106: FCBA Street Fighting, 11/17/2005
CREDIT 107: FDCPA Street Fighting, 12/1/2005
CREDIT 108: Small Claims Lawsuits, 12/15/2005
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LESSON ONE TRANSCRIPT
CREDIT 101: The Ethics of Credit Repair, 9/8/2005
First, when we talk about credit repair we're talking about a number of things
really. Is credit repair about making your credit report more accurate? Is credit
repair about "fixing" your credit report? What's credit repair? Is credit repair
about getting better rates on loans? Getting credit cards? Buying a car? Is credit
repair about debt negotiation? Debt reduction? Debt elimination? Learning tricks
to improve your credit score? When you talk about getting your life back in order,
I'm guessing that (like me at one time) bad credit has caused some heartache for
you!? I remember when I couldn't buy a car... We'll touch on all of these during
the next few weeks, but the emphasis will be upon removing negatives from your
credit report. When negatives peel away, your credit score typically improves.
And when that happens, you'll get better rates on loans. Moreover, as a happy
consequence of confronting what's on your credit report, you may find that
alleged (I'll explain that adjective in Lesson 7) creditors may forgive alleged
debts. But debt forgiveness is a possible symptom. My emphasis is about your
credit reports. Everyone has to define their own emphasis though. I've done
some writing and seminar facilitation for The Motley Fool (Fool.com), and I got
into a bit of trouble as a result of that involvement one fine autumn day a couple
of years ago. Equifax was (and maybe continues to be) an advertiser with their
website, and they didn't much like it when I wrote stuff like this... to quote...
"There are a few hardball tactics which you can use with the bureaus and
creditors that will compel them to remove negative tradelines, irrespective of
accuracy, from your credit reports." Basically, Equifax contended that I was
breaking the law when I made that statement, and my Foolish colleagues agreed.
So we watered down my statements a bit. We gave in. We caved. We sold out.
QUESTION for discussion... Does anybody know how my statements may have
constituted lawbreaking? anybody know why Equifax thought I'd broken the law?
all of us who tell another human being is defined as a CRO by federal law...
crazy huh Section 404 ("Prohibited Practices") of the Credit Repair Organizations
Act (CROA) reads, "No person may..."Now before I say another word, note that
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CROA doesn't say, "No credit repair organization may..." or even "No
organization may..." Rather it says, "No person may..." and continues "make any
statement, or counsel or advise any consumer to make any statement, which is
untrue or misleading... with respect to any consumer's credit worthiness, credit
standing, or credit capacity to... any [credit bureau]... or any creditor." it almost
seems to violate the First Amendment! Nobody's ever challenged that incourt. I
think it would fall flat. But... As I sit here tonight I am a CRO of one person.
Equifax basically said that the phrase "irrespective of accuracy" meant that I was
advising people to disregard the truth when making statements about
themselves, that this violated federal law, and that if I didn't revise my tune they
might not be interested in advertising with The Motley Fool anymore. Guess
what? Equifax was wrong. There ARE some things which may compel a credit
bureau or creditor to remove items from a credit report IRRESPECTIVE OF
ACCURACY... and YOU DON'T HAVE TO TELL LIES in order for that to happen.
In fact, let me say it more plainly...I call these PSYCHDOC'S FIVE BASIC
CREDIT REPAIR PRINCIPLES...
1) You should always TELL THE TRUTH when communicating with credit
bureaus and those companies which report to them.
2) Telling the truth is usually more INTIMIDATING to those entities.
3) Telling the truth is almost always more EFFECTIVE vis-a-vis your goals.
4) Credit repair involves INTERVENTIONS which invoke one of three
TRUTHFUL communication tactics: a) polite requests, b} requests for
information, and c) legal demands. and the last one...
5) Credit repair involves leveraging your FEDERAL CIVIL RIGHTS in the service
of improving your credit rating.
Another quick definition... I use the word INTERVENTION a lot. Basically a credit
repair intervention is anything you do to intervene against the current credit
status quo. Interventions include credit bureau disputes, goodwill requests,
escalated information requests (which include creditor-directed communications
like the "Nutcase" series and other effective tactics), formal requests for
validation, and more. Such interventions usually take the form of things like hard-
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copy letters [best], internet-based communications [sometimes ok, depending],
phone calls [iffy], smoke signals [forget it], etc. I've been asked... Well, gee whiz,
how can one dispute a negative that is accurate with a credit bureau without
telling a lie? As an aside right now, though, does anybody have any ideas how
one can dispute an accurate negative listing without lying? Discussion
question...we'll definitely have a hard copy discussion ... how can one dispute an
accurate negative without lying? any old-timers care to chime in? well... smile.gif
well, what if it's yours? What if something is yours on your report, and it is
reported as late because it was truly late...We'll explore ETHICAL DISPUTING
examples more fully in the fifth lesson (CREDIT 105: FCRA Street Fighting) For
now, consider this: In the case of credit bureau disputes, it's the difference
between saying, "The Sears tradeline (account 12345) is not mine" versus
"Provide documentation that the Sears tradeline (account 12345) belongs on my
credit report and that my rights have not been abrogated. Otherwise please
delete this damaging data." When you say, "It's not mine" (and it's yours), you're
treading some really rough territory. The bureaus don't want to get a
letter from somebody who knows their rights and who can spell out what it is
they need to do. Now, many people have achieved great results saying, "not
mine. The problem comes later... if indeed you wanted to take the bureau to
court. You want your documentation with them to be 100% honest and on the
mark. I sued all three CRAs in small claims court a few years ago. It wasn't as
tough as that sounds, ha. But that's not where this lesson is heading. We'll talk
about small claims in Lesson 8. Will provide some letters, templates, etc. With
inquiries... I would say "Please show documentation that the creditor gave
evidence of their permissible purpose when requesting access to my report.
Otherwise you are bound by federal law to remove this inquiry now. I have
ALWAYS contended that truthful words are more intimidating than a simple lie.
The CRAs read lies all the time. But a carefully written letter that reveals the
writer to be educated to their rights...is far worse for them potentially. The same
logic applies to creditors as with CRAs. You're presenting yourself as someone I
like to term "a litigious nutcase"... but you're not shouting...you're not being
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impolite... you're not making accusations... and you're not telling lies. In fact...
The truth is in the asking If you look back over this transcript in the chat window
to where I talked about the types of interventions (my fourth basic law...)
4) Credit repair involves INTERVENTIONS which invoke one of three
TRUTHFUL communication tactics: a) polite requests, b} requests for
information, and c) legal demands. Polite requests may be goodwill requests...
Or it may just be you begging Lowe's credit to remove that 30 day late from 3
years ago (which they may do). b} "requests for information" ... those types of
interventions include original creditor "validation" (so-called... we'll open that bag
of worms in Lesson 7 oops... Lesson 6 or debt validation (Lesson 7) where
basically you're asking the CRA (in the case of the HONEST AND ETHICAL
dispute I mentioned before) or the creditor for more information that they simply
don't want to take the time to provide necessariliy. They don't know where you're
coming from, and that's better. When you say, "This wasn't mine" and they
basically know different, the line is drawn in the sand. When you say, "Pursuant
to my rights under the Fair Credit Billing Act, please provide documentation
regarding every transaction ever associated with this account." Then their heads
spin (you hope,and they often do, lol) Much more powerful. Some creditors in
that situation-- especially if the stakes are low -- will simply delete the negs rather
than fool with it. That's the desired outcome for FDCPA validation... and for
FCBA escalated information requests... and for CRA disputes as well CRAs don't
provide account information like that but they are compelled to provide the
information that federal law spells out in the FDCPA in the FCRA. FCRA compels
credit bureaus. FCBA compels original creditors. FDCPA compels third party
collectors. That's a very over-simplified way to "map" it out in your mind. I used to
teach child psych at the University of Tennessee, and I was famous for repeating
myself... ha but I want to repeat one thing that was a cut and paste from
earlier...with respect to CRAs. In the case of credit bureau disputes, it's the
difference between saying, "The Sears tradeline (account 12345) is not mine"
versus "Provide documentation that the Sears tradeline (account 12345) belongs
on my credit report and that my rights have not been abrogated. Otherwise
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please delete this damaging data. "As you read the statute... and interact with
others on Creditboards... and become more familiar with the law and become
more comfortable with the material... You'll find yourself creating variations on
those kinds of interventions, and you'll likely share them with others! Then, a few
years later, you'll lead a class like this, LOL. (If you still find the material
interesting, ha.) In other words... that sample CRA dispute I just provided...
"Provide documentation that the Sears tradeline (account 12345) belongs on my
credit report and that my rights have not been abrogated. Otherwise please
delete this damaging data."would probably get OLD fast...think of your own
words but the point is the same ask them to prove it and don't you lie
To risk moving away from psychology and entering the realm of the preacher... I
just never understood those consumer advocates who believed that they needed
to advise others to tell lies. The CROA notwithstanding... lies just don't work as
well. You could send them separate... you could group a couple together, etc.
"Demonstrate that this material appears correctly on my reports. Request ample
documentation from these two alleged creditors." "If these items appear in error, I
have a cause for action because my rights may have been abrogated in that
case." See what you can do, ha?! Now, in real life... those words will have the
same impact as a "not mine" -- except more powerful because they don't know
where you're going next (EVEN THOUGH YOU DIDN'T THREATEN A LAWSUIT
EITHER) brevity is good Ok... So this brings us to the next item on tonight's
syllabus What are your credit repair goals? We did cover this a bit at the
beginning... It's helpful in credit repair...as with just about any worthwhile
endeavor in life...to know your goals before you embark. I think it was Missbee
who said she wanted a house you just have to know what you want fantastic.
Once you know...You'll be more focused. It's hard for me to get away from my
background in psychology... Finally, the last portion of tonight's syllabus... A note
about attitude. In this regard, a few suggestions have worked for me...
1) Be serious.
2) Learn about the various laws discussed on Creditboards... and I'll interject
from my prepared notes...those laws include... minimally...
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FCRA
FCBA
FDCPA
and even the Truth in Lending Act (which is a superset of the FCBA and a few
other civil rights)
HIPPA those are the ones you should get to know if you can if reading law
outright bores ya... (I love it but I'm weird) then there's a wonderful other way to
get it
READ THE BOARDS these people make it so interesting "search" is good
oops... getting back to my suggestions
3) Embrace your community. (In this case, embrace your friends on
Creditboards.com. They're your best allies.)
4) Retain all written correspondence, credit reports, and any other written
materials.
5) Make notes as if you're headed to court, even though you probably aren't.
Such documentation will likely become very helpful during your journey.
6) Don't scream, yell, threaten, or make an ass of yourself.
Those six things will keep you in good stead. (Ah yes, that, Blue) one bit of
controversy...I was browsing the internet last week and listened to some
recorded phone calls between a credit consultant and a few alleged creditors. I'm
not going to tell you whose calls these were, because I have much respect for
this particular person (even when some others sometimes don't). I've learned
much from this individual. Regardless, I disagreed with the consultant's attitude...
In every case, the phone call descended into a crescendo of conflict. The
consultant was SCREAMING AND YELLING..."IF YOU DON'T PROVIDE
VALIDATION, THEN I WON'T PAYYYYYYYYYYYYYYYY!" the consultant
wailed. "DON'T YOU UNDERSTAND, YOU IDIOT!!!!!???????????" And on and
on and ON AND ON AND ON. This ultimately gets you nothing that couldn't have
been achieved without risking an aneurysm. Similarly, threatening letters can be
shelved in favor of ones which -- through ethical but escalated requests for
information to which you are entitled -- simply irritate the other party into
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submission. I once wrote an essay on another discussion board which included
this suggestion: "Don't be a sonofabitch." I'd like to quote myself here...
"Some people think that embracing a litigious mindset requires acting like a
sonofabitch. (Can we say that on this board, lol?) Nothing is farther from the
truth. Whatever you do, DON'T act like a sonofabitch. Here's why."
"Sonofabitches aren't satisfied with the tradeline deletion. Sonofabitches
REQUIRE the tradeline deletion AND a monetary award of $10,000 AND a
formal apology AND admission of wrongdoing AND a brand new credit card AND
self-mutilation, etc. You don't want your adversary to believe that you are a
"crank" who could NEVER be satisfied." "Instead, you want your demands to
be VERY clear right from the start -- whatever those demands are. And you
should state those demands politely. Potential consequences should be stated
politely as well." "Picture the stance most often drawn by lawyers in a courtroom.
They are matter-of-fact to a deadly degree. They don't beg. They don't threaten.
They don't scream at adversaries unless they want to be admonished by the
judge. They simply state their case, as strongly and as seriously as possible.
END CREDIT 101
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LESSON TWO TRANSCRIPT
CREDIT 102: A Consumer Law Overview, 9/22/2005
PSYCHDOC'S CREDIT REPAIR SCHOOL FOR BEGINNERS
For those who have just joined us, I should mention that the 8 lessons are
divided into two sections...the first three lessons (where credit repair is framed as
an ETHICAL enterprise in opposition to the many UNETHICAL business
practices which comprise the consumer credit industry)...and the last five
sessions (where we discuss the nitty-gritty of credit repair -- interventions which
leverage your RIGHTS as a citizen). Like last session, I hope we'll all learn
something new, but I especially hope that those who are new to their credit repair
campaigns come away from these sessions with something that will contribute to
their eventual success.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the last session
-3-- "Three Musts" for beginners
-4-- The laws we reference
-5-- How to invent credit repair interventions
Basically... the first message... Credit repair involves INTERVENTIONS which
invoke one of three TRUTHFUL communication tactics: a) polite requests, b}
requests for information, and c) legal demands. dubzero... just a quick note for
those who weren't here before being polite doesn't necessarily mean being
solicitous or kissing someone's behind
essentially it means that a calm legal-based approach can be far more effective
than a bunch of screaming and yelling someone who calmly demands that the
other party comply with federal law is going to be far more of a threat than
someone who thinks they're going to get great results by trying to intimidate the
other side very true, dub and rich. Well, enough about last session... there is a
transcript for those newcomers here who would like to review that. That transcript
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can be found on the main credit repair board attached to a sticky message at the
top. Since this is primarily a course for beginners, and since it's likely that many
other beginners will read these transcripts later, I want to mention my "Three
Musts" for beginners.
1. You must be willing to learn. Actually, this is really about attitude. I once spent
an awful lot of time in another credit-related community preaching the virtues of
"BE WILLING TO BE A NEWBIE FOR AWHILE BEFORE PROCLAIMING YOUR
EXPERTISE." What I was trying to do with that is help people to understand that
they would indeed be accepted even if they didn't know anything at all. I had
seen plenty of newcomers, time and again, either not post because they thought
they didn't know enough to participate. Or they didn't post because they were
afraid that someone would think they're stupid. Or, worse, they would try to
present themselves as knowing more than they actually did know because they
thought that was the clear path to acceptance. (I think that irritates everybody the
most, lol.) The truth is far better than some newcomers might expect.
Creditboards.com is frequented by a whole bunch of folks who want nothing
more than to help somebody get through what they once got through.
For that reason, you simply must feel free to identify yourself as somebody who's
seeking help! And, for goodness sakes, feel free to do it without apology. Just get
in there and say, "Hey, I'm new here, this is my situation, and I want to learn and
would appreciate anybody's help." The Creditboards swimming pool is warm.
2. You must participate. You've not only got to be willing to learn, you've got to
participate. Some people introduce themselves, and then wait for the ambulance
to come to take them away to the Credit Repair Emergency Room where the
experts will do all their work for them. Then when it doesn't happen, we never
from them again. Creditboards isn't an emergency room. Rather, it's a
community, so after you introduce yourself and state your problem, you may not
get an instant answer. Rest assured, though, people are already getting to know
you, and they may well be thinking about what you've posted. After that, you've
got to "keep coming back" as I once heard elsewhere, continue interacting, and
always ask more questions. Staying with the community and participating fully is
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the key to your ultimate success. Over the long haul, you'll probably find you're
answering more questions than you're asking. But even when others think you're
an old grizzled expert, you should still feel free to ask even basic questions. Even
the old-timers are still learning.
3. You must read more than this. Homework is not fun. But you've got to do it if
you don't want to fail. Now, I'm not necessarily suggesting that you venture onto
the Internet right now and find the laws we'll mention tonight and read them fully.
(Of course that wouldn't be a bad idea, frankly, and many of the most successful
among us have done just that.). On the other hand, get ready to at least READ
ABOUT them. One way to do that is to spend at least an hour a day reading
Creditboards.com for one full week. Just get in there, and start reading. You'll
definitely come across stuff that makes no sense to you at all, but keep reading
anyway. If you do that for a significant amount of time, the material will begin to
congeal, and you will find yourself understanding more and more. Make a
commitment to yourself to read the daylights out of this board for a brief period of
time before you do anything else. Consider it your Master's Degree in Credit
Repair. Just as a bit of discussion Who here has actually read the FCRA? wow
lots of yeses, ok, who's read the FCBA (if you don't know what that is, I'll detail
that in a minute) FDCPA? FDCPA is one I would encourage you to read. well,
they're tough to read but if you can't make yourself read 'em as I said at least
read ABOUT them as much as you can on the board here are a few links
FCRA: http://www.ftc.gov/os/statutes/fcra.htm
FDCPA: http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
FCBA: http://www.ftc.gov/os/statutes/fcb/fcb.pdf That's a pdf file (Adobe Acrobat)
I would encourage you to at least look over them look at the subsection titles and
dip in it will help as we move forward through the course. For those who are
interested in HIPAA (more later) regarding medical accounts Here's a great link
http://www.hipaacomply.com/
Very good stuff. Now, while we begin to talk about the legal basis for all of this it's
bears mentioning for a moment that there are other tactics. I'm keeping in mind
that there will be newcomers reading the transcript of this in the future so... You
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may have come across credit repair methods which are strictly illegal. These
range from booklets and consultants who will advise you to do everything from
identifying someone near your age who died as a child and attempting to
establish credit in their name, to simply making up a Social Security number in
accordance with some geographically-based insider information regarding the
numbering scheme, to acquiring an IRS Taxpayer Information Number (TIN),
which looks like a Social Security Number, and establishing credit with that, to
you-name-it. Needless to say, all such methods risk loss of freedom, income, and
community standing. Anytime you see an advertisement for "NEW CREDIT FILE
OVERNIGHT," steer clear. Truly legal credit repair is a gradual process that
takes time to complete. In fact, what is advocated here is putting Federal statutes
to work in the service of improving your credit standing. Here, laws are chased
and embraced -- rather than shunned and avoided. Sometimes members of this
community use those laws to actually file lawsuits against abusive original
creditors ("OCs" for short), collection agencies ("CAs"), and credit bureaus
(officially "consumer reporting agencies" or "CRAs") to meet their goals.The laws
we most commonly reference are: The Fair Credit Reporting Act (FCRA), which
basically tells the bureaus what they can and can't do. The Fair Credit Billing Act
(FCBA), which is a subset of the more comprehensive Truth in Lending Act,
which essentially tells original creditors how they should behave. As an aside... I
really like this second one (FCBA) It's not one we commonly use in this
community... but it forms the basis of most so-called "OC validation" interventions
like the Nutcase Series and other good ones you'll see from time to time. More
shortly. The Fair Debt Collections Practices Act (FDCPA), which regulates debt
collectors. Health Insurance Portability and Accountability Act of 1996 (HIPAA),
which regulates health providers. Here's a very very brief way to think about
these...
The FCRA... Ensures access to credit reports. Regulates who has "permissable
purpose" to acquire a consumer's report Limits how long information can be
reported. Details how a CRA must handle disputes. And of course... the credit
repair intervention commonly associated with this statute is of course the credit
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bureau dispute. We'll delve into the FCRA in more detail in the fifth lesson
November 3 (CREDIT 105: FCRA Street Fighting)
FCBA: The FCBA requires creditors to bill correctly and completely, and it's the
FTC's job to make sure that the statute is universally applied. (But it can be your
job to ask that your creditors comply as well, LOL.) The FTC summarizes the
statute's prohibitions as follows: "unauthorized charges; charges that list the
wrong date or amount; charges for goods and services you didn't accept or
weren't delivered as agreed; math errors; failure to post payments and other
credits, such as returns; failure to send bills to your current address -- provided
the creditor receives your change of address, in writing, at least 20 days before
the billing period ends; and charges for which you ask for an explanation or
written proof of purchase along with a claimed error or request for clarification."
As you read the list of requirements the FCBA stipulates, just think about the
credit repair possibilities. Consider something like this: "In accordance with my
Federal civil rights as stipulated by the Fair Credit Billing Act, you are obligated to
comply with this lawful request for elaborated documentation for billing, including
charges and interest, as well as a full accounting of where each bill was mailed,
for the life of the account, or rescind these reports from every consumer reporting
agency to which you have reported same. Your expeditious handling of this
matter is expected." That's something that no original creditor wants to fool with.
This constitutes a truthful request for information.
Call this example FCBA Nutcase, or call it chopped liver, or -- even better --
invent your own creative approach using the statute. Keep in mind that the FCBA
is actually intended to assist consumers with CURRENT charges in dispute,
however creditors do not welcome the idea that they may have broken the law
with your account even several years before. And of course even though you
WON'T accuse them of that (because perhaps they broke no laws), they almost
always seem to get spooked when asked for such information. We'll cover the
FCBA more fully in the sixth lesson November 17 (CREDIT 106: FCBA Street
Fighting) FDCPA: What a goodie. Who here has ever sent a validation letter?
Great, ok, so I may be telling you what you already know... but a validation letter
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is an FDCPA intervention a quick mind-map of the FDCPA. Provides behavioral
standards for acceptible third-party collections behavior. Specifies that CAs must
always include several legal caveats in their dealings with debtors. (Before, CAs
would employ all kinds of shenanigans to mislead consumers regarding who they
were.) Allows the debtor to formally request (i.e., by letter -- hopefully certified
and sent with return-receipt requested) that the CA "cease and desist" from
communicating with the debtor further. Specifically details a consumer's right to
request further information regarding an alleged debt. Such procedures are
termed debt validation (as so many here know) and are so POWERFUL that we'll
devote an entire lesson to the matter on December 1 (CREDIT 107: FDCPA
Street Fighting). You'll sometimes see the credit repair mavens...the titans. LOL,
argue about what constitutes true validation or which legal cases require what
item, etc. Most of that is interesting if you're way into it... but the wonderful thing
is that validation requests often just work. For the same reason that FCRA
interventions (aka credit bureau disputes) and FCBA interventions (pestering
OCs) work. They simply don't want to fool with your lawful request for
information. CAs in particular would rather just move along to the next person
who'll roll over. They cost less and pay more. Again, we'll get more into the detail
of all of that in the FDCPA session. But I want to talk more here at the start about
the PHILOSOPHY of creating interventions. Here's why when you use somebody
else's intervention letter, that's fine but when 25,000 people use the same letter,
it may be flagged, if you begin to create your own interventions... or even if more
people begin to create unique ones... we'll all be better off collectively and it's
pretty darned easy! well, it cuts even deeper than just using your own words
(although I agree with that wholeheartedly). Pretend for a moment that there was
something called the FAIR CREDIT REPORT REQUIREMENT RAZZMATAZZ
ACT (FCRRRA). And let's further pretend that that law requires these things:
First, let's say that the FCRRRA says that CRAs must send thank you notes to
creditors every time they report new information to them. Second, let's say that
the FCRRRA stipulates that they must print their consumer credit reports with ink
bought only from Cartier New York. Finally, let's say that the FCRRRA requires
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credit bureaus to mail their reports to consumers only on Thursdays. Now,
remember that citizens (including you and me as well as corporate citizens) can't
pick and choose which parts of a statute deserve compliance. They must comply
with the whole act. And if they don't comply with every bit of it, then they've
broken the law. If corporate citizens like Equifax or Citibank or NCO violate a
statute, they've likely injured a real person, and there are serious penalties for
doing so. So, back to our silly fictional federal statute. A good credit repair
intervention wouldn't directly accuse the recipient of malfeasance (unless you are
sure that they ABSOLUTELY did commit the malfeasance). Rather, the credit
repair intervention would simply ask the other party to DOCUMENT THEIR
COMPLIANCE with the law. So, in this case, it would look something like...Dear
Equifax: Pursuant to the Fair Credit Report requirement Razzmatazz Act, please
demonstrate that you sent the required thank you notes to Citibank every time
they forwarded new information related to my account (number 12345).
Moreover, show that such information was printed with ink requisitioned from
Cartier New York. Finally, prove that you mailed the report in question to me on a
Thursday. If such documentation cannot be provided, please remove the item
from my report immediately. Sincerely, Joe Consumer
Essentially you're asking them to document their compliance. In other words, the
best way to create a unique credit repair intervention is to take a close look at the
federal statute in question (whether that's FCRA, FCBA, FDCPA, HIPAA, or
another state or federal law which you believe is relevant), and then ask the other
party to show that they aren't behaving criminally. When you approach the matter
this way, you aren't crafting lies. You're simply asking a company for information
related to your account, especially with respect to how that account has been
reported to the credit bureaus. Sometimes companies don't want to take the time
to address your lawful request in that manner, and some of those sometimes
simply delete the offending tradeline rather than fool with it (or you) anymore.
This approach is the essence of the credit bureau dispute (HEY BUREAU --
SHOW ME YOU'RE COMPLIANT WITH THE FCRA), the original creditor
interventions like the "Nutcase Series" (HEY ORIGINAL CREDITOR – PROVIDE
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ALL THIS INFORMATION ABOUT MY ACCOUNT PURSUANT TO FCBA), debt
validation (HEY COLLECTOR -- SHOW ME THE HISTORY AND
PROVENANCE OF THE DEBT PER THE FDCPA), and HIPAA interventions
(HEY DOC -- SHOW ME YOU HANDLED MY ACCOUNT IN WAYS THAT
PROTECT MY PRIVACY). Ok, I'll stay away from inventing anymore silly
statutes because we've got too many real ones to discuss as we move forward.
Still, I hope this example illustrates the similarities among the real credit repair
interventions we commonly use. This approach... requesting information
basically... is one that lawyers commonly use (what they sometimes term
"discovery"). Asking for information is your right as a consumer. Lawyers love
discovery simply because of the nuisance factor. And that same principle works
for you. Lawyers don't say to their opponent during discovery anything like...
"TELL ME WHY YOU BEAT YOUR WIFE (OR HUSBAND)." Instead they'll say...
"GIVE AN ACCOUNTING OF YOUR RELATIONSHIP FROM THE BEGINNING
UNTIL THE PRESENT." And then they look for discrepancies. If you really do
head toward court eventually with some matter, you'll probably collect a few
discrepancies vis-a-vis some CRA's behavior... or an OC... or a CA. Does any of
this resonate with anybody? (Hope so, lol.) This is basically the core method for
how these crazy credit repair interventions get started. You know, I was looking
over the transcript for the last lesson... and I received some accolades for a
couple of interventions I created... and I thought, "wow, what nice people" and
then I thought "wow, I have to UN-snow them" "I have to show them that there's
no magic to this" I mean, there's a choice point here for me...continue to indulge
the guru thing or just convince others that they are the gurus the second is best,
because I'm no guru (LKH will confirm that, LOL!) rich, how do you think I ended
up being a shrink? biggrin.gif Once you get the hang of this...essentially that it's
about demanding compliance and demanding information then you'll not only be
in a terrific position to radically increase your credit rating (i.e., your credit score...
the rates you're offered... etc.) but you'll be in a fantastic position to help others...
and if you're in this room and I see that even as we near the end of this lesson,
we have 37 people still here...then you're probably VERY interested in the topic
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and will likely be among those people who'll help the NEXT group of beginners,
this is a terrific community and those of us who care about helping others who've
been through what we've been through (like you) want to make sure that it
continues to grow... and that new credit repair interventions based upon law are
developed well, that's it for this time.
I hope something here was useful next time we'll delve into credit bureaus and
credit reports ... and credit scores and we'll talk about how to improve your score
EVEN WITHOUT these intervention letters then we'll get into the street fighting
Court records are tough... tougher than creditor tradelines. There's no harm in
asking the court to verify their procedures for reporting to credit bureaus You may
see some success. Most people simply dispute and re-dispute with the CRAs
until they're gone. You can ALWAYS ask your opponent -- in this case, the court
-- for information. Asking for information violates no laws. No, they're not required
to delete. Ask them to demonstrate that they abided by all laws. Very interesting.
Agreed or do it by letter, certified letter, ok... this strikes me as something that
you should also post on the board about being worried re fooling with courts...
YOU DON'T OWE ANY MORE MONEY, THE CASE WAS SETTLED biggrin.gif
You are now just a nuisance. You're not threatening anybody. You're simply
demanding some information. Don't be nervous, lol. THE JOY OF PESTERING
that's the key! Ok, see you in two weeks.
END CREDIT 102
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LESSON THREE TRANSCRIPT
CREDIT 103: Credit Reports & Credit Scores, 10/6/2005
Tonight's seminar, the third of eight, will focus upon credit bureaus and credit
scores. It's nice to see some new faces and some returning ones too. And, let me
do something we couldn't have done before the internet: I'd like to welcome
those who have discovered these transcripts in future weeks, months, and years.
I hope something here proves helpful as you approach your own credit repair.
This site, Creditboards.com, is made possible by its owners (you know who you
are, LOL), and I would like to express my appreciation once again for their
invitation. Ok, in case you don't know who you are... breeze, Pam, LKH, and
radi8... I've interacted with each of them through the years, all of whom have
poured a lot of care and sweat (and have endured heaping helpings of what we
call in Yiddish "mishegoss" in return)...QUICK ASIDE... "mishegoss" is your word
of the week. You are all now honorary Jewish people. Ahem. But they have put
up with a fair amount of mishegoss...just to benefit others. Their commitment to
consumer advocacy is astounding. I'll endeavor not to be a meshugana tonight.
Now I'll turn away from such comments with a much browner nose and focus
upon our task here.
Like last session, I hope we'll all learn something new, but I especially hope that
those who are new to their credit repair campaigns come away from these
sessions with something which may contribute to their eventual success.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- Approaches to debt
-4-- Two credit bureau myths
-5-- Credit scores
Tonight's session could easily have been the first one... except that I didn't want
to set the wrong tone for this. First, credit repair isn't primarily about the credit
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bureaus or about credit scores. Rather, it's about conducting ethical and lawful
interventions in order to further your personal consumer credit goals --whatever
they may be. Second, so many credit repair interventions (and their co-curricular
consumer protection statutes) aren't directed toward the credit bureaus at all.
Rather, they're directed toward original creditors, debt collectors, health
professionals, and others. ("Others" may include the Better Business Bureau, the
Federal Trade Commission, the consumer advocacy site PlanetFeedback.com,
etc. We'll begin to talk about these ancillary intervention opportunities in a few
weeks, as they can interlace nicely with FCRA, FCBA, and FDCPA based
interventions.) Still, it doesn't make much sense to conduct a credit repair course
for beginners without at least wearing out the usual yawn-inducing introduction
you see just about everywhere, which goes something like this: "There are three
major consumer reporting agencies, Equifax, Experian, and TransUnion, and
they maintain consumer records on hundreds of millions of Americans. It's their
legal responsibility to maintain accurate records, and it's your right as a
consumer to ensure that they follow through in that regard." Argh... I said it. I'd
like to back up a bit from that, though, and cut through to something more
essential, and that has to do with DEBT. Generally, the credit bureaus maintain
records (or, perhaps more accurately stated, LISTS OF UNPROVEN
ALLEGATIONS, lol) regarding how you as a consumer have behaved when
borrowing and repaying money. Even most court records that appear on such
reports often have to do with debt. Critically, your GOALS regarding debt will
dictate how you go about tackling what appears on those reports. Moreover,
HOW YOU BORROW and HOW YOU REPAY debt are perhaps the two greatest
influencers of credit scores. Manipulating ones borrowing and repayment
patterns is perhaps the quickest way to raising a credit score -- even, in some
cases, irrespective of what actually appears on the credit report. More about that
in a minute. For those reasons, it's important to step back a bit from the credit
repair task, especially at the beginning, and take stock of one’s own approach to
DEBT. That's really what this is about. Suffice to say, this isn't what some folks
want to hear. Nobody wants to be reminded to floss after brushing. For that
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reason, I won't spend too much time on this, but I would be completely remiss if I
didn't at least acknowledge the obvious: DEBT is what caused so many of our
problems which necessitate credit repair in the first place, so perhaps 5 or 10
minutes of this will be appreciated by someone out there at some point. As an
aside, I really like an article which appears on Creditboards (LINK) called "The
Problem with Debt Settlement Companies" written by radi8. He discusses a
widely advertised -- by a seemingly limitless number of companies -- method for
dealing with debt. It's a must read. There are many approaches to debt, but here
are two wide categories:
1) Wealth accumulation.
2) Eternal indebtedness.
Expanding these...
1) Is your long term goal to accumulate wealth? It almost goes without saying
that the wealthiest people (and the wealthiest corporations, for that matter) have
little debt and lots of money. If becoming more financially stable is your goal, then
reducing outstanding balances low should be an objective. Interestingly, this
approach has a credit repair benefit: your credit scores will rise. Most importantly,
you'll be less susceptible to fiscal disaster if you have an emergency fund of real
cash in case something unexpected happens.OR...
2) Do you regard a brand new credit card as INCOME? In other words, when the
shiny new MasterCard arrives with a $10,000 limit, are you already thinking
about that home theater system you can buy now? If so, then you may find
yourself overextended (and for most of us here, I should add the word "AGAIN" --
me included), unable to repay everything in a timely manner, and perhaps right
back where you started. Obviously, I would encourage anyone in the second
category to at least begin to think about how they've embraced and accumulated
debt. Ok, let's assume that accumulating wealth (the first category) -- and so, in
other words, reducing debt -- isyour financial goal. How will you do it? There are
three general approaches:
1) Reducing debt as quickly as possible.
2) Reducing debt the least expensive way.
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3) Reducing debt in a way that will maximize your credit scores.
While all three of these are worthy objectives, they are very different. And by the
way... If your goal is to reduce debt as quickly as possible, then you may not be
able to do it the least expensive way... Likewise, if you goal is either of the first
two, then you may not be able to do it in ways that will maximize your scores...So
this is about making choices...The first approach – reducing debt as quickly as
possible -- usually involves what Dave Ramsey and other authors have termed
the "debt snowball" approach. By the way, does anybody here ever listen to
Dave Ramsey? He's an anti-debt fanatic. That isn't my approach. But he
represents a viewpoint. His is an extremely compelling argument. Plus he's
entertaining. I recommend at least listening to what he has to say even if you
(like me) aren't an anti-debt nut. (With apologies to "nutty" here, ahem.)
Dave Ramsey's debt snowball approach involves repaying the smallest debt first,
then when that's taken care of, taking that payment and applying it to the next
largest one, and so on until everything's paid for. This approach affords
psychological advantages relatively quickly because it's encouraging to repay
something entirely and then move to the next one in turn. The disadvantages of
this first approach are...
a) Even if it's the most encouraging way to tackle debt (which is perhaps the
most critical factor for some people), it's not the least expensive way since
you're focusing on repaying the SMALLEST DEBT first -- and not the one
with the highest interest rate...and
b) It's not the most efficient way to raise your credit score, since it may well
be that the larger debts are ones which involve maxed-out revolving credit
lines (a score killer).
The second approach – reducing debt the least expensive way -- is the approach
favored by people like Suze Orman. Now Suze doesn't know much about credit
repair... LOL yep... ha... but she does offer an approach to debt reduction... Hers
involves prioritizing debt according to the actual cost of the money -- in other
words, the interest rate – and paying off the most "expensive" debt first. The
advantage of this approach is obviously the cost savings. This is different from
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the first obviously. The disadvantage is that you can easily feel like less progress
is being made especially if the most expensive debts are also your largest ones.
Also, like the first "debt snowball" approach, the focus isn't on your credit score.
two very different approaches The third approach – reducing debt in ways that
improve your credit score -- involves equalizing balances so that no debt's
"utilization ratio" (the amount owed divided by the overall line of credit) is high
and then paying down the various debts equally so that all the ratios lower
together. Again, this approach can result in DRAMATIC differences to a credit
score, but doesn't afford the psychological advantage of Dave Ramsey's "debt
snowball" nor the cost savings of Orman's approach. So it all depends upon your
goals once again. By the way... the use of the term "utilization ratio" brings us
squarely into the realm of credit bureaus and credit scores... Does anybody now
know what I mean by that? Just in case...Your utilization ratio is the amount you
owe on a debt divided by that debt's line of credit. For those who are new to all of
this information... Keep in mind this heuristic...LOWER UTILIZATION RATIOS =
HIGHER CREDIT SCORES That's true whether we're considering an individual
debt...and it's true when we're considering all debt...will give an example... but
You apply for revolving credit and keep a low balance. :) That's the irritating thing
about credit. You've got to struggle to improve your rating (your reports, your
score)... and then you'll qualify for more that will help further. interestingly, DTI
(debt to income ratio) doesn't really matter much unless you're buying a house
no problem I'll give an example... and then tackle cred's question
example...You've got a Chase MasterCard with a $10,000 line of credit And
you've only spent $1,000 of it. That card has a 10% utilization ratio. That an
example of a tradeline-specific utilization ratio. Now, overall...Let's say you have
three revolving lines of credit...And the overall credit available to you is, let's
say... $20,000... If you've spent, say, $5,000 of that then what's your overall
utilization ratio? (simple math) Credit scores take into consideration BOTH types
of utilization ratios. SO... Any consideration of improving your credit scores will
ALWAYS factor in HOW your borrow and repay your debt. Interestingly, some
people (me included) believe that this is the LARGEST factor in credit scoring
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(aside from having a bunch of negatives, LOL... but all things being equal...) Debt
is never a fun topic when raised in a milieu of people who love credit cards (like
me, ha) but it's a necessary topic... not only in terms of fiscal health...but also
with regard to your CREDIT SCORE which DOES interest everyone here I think.
OPEN accounts contribute to the score. CLOSED ACCOUNTS don't help... and
can hurt IF there's an outstanding balance. That's why the most common advice
you'll hear is... "Don't start closing accounts willy-nilly." Even the erudite Suze
Orman says so, LOL. And she's right. Ok, so long as we've established what
we're really talking about here -- i.e., DEBT -- let's turn to busting two common
credit bureau myths. First, let me ask a trick question...Which federal law
establishes the credit bureaus as official quasi-governmental entities?
MYTH 1: Credit bureaus are officially recognized entities. WRONG. Credit
bureaus are private companies (at least one is publicly traded, but it's still owned
by its shareholders) which are in the business of buying and selling financial
gossip about you. And what's gossip? Gossip is, at best, a list of unproven
allegations, and that's all a credit report is. By the way, that's WHY the Fair Credit
ReportingAct became law in the early 1970s... in order to regulate what they
CAN'T do. (More about that two sessions from now.) A credit report doesn't even
enjoy the official legal status of, say, your driving record maintained at your local
statehouse. It is unfortunate, then, that these unofficial credit reports sometimes
impact our lives far more than most any official document which exists.
Well, that's the way the lending industry has evolved. In the old days... like in our
grandparents' time... You'd go visit the banker. Who you probably went to church
with. And he (and in those days, it was always a he) he knew you. There were
credit bureaus. But that wasn't the primary consideration. Unfortunately, other
considerations that AREN'T helpful intruded. Like, for example, a banker's social
preconceptions... whether he thought women were creditworthy... or racial
prejudice, etc. So life wasn't rosy for everyone. Incidentally, that's the stated
rationale for credit scoring as well. On to myth two
MYTH 2: Items on your credit report are required to remain for 7 years (in most
states), except for bankruptcy related items which are required to remain for 10
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years. myth... WRONG. When you speak with the nice customer service person
at Sears, and they say something like, "Oh I'm sorry, Miss Jones, there's nothing
we can do because those things are supposed to stay on your report for seven
years," you should know that-- their niceness notwithstanding -- you're either
speaking to someone who is terribly misinformed (at best) or someone who is
deliberately lying to you (at worst). That may be a company's policy and the
credit bureau's policy, but it's not the law. The FCRA simply places LIMITS upon
what can be reported. It doesn't MANDATE reporting though! This is one of the
most insidious lies related to credit reports which we have embraced as a society
for whatever reason. There is no requirement, legal or otherwise, that private
companies must buy and sell information about you to others. Confronting what
appears on your credit reports, especially if done using ethical means, is simply
your way of saying: "Hey, I don't appreciate corporate titans who choose to
violate my privacy." Keep these two myths in mind as you go about the task of
confronting what appears on your credit reports, someone should bring a class
action lawsuit against any consumer reporting agency that says something like:
"Negative items must remain on your credit report for 7 years in your state." That
is an oft-told lie, and I can't wait for someone to challenge that kind of misleading
information. Of course, as long as we sheep believe, LOL...their business is
safeguarded. Which brings us to credit scoring... LOL,Here's what you see
everywhere...and it bears repeating for those who are new to the material...35%
of your score is influenced by account history (how timely you've paid), 30% to
current account usage (how much of your credit is being used, with greater
amounts being negative) which is the "utilization ratio" we discussed before, 15%
to length of credit history (the longer the better), 10% to new credit inquiries and
accounts (with fewer being better), and 10% to the "credit mix" or variety of credit
types present. Scores range from 350 to 850, with the mean value score being
right at 725. In real life, the most favorable credit rates are typically extended to
those with scores of 720 or above. That's what Fair Isaac Corporation (the FICO
company) wants us to know. They DON'T tell us something else, though. And
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perhaps someone in this room will one day sue their pants off, LOL... and it's
this...QUOTING MYSELF from another venue: "Your credit score isn't just
about you. If it was, providing it along with the rest of your credit report might not
violate federal law, which stipulates that your consumer file must only (and
obviously) be about you. Rather, it's about you and others. More specifically, Fair
Isaac makes use of what they call "Score Cards," which groups consumers
according to whatever criteria they choose. Then, they run what we statisticians
call Pearson correlations between credit report items and subsequent late-pays
for each consumer grouping. Through that continuous process, Fair Isaac stays
on top of the variables du jour which may diagnose bad future news. The final
step happens when your credit report is pulled and is analyzed through the use
of those comparative algorithms, and a credit score is then reported which
purports to predict the possibility that you are the type of person who may one
day become seriously delinquent." Now, I'm a statistics wonk... But what that
boils down to (for those who hate stats)...is that basically a credit score indicates
the PROBABILITY that a consumer will Credit scores are about helping lenders
PREDICT who will default. It's all about helping banks determine who is in the
group of people who may not repay them. The problem is...In any grouping like
that... There are the false positives... i.e., those people who will NEVER default.
And, interestingly, those people are in the majority... even among those who
have relatively low credit scores. So... we all pay for the mistakes of the few.To
quote myself one last time:"So does this sound kosher? Are prediction and
speculation and comparisons with other consumers fair items to include in a
credit report alongside the stuff that otherwise really is about a single consumer?
undoubtedly, the judiciary will eventually decide." This is why someone needs to
challenge the legitimacy of the credit reporting and scoring industry generally. I
don't believe that they are honorable enterprises. Ok... to cled's question, Try not
to confuse the credit score number with what I was talking about when I
mentioned "utilization ratio" The actual FICO score is just an INDEX OF
PROBABLE DEFAULT That's not to say you didn't ask a great question... People
often ask things like..."If I apply for credit, how many points will an inquiry take
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off." Now, even though the answer to that is usually "2 or 3 or 4" LOL... (I
shouldn't fall victim to answering, LOL)... The real answer is this... People who
apply for LOTS of credit are among that statistical grouping of people who are
MORE likely to default...So the more inquiries you have, the more you resemble
that group of probable defaulters. Similarly... people who have defaulted in the
past are statistically MORE LIKELY to default again than people who never have,
so... the presence of R9's are poison. (R9 is Equifax's designation for a charged-
off or collection revolving account.) Well... people who have 60 day lates
STATISTICALLY RESEMBLE probable defaulters MORE than say those people
who have only 30 day lates (or no lates) Again, it's about comparing you to
others. And I (and some lawyers I've spoken with) believe that when a credit
bureau includes a credit score, they may be breaking the law. Consumer credit
reports cannot include information about other consumers, and the credit score
essentially does that. But that's for tomorrow's litigation, LOL. Some people say
that an ideal utilization ratio is 10%. Others say 5%. Still others say, "keep it
below 30%." I think everyone agrees that anything above 50% is hellish on a
credit score. (Not to mention that it's hellish on your fiscal health. But there I go
talking about flossing again.) ;) The truth is this...People with LOW utilization
scream "responsibility" to them. Ok... Now... A few words about raising your
credit score. What follows is conventional wisdom you'll see elsewhere, but I
agree with it wholly.
1) Eliminate negatives, but do so using ethical means.
2) Pay down revolving credit.
3) Stop taking advantage of installment loans (other than a mortgage and car
payment)
4) Don't close accounts. And, yes, I mean open revolving lines.
That's advice for beginners. When you become more comfortable with your
GOOD credit (after your credit repair succeeds)... then you'll tweak things...You'll
apply for a super premium MBNA card and close your Capital One card, etc. But
a good rule of thumb here at the beginning is... Don't start closing accounts here,
there, and everywhere. And when it doubt, post to the boards here and get
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advice. Well, that's it for tonight! In two weeks, we'll discuss some overall
strategies for taking a credit report, triaging it, and devising your best game plan.
Then we'll delve more deeply into the down-and-dirty credit repair tactics we love
the most. I hope something here was useful for somebody tonight! :) LOL!
student loans are ok when you need them... but interestingly, those student loans
will depress a score. Doesn't that suck? How do I know? I've seen it myself. Now,
interestingly...Now don't just go and dispute something like that off just because...
they may be your only positive items! In which case...they'll add more than they
take away. Credit scoring is a dance. I would never advise people to lie. But...
There's no harm in using the approach we discussed in the first two sessions...
which is..."Please demonstrate that this inquiry was included on my report as a
result of the company's permissible purpose... in accordance with my federal
rights." You can still ask the bureau to demonstrate that. It will be much tougher
to remove, for sure. Inquiries that DON'T have an attached active tradeline are
termed "orphaned inquiries" by some attorneys I associate with, and those are
much easier to remove...Still, inquiries are tough period as you know. One risks
having the report (and the account) flagged. That's true of almost all credit repair
interventions though. Flagged = noted as being an identity theft victim... makes it
tougher to get new credit,once again it's about your goals (reference the section
of tonight's session regarding the three types of debt repayment) If your goal is to
improve your scores... then definitely pay down your revolving credit. If it's about
other things (ref. earlier paragraphs) then pay the student loans.
END CREDIT 103
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LESSON FOUR TRANSCRIPT
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- The purpose of "triage"
-4-- Credit repair rules of thumb
-5-- YOU are your guru
Each session builds upon the previous ones. Now on to "credit report triage"... As
an aside, you gotta love the internet. For those who enjoy sound effects, here's
Merriam-Webster's Stepford Person pronouncing the word for all of us...
Link: http://tinyurl.com/dze2z
I know, I know... that was so pedantic of me I can't help it. Anyway, as you know,
the term "triage" is borrowed from war battlefields where medical personnel deal
with groups of injured soldiers. Generally speaking, the wounded are divided into
three groups (hence "triage") --
1) the most seriously injured who require immediate attention in order to prevent
death,
2) those with serious injuries who aren't life-endangered,
3) the walking wounded who will still require first aid but who can assist the
EMTs with the other two groups but we'll pretend nothing's "dead"on a credit
report, lol Actually I borrowed my definition this afternoon from Wikipedia so
there I feel like a giant cane is about to enter stage left and pull me away now :)
Simply having a plan for what must otherwise be terrifying circumstances helps
first responders cope. Similarly, knowing that there is an organized way to
proceed (with any endeavor) helps one get past the fear of starting any sizable
task. Was anybody here (who's already begun their credit repair program) ever
intimidated by the task when they first got started? Well I felt the same way at
one point. Sometimes credit report issues are so plentiful that it's easy to feel
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like one is about to fight a war (of sorts). My goals in adopting the metaphor are
threefold:
1) Impress upon you my belief (shared by many in this community) that
practically no bad credit rating is beyond repair.
2) Empower you to approach each of your three credit reports with optimism and
a sense of fun as you delineate your plan of attack.
3) Provide some concrete rules of thumb for matching tradelines with
appropriate credit repair interventions.
So... whether it's gossipy bureaus... or petty creditors... or ruthless and unethical
debt collectors... there's a systematic approach for each. For those who haven't
begun, here's "PsychDoc's Plan of Attack" (licensed to you only for your own
individual personal use under the "GNU General Public License" but not for use
in any commercial setting). :) Let me emphasize before I delve
in, though, that this is simply my approach. I don't want to represent this
as the "correct" way, or the "right" way, or the "only sensible" way, or
anything of that sort. That said, I'll proceed...
PRELIMINARY STEP: Go to Kinko's
(or your office copy machine, or wherever) and make COPIES of your latest
credit reports. Keep a set of "clean" originals in a file somewhere, though,
just in case you ever need them as evidence in a court proceeding. I
realize that eventuality is unlikely, but that's still a good idea.
As for the COPIES, you're about to take a nasty red marker and mark them up
as if they're a graffiti wall somewhere. Spare no mercy. Those reports are the
work of the devil. (And if not the devil, then at least the work product of corporate
drones who probably care less about your personal welfare.)
STEP ONE: Keeping our second session in mind (CREDIT 102: A Consumer
Law Overview), you're going to assess each item on your report and assign it an
appropriate credit repair intervention. First, comb through your reports and look
for those tradelines (credit industry jargon meaning "an item on your report")
where you were never more than 30 days late. And, by the way, don't cheat...
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we're NOT going to include anything with 60 day lates or work during this
pass... Now, you're going to write the word "GOODWILL" next to each of those
tradelines. By the way, if you're completely new to all of this, then don't worry
what that means right now. Just do it. You're triaging. :)
STEP TWO: Now, you're going to make a second pass through your reports.
This time you're hunting for any tradeline whose worst notations are 60 days late.
For these you'll mark "GOODWILL OR FCBA." More in a few minutes about that.
STEP THREE: Now, on the next pass, you're going to label those items whose
worst notations are 90 to 150 days late and which NEVER entered collection or
charge-off status. Mark those as "FCBA OR NUTCASE." More about what that is
in a few minutes also. Ok, ok, ok, technically we're going past "triage" now...
Perhaps we'll have to coin a new word..."quattrage" or even "pentage" or
"sextage" (because, YES, there's going to be fourth, fifth, and sixth steps, ahem).
Those of us who appreciate 12 Step Programs are welcome to say the Serenity
Prayer now. (Actually, that may help with this task, but, alas, I digress.) And, NO,
"sextage" doesn't guarantee any additional fun when you're through. (Although,
actually, that may help too, but now I'm way off topic. Cough, cough.)
STEP FOUR: Next look for items that have entered collection or charge-off
status. By the way, Equifax includes their handy "R9" or "I9" designations, which
will help make short work of this task with that bureau's reports. If the tradeline
was placed there by a third-party debt collector (in other words by "XYZ
Collection Company" as opposed to "MBNA"), then mark those tradelines with
the phrase "VALIDATION." If the chargeoff was put there by an original creditor,
mark it "OC VALIDATION." Don't worry about the wizened souls who proclaim
that there's no such thing as "OC VALIDATION" at this point. They're right, but
those of us who advocate differently are right too. Kindly sit with the tension for a
moment, and I'll get back to it in a few minutes. (Suffice to say, groups of us have
been debating this for years. Meanwhile, consumers are netting credit report
deletions, irrespective of the technicalities.)
STEP FIVE: Up to now, no tradeline has received more than one mark. That may
change with this step. Mark it VALIDATION if a CA and OC VALIDATION if an
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OC to Step 5... This step requires you to work through your reports and locate
any MEDICAL tradelines. If the item was placed there by a doctor, a hospital, a
testing lab, or someone collecting money for any of those, mark this one with the
acronym "HIPAA." Note again that you may be writing "HIPAA" next to something
which was already labeled "GOODWILL," "GOODWILL OR FCBA," "FCBA OR
NUTCASE" or "VALIDATION." a tradeline may have more than one notation
STEP SIX: Anything left is probably there as the result of some legal action -- a
lien, a bankruptcy notation, a judgment, etc. Go back and mark those
COURTHOUSE."
Now you have the rough outlines of a plan... with plenty of flexibility. Each of
those notations reflects a particular credit repair procedure. Your "GOODWILL"
tradelines are due a Goodwill Letter. This is where you need to do your
homework – search the board for the basic template. The "Goodwill Letter" saw
its origins in a letter penned by "marci" (an occasional participant on these
boards) which she called her "Sample Nice Letter for Paid Chargeoffs." I
borrowed marci's letter (lifting a couple of her brilliant key phrases), reworked it
for those tradelines with minor late pays which had never charged-off, and
dubbed it the "Goodwill Letter" after a rep for Sears National Bank told me by
phone that they had an internal phrase for certain nice people who begged
forgiveness --the "Goodwill Adjustment." That sounds like something a
chiropractor would do... :) Regardless, the approach is tried-and-true, and while
nothing works all the time, this one does work some of the time. Has anybody
ever had success with the Goodwill letter? I realize most in here are new...
some no's... some yes's Let me diverge from the prepared remarks for a
minute... I have a philosophy about credit repair interventions... The philosophy is
this... Let's say that a credit bureau dispute will work 5 or 10 percent of the time
or even 20 percent... and let's say that a Goodwill approach will work 5 or 10
percent of the time and let's say that a Nutcase approach will work 5 or 10
percent of the time FCBA same FDCPA validation same, etc. and then you try
again...somewhere down the line you're going to clean it up... persistence and a
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variety of approaches is key I just hate it when I see somebody really punishing
themselves after they try an intervention and it doesn't work. They despair...
OH NO... IT DIDN'T WORK I'M DOOMED It's just horrible because you know
how they feel... which is terrible but if they kept in mind that each intervention has
a chance of working and that interventions can be REPEATED and in some
cases... some tradelines can call for multiple interventions per the triage
approach I just outlined above Your chances of succeeding during the next year
or so... are HUGE. Be encouraged. I should put that in all caps: BE
ENCOURAGED. :)
Ok, for those tradelines marked "GOODWILL OR FCBA" you have a choice. You
might try one or the other. Or you might try one and THEN the other. Refer to the
second session for commentary regarding the FCBA approach, and customize
your own. You approach it as quickly as possible. Those tradelines marked
"FCBA or NUTCASE" also present a choice. Try one, or the other, or do both
(space them apart awhile). The "Nutcase Series" enjoys a good number of
testimonials, and a template and accompanying rationale can be found on the
board Again, nothing works all the time, but taking NO action ensures failure, so
buck up and move forward! The following sentences should not substitute for
your doing just a few minutes of homework and reading the rationale here on the
boards, but here it is anyway in a nutshell Essentially, the Nutcase approach
can be summed up as a polite but escalated set of information requests. Your
questions likely compel the other side to wonder what you plan to do next... Will
you sue? Are you a "litigious nutcase"? Sometimes, creditors would rather just go
ahead and delete a severe late mark than risk (or waste their time) tangling with
you any further. As an aside, has anybody seen success by trying the Nutcase
series yet? Let me say something about "required"... You'll sometimes see one of
us old fools say something like... "Address it in a red pen." "Then fold it twice."
"Three times along the seam." "Then address the envelope in purple ink."
And on and on and on. Sometimes there is a reason for that... Maybe the old-
timer wants you to NOT look like a credit repair organization... Well... lemme tell
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ya what I know about CROs... they break out the purple pens sometimes so I'm
really at the point where I hesitate to get so specific.
Next, those tradelines marked "VALIDATION" should receive a formal request for
validation pursuant to the FDCPA. (Again reference the transcript for seminar
#2.) You'll find a template for the letter, as well as its sequential successor
termed by some the "Estoppel" letter, here on Creditboards. Plus, you'll find no
end of discussion and debate regarding such interventions. Again, I would advise
that you spend some time (a few hours) reading about validation before you fire
these off. Also remember that the larger the amount of an alleged outstanding
debt, the greater the risk that you'll "awaken the giant" (search the board for that
phrase). If in doubt, seek legal counsel, or at least ask for the advice of fellow
travelers on the board. Quick point of discussion... Has anybody succeeded with
Validation? Now, there are in credit repair, as with most areas of interest, topics
which are controversial where perfectly smart and right people see things
differently. In credit repair, one such area involves the notion of "OC
VALIDATION" (i.e., "original creditor validation"). The FDCPA only (well, almost
only, but we'll not get into more advanced and arcane debates in this beginner
session) regulates third-party debt collectors. So, technically, heapings of respect
should be accorded those who maintain that there is no such thing as "original
creditor validation." Incidentally, in this regard, you'll find people on the boards
debating who "verifies" versus who "validates" and similar arcana... So
technically, it's true... original creditors verify and don't validate That said, I've
seen plenty of people net credit report deletions by sending the STOCK
validation letter to original creditors, irrespective of whether or not the OC was
actually required to do anything at all, and arguments about words
notwithstanding. I personally have never enjoyed the verify/validate wars, but I
have enjoyed watching consumers win their credit repair battles. One possible
semantic solution I've recommended... Take a validation letter, substitute the
word "verify" for "validate" and substitute references to the "FDCPA" with
references to the "FCBA" and fire them off. Whichever position appeals to you,
you should know that sending a stock validation letter to an original creditor does
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not abridge your rights as a consumer in any way. So, for example, if you send
the "wrong" letter, perhaps the OC will write you back and say, "The FDCPA
does not pertain to us. Thank you. Now go pay the people to whom we sold the
debt." What they can't do is slap the cuffs on you for daring to ask for information
about the alleged debt. The debates almost get political, and I'll dare not make a
claim regarding "what's best" because many well-informed people I respect
disagree with each other. My goal tonight: at least beginners who read this will
perhaps now better understand what the argument is about generally when they
come across it here or elsewhere.
QUICK CROA DISCLAIMER: I am not an attorney, and this is not legal advice.
Second, never misrepresent your situation when sending letters to anyone for
any purpose.
Now... on to HIPAA This requires more homework. (Sorry, but there's no way
around it.) Search the board for the term "HIPAA". I especially appreciate all of
WhyChat's comments and advise regarding how to use this statute. In a
nutshell, no medical provider wants to entertain the possibility that their
credit bureau report has violated your federal privacy rights. That simple but
lovely concept defines the approach. :) The irony is that you could try that same
intervention in 4 or 5 months, and it might work. Of course, by that time, a bureau
dispute may have done the job. It's all about persistence. Clouds, speaking as a
shrink, I can confirm your hypothesis. LOL! Now, I don't want to suggest that
every medical tradeline is necessarily appropriate for a HIPAA-based credit
repair intervention, so, again, do some research on the board before proceeding
in this regard. A number of approaches have been detailed regarding courthouse
notations... A detailed discussion of these would absolutely extend well beyond
the parameters of a beginner's seminar, but the boards contain many relevant
discussions worth exploring. At least you've marked your credit reports for those
tradelines which may be appropriate for one of these approaches. Finally, every
single item on a credit report merits FCRA verification by requesting same from a
credit bureau. That means that essentially every item on your reports will be
matched with at least two interventions... one sent to the bureaus... and one sent
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to whoever placed the item on the reports. In the next three sessions, we'll
detail FCRA (bureau-directed), FCBA (OC-directed), and FDCPA (CA-directed)
approaches in more detail. Such discussions will also include at certain
points what some term "the one-two punch"... an approach which leverages
both bureau-directed and creditor-directed interventions in tandem in order
to effect a particular result. Stay tuned.
Finally, let me move to the last section of tonight's syllabus which is really just a
simple reminder... You really are your own guru. Or at least I hope you eventually
will be. The more educated you become to credit repair, the more you'll find
yourself entering into the many excellent debates regarding law, approaches,
philosophy, and even attitude. Perhaps there is a right answer, or perhaps every
wizened old-timer has a piece of the truth. Ultimately, the more you know, the
better you'll be able to decide how YOU feel about any number of controversial
issues. And with that, I hope somebody new here feels MORE EMPOWERED to
dig into their reports in a SYSTEMATIC WAY... and then do some co-curricular
RESEARCH on the boards to learn more about the various interventions you've
designated. Now, on that note, it's time to end... I'll look forward to seeing you in
two weeks when we talk more about FCRA interventions you can employ with
the bureaus. We'll also excerpt actual letters in the next few sessions, but don't
wait for that... Delve into the boards now and wear out that SEARCH button! :)
tell me... well, she can still ask the OC to document that they have crossed every
t and dotted every i you can pester a paid OC like crazy without lying until they
are just sick of you One thing I like to say to folks... NO LAW LIMITS YOUR
NUISANCE (Unless you get violent or threatening... lol) So have at them.
Eventually they'll wonder if it's worth it to report that 60 day late tradeline.
Breeze hit it on the nose. well... See you in two weeks. :) I hope this helps
somebody at some point! Thank you too. :) on to life get those markers!
END CREDIT 104
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LESSON FIVE TRANSCRIPT
CREDIT 105: FCRA Street Fighting, 11/3/2005
Tonight we examine what is obviously a very important component of anybody's
credit repair campaign -- the credit bureau dispute. I didn't want to give the wrong
impression that credit repair was mostly about credit bureau disputes... Lots of
people believe that, but I don't. I'll mention why in a minute for those who are
mystified by that, LOL! For the first four sessions, I mentioned the Creditboards
site owners for all they do to keep this site up and running, but I'm going to do
something different for the second four sessions. Tonight I'm going to thank the
owners of other sites for all they do. Actually, for the next four sessions I'd like to
recognize those hard-working (and heretofore thankless) Creditboards Forum
Leads and Mods... Can we have a rousing round of applause for (in alphabetical
order) cotterpin, CramItCCCAs, fla-tan, HDAlex, MarvBear, rigirl, TeeSharice,
and TxQuiltGirl? (Did I leave anybody out??? ...or include somebody who'd
rather not be included anymore?... If yes, I'll correct that on the transcript, LOL!)
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- FCRA overview
-4-- About disputing
-5-- Types of disputes
-6-- About inquiries
-7-- Expectations
Well, on that note we'll dive into tonight's material. In the second session we
began to describe the various components that comprise the FCRA. Now, there
are entire multi-day seminars devoted to the topic. Lawyers pursuing CEUs
attend those... We obviously can only skim the surface... But what I'd like to do is
highlight those things that may be of particular interest (AND HELP) to you. CEU
= continuing education unit... In most states, lawyers and other professionals
have to engage in a certain number of hours of continuing education in order to
36
retain their licenses to practice. The Fair Credit Reporting Act of 1971 ...
accorded all of us some basic rights regarding what credit bureaus said about us.
Before that time, credit bureaus engaged in some very questionable activities.
For example... The company that became Equifax began life as the "Retail Credit
Company" in Atlanta, Georgia. That was the old Atlanta credit bureau. Retail
Credit grew and became the primary bureau in the southeast, and they had a
snugly relationship with Welcome Wagon. Does anybody remember the
Welcome Wagon ladies (and they were almost always women)? Well... Some do,
some don't... you'd move into a neighborhood and a couple of very friendly
women would come to the door with a little basket of goodies... coupons, info,
etc. and welcome you to the fair city. They would then make careful notes about
the family. Did it seem upstanding? Did anybody smell of alcohol?
What color was the family? (I kid you not.) This kind of data was then transmitted
back to headquarters... And the good old Retail Credit Company would include
stuff like that on your credit report. Oh... another one...Was there a man in the
house? (Families not headed by a male were considered by some bankers to be
less creditworthy and more risky.) Some of the abuses were essentially erased
by the civil rights legislation of the 1960s. The Civil Rights Act in particular erased
some of that, but some of the abuses continued. By the late 1960s there was an
uproar, and Congress finally passed the FCRA in order to help all of us. For the
first time, consumers are able to actually take a look at their credit reports!
Believe it or not, before that time, ordinary folks couldn't even take a look. There
were no restrictions upon WHO could actually pay the credit bureau to see your
information. And so on... In 1971 the FCRA took effect. And the Retail Credit
Company changed its name, Equifax. It was a nice break from the abusive past.
The smaller bureaus like that... For example, CBK in Knoxville, TN was bought
by Equifax In other parts of the country, other large bureaus consolidated...The
old Chicago bureau... The Credit Bureau of Cook County... became TransUnion
and gobbled up every other bureau in sight. Similarly two other large regional
bureaus combined to create Experian. Nobody crowned these companies with an
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official tag. TRW was one of the two companies that became Experian. Ok,
enough history...
The FCRA...
1) Ensures access to credit reports.
2) Regulates who has "permissable purpose" to acquire a consumer's report.
(in other words, gives YOU certain rights about who puts inquiries on your
reports)
3) Limits how long information can be reported. (generally 7 years for regular
tradelines and 10 years for bankruptcy-related ones)
4) Details how a CRA must handle disputes (more about that in a second)
And the recent amendment to the FCRA... FACTA...even gives us all the right to
free reports from each bureau once a year. Typically... You'll see old-timers give
some initial advice to consumers BEFORE they start disputing with credit
bureaus.
1) Opt-out. (In other words, let the bureaus know you aren't open to promotional
advertisements and offers.) and
2) Dispute multiple names and addresses that may appear on your report.
So you pick one and dispute the others... If your name is Robert Sheldon Poole...
you may have R.S. Poole on the reports as well as Bob Poole and a half dozen
others. Now... does anybody know what the rationale is for OPTING-OUT (other
than offers can be a nuisance)? Well, those may be reasons... But some people
believe this... Since the bureaus are engaged in the business of buying and
selling information about us... those of us whose reports are in OPT-OUT status
are less valuable... and therefore what appears on our reports just doesn't matter
as much... so... (and I'm not sure I subscribe to this, but I'm not sure I don't
either) Disputes from those of us who've opted-out may be easier to accept...
than from those whose reports are juicier. Again, I don't know if that's just a
bunch of crap or not. BUT Some folks I respect here believe that mightily and
seem to have anecdotal evidence in support of that belief. I know some people
here must have wondered, "Why in the hades are they suggesting I opt-out all
the time, lol?" "I like junk mail, after all." Etc. LOL! Well, that's the reason. LOL,
38
good enough, Now... About the second reason... Anybody know the credit repair
rationale for disputing multiple names and addresses? Actually yes. Again, some
folks believe that the automated systems in place verify one data point or
another. The fewer bits on the report, PERHAPS the hard to verify. So... Very
smart people on both sides of the discussion sometimes debate this. I'm not
going to take a side...(Not because I'm afraid to take sides, LOL!) Rather, I'm just
not sure. It seems reasonable. But we don't know for sure. Some folks swear by
the advice, and frankly, extra names and addresses are probably the easiest
thing to remove. If I was pressed, I would say... Go ahead and opt-out and then
dispute the extra names and ALL your previous addresses. Just do it. Ok... Now
on to About addresses, either way. Sometimes the easiest thing to do is just call
'em if it's just the addresses... Remember that when you're disputing addresses,
you're not contesting information about account payment history. They don't see
it as critical information that must be retained. Call 'em, write 'em, send a smoke
signal. Get an uncooperative phone rep this week? Call 'em again next week.
More about disputing... Before we move onto the types of disputes...
Disputing is not the end-all be-all of credit repair. Probably the one thing you'll
learn here on Creditboards is that what most credit repair books say about the
topic is VERY short-sighted. Credit bureau disputes are simply ONE intervention
we use. Anybody who's new to this series of seminars is referred to the transcript
for Session 4. Other intervetions... Goodwill, FCBA, Nutcase, Validation, etc.
Now... Some ask... should I do the credit bureau disputes first? Or the OC/CA
interventions first? If it was me... and I want to emphasize that this is BY NO
MEANS the "right" answer... I would begin with the creditors. When a credit
removes an item, it's gone from all three bureaus in one swipe. That's a three-fer!
There are quite a few, and you select them based upon the type of tradeline,
account, etc., whether it ever charged off or not, whether it was a minor late pay
or a major one, etc. Keep in mind... Once you do a dispute with a bureau and
they "verify," the bureau may not entertain another dispute for awhile...They may
report back "previously verified." You may have to wait 6-12 months before they
give it another go... But if you do your work with your creditors / CAs / etc., first,
39
then you may clean stuff up before wrestling with the bureau personnel. Keep
careful notes in case you ever take 'em to court. More in Lesson 8.... let me
tackle a few VERY good questions...
1) There are several different "clocks"... there is the disputing clock that begins
when you send one to the bureaus... They are supposed to investigate within
what the statute terms a "reasonable period" held by case law to be 30 days
typically although no judge will toss the book at them for 45 or even 60 days if
they end up doing the job ignoring you is another story... or as tal said
previously... refusing to investigate again at all
2) Another "clock" is the one that has to do with validation... We'll talk more about
that in lesson 7
3) Another "clock" is that statute of limitations for debts. I would recommend that
you search the board regarding "SOL" or "statute of limitations" for that. So there
are several clocks. Sometimes consumers confuse them.
... and there is a clock regarding their response time more about that in Lesson
7... too much material tonight...
Just getting my bearings... Had recommended that you intervene with the
creditors first... About the comment "low-hanging fruit"... Remember that what's
low-hanging with one bureau may be your toughest on another. Just no rhyme or
reason sometimes. The best low-hanging fruit is when Sears says, ok, what the
heck, we'll send UDF forms to the bureaus and remove your late pays. And that's
a WHAM-three-gone.
Zowie, that sounds like a question related to debts that are allegedly outstanding.
We'll tackle those topics in the FDCPA session... #7 LOL! Now... About the
TYPES of disputes... I casually mentioned one type of dispute in the very first
session. Those who have just joined this series are referred to Lecture #1. I
mentioned the importance of honesty... and that you could send disputes that
essentially said something like this...
(Several NON-LYING credit bureau intervention examples follow, and those
appear in red italic type.) "Please demonstrate that the following tradeline(s)
appears correctly on my report. Otherwise, remove, in accordance with my
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federally protected civil rights." (etc.) That created quite a stir on the board. I read
a few threads where people embraced that quickly. (Which is fine.) But I fear that
they may have embraced that single technique to the exclusion of others... And
I'll describe some of those others tonight. I noticed that some achieved some
good deletions. Others mentioned that it didn't work for them. Keep in mind this:
NO intervention ever works all the time. That's why... we advise a variety of
approaches... and REPETITION throughout the year.
In the last session I mentioned that it's hard not to feel a lot of empathy for folks
who try something and then it fails and they feel doomed. Keep it up, Indeed.
Sometimes I've seen folks who do nothing more than CRA disputes finally get
something deleted on the fourth or fifth try. Nothing works all the time. Now...
about some FCRA street fighting...Let me throw out a variety of TRUTHFUL
techniques for dealing with the lovely CRAs. "I don't understand why this
appears on my report" I love that one. You profess to just not understand. "I'm so
confused by what appears here. Please investigate this. It makes absolutely no
sense to me." You aren't making any claim of "not mine" or "never late" (which
would be lies unless, of course, they really aren't yours or weren't ever late... in
which case... ok) You can write that in your own words a THOUSAND different
ways. It IS the bureau's responsibility to provide you with explanations in plain
English. You don't understand why it's there? Demand an explanation. Here's
another technique that does NOT require prevarication. "Items which don't
belong on a consumer's report violate federal law. Please investigate this item."
Yes, that skates close to the edge. But preachy consumers aren't violating law.
Along that line:
"Dear bureau: Have you read the statistics regarding what percentage of reports
include errors? This is a huge problem in our society. I don't appreciate it one bit.
Please investigate the following items on my report."
That's the preachy approach. Preach and preach. But don't lie. I don't like the
"Not mine" dispute for other reasons, and I'll mention those in a minute.
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Keep up the good work. You'll prevail eventually. Credit repair can test your
patience, but the eventual rewards are good. Here's another credit bureau
intervention...
"Are you aware that reporting items late which were never late violates the law?
Pursuant to my rights under federal law, I am requesting that you investigate the
following account immediately, and if you find that you have included incorrect
information, remove such data immediately. Please facilitate this lawful request
within 30 days."
post-seminar note from PsychDoc: What I didn't realize was that everybody
wasn't ok, although I realized that something was wrong... I continued merrily
typing away... I wondered why nobody else was typing, lol... Then of course I
realized that the chat room software had crashed... Unfortunately I didn't get to
banter with Gryf regarding my contentions that sometimes credit repair
interventions fail, that sometimes something will work for one person and not for
another, and that one simply must dust oneself off and try again or try something
else. Perhaps another day!
END CREDIT 105
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LESSON SIX TRANSCRIPT
CREDIT 106: FCBA Street Fighting, 11/17/2005
Tonight we'll delve into the kinds of hardball tactics you can engage with
creditors. Specifically, we're going to restrict ourselves tonight to those tradelines
which may show late payments reporting to your credit reports but that never
reached R9 or I9 status... i.e., they never, ever, charged-off or were listed as a
collections accounts. Once again, I thought it would be useful to recognize the
Creditboards Forum Leads and Mods... (in alphabetical order) cotterpin,
CramItCCCAs, fla-tan, HDAlex, MarvBear, rigirl, TeeSharice, and TxQuiltGirl ...
Once again, I hope I didn't leave somebody out. (LOL!) Anyway... The forum
Moderator job requires so much...
1) Hard work. 2) No pay. 3) Knowledge. 4) Participation. 5) Willingness to
play cop when "bad people" (and they know who they are) drift in like a
bad log in a tide. If they weren't there, the boards would likely degenerate
into a spam-filled morass where Viagra postings would surely outpace
anything related to consumer credit by 10 to 1. ain't that the truth! LOL.
So... we're all grateful, I think, for what they do here.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- FCBA brief
-4-- Creditor motivation
-5-- Creditor interventions
-6-- Third-Party interventions
I taught developmental psych as a grad student back in the day, gotta have a
syllabus. Now we delve into the material for tonight specifically... I want to
differentiate tonight's credit repair interventions from next week's... Specifically...
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Next week we'll tackle collections and charge-offs -- in other words, those credit
report items which are termed "R9" (for revolving chargeoffs) or "I9" (installment
chargeoffs) by Equifax. Those kinds of tradelines fall under the purview of the
Fair Debt Collections Practices Act (FDCPA)... and the primary credit repair
intervention imposed for those types of accounts is termed "validation" which is
the word actually used within that federal statute.
TONIGHT however, we'll discuss those pesky accounts which never charged off
but report nasty late pays... 30 day lates... 60s... 90s.. 120s... 150s...
Anybody ever had any of those? smile.gif. Well... My entrance into credit repair
occurred a half decade ago... (doesn't that make it sound longer than it was, ha)
I was finishing up my doctorate, and I had lots of student loans... And I was late
on all of them. Really late. Somehow I never let anything charge off. I knew very
little about credit reports. My thinking was faulty... I thought, "What the heck, I'll
pay them... so what if I'm late?" Then one day I got married, and my new wife
and I decided to buy a car. Holy moly. Did I get an education that day? My credit
was destroyed. So I started reading a bunch of credit repair books... and
unfortunately they ... to borrow the language of people who are two decades
younger than me (I'm 44)... those books SUCKED! They all said that if I paid off
my debts I had no "leverage." (Which I don't believe, by the way, but I don't want
to get ahead of myself.) So I went online and discovered the main credit repair
discussion board on the net in 2000... and that was not the one some of you may
be thinking of... it was a Yahoo discussion group... and they told me the same
thing: "Oh man, you pay your debts... you have no leverage." Apparently
"leverage" was reserved only for those who let things charge off... and then you
negotiate the tradeline removal... according to them... and that's a fine technique
by the way... we'll discuss that, among other tactics, next week... but that didn't
help my situation... I was just a guy with a bunch of late pays... 30 days to 150s.
To make this long story MUCH shorter...I did a lot of research and "adopted"
some very fine teachers online and off... breeze is included in that category... and
so was my brother, who was an attorney...There were others I'm leaving out...
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But the short of it is...a series of credit repair interventions was fashioned which
would restore "leverage" to those of us who:
1) didn't want to lie, and
2) who paid the bills, and
3) whose credit was TERRIBLE
These are the interventions we'll discuss tonight. They include:
a) The Goodwill Letter (heavily influenced by marci, a Creditboards member);
b) The Nutcase Series;
c) The Dancerat letters (written by a member of another discussion board...
Dancerat);
d) The Knockout Letter (written by a very controversial fellow, but I've seen the
results it gets). And there are others of course.
There is a common thread to all of these direct-to-creditor interventions, and we'll
discuss that shortly. I'll also post links to those letters...c) is cited on Creditboards
btw, and perhaps d) too... but I didn't check. Let me cover the next topic on
tonight's syllabus, CREDITOR MOTIVATION, and then we'll delve into the
interventions themselves. Here are PsychDoc's Creditor Heuristics
1) Creditors are in business to loan money.
2) They don't want to fool with your credit problems.
3) They don't respect people with credit problems generally.
4) They wish you would go away.
5) They are highly motivated to avoid even the hint of litigation or
embarrassment.
Those five heuristics are key, lol. The jiu jitsu of dealing with creditors is to use
their motivation to benefit YOU. So... First, the classic "Goodwill" approach...
Essentially, some creditors, if approached on the right day, and if the right
representative is engaged, will forgive a negative credit report listing just
because. I would like to say... "just because they value your business"... but I
think it's simply "just because"...The approach simply involves this... Saying your
sorry. Saying you won't do it again. Saying you had a bad moment. Asking if
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there is redemption in this lifetime at Sears. Has anybody had success yet using
the Goodwill approach? Some yesses and some no's. It's a great way to start.
So nibanike... you actually saw success with 2 90 day lates using Goodwill?
That's fantastic... Very nice, tagalong...For those who have not succeeded (yet),
be persistent... use a variety of approaches... I think wayhigh is correct... and I
also think that -- typically -- the less severe the item, the more likely the
success... although as we've seen here tonight... even severe tradelines can give
way. There is a "classic" goodwill example that I'm sure is posted to
Creditboards. You can and SHOULD change that a bit to fit your situation, your
explanation, etc. The next credit repair intervention for late-pay creditors is... the
Nutcase series. I'm intimately familiar with that one, lol...Let me say, first, what it
ISN'T... A CBer posted this... (and I like this CBer... so don't take this out of
context)... "So the nutcase letter is basically an ITS with a foaming-at-the-mouth
rabid tone, spouting whatever the CBer can come up with that's close to a legal
theory that might fly (in the Bizarro World)." WRONG. LOL. Maybe somebody's
generic nutcase letter is that... and I'll bet that's what he's referencing. But there
is a specific series of letters that we "named"... just so we'd have a convenient
moniker. Really, the Nutcase series uses non-angry language. Very matter-of-
fact. It asks the creditors to verify this and that. And this and that. And this over
here and that over there. And, oh by the way, if you can't comply with these
lawful requests, then delete the tradeline. It looks a lot like "OC validation," i.e.,
validation letters sent to creditors... but it's not that... because those are usually
tried in order to attempt forgiveness of an allegedly outstanding debt. Sometimes
the entire tradeline is removed...I have a personal philosophy about that... Some
people cry (and they're right in one respect)... "TAKING THE TL AWAY
ENTIRELY IS WORSE THAN LEAVING IT BECAUSE OF MY CREDIT SCORE"
etc. I think that's a respectable argument, and it's certainly true that an
established account with a high line of credit adds points to credit scores. But... If
you want a CLEAN slate (because mortgage brokers will give you sheer hell
even when they see even a 30 day late or whatever), etc., then I'm all for just
starting fresh. With my personal credit repair I didn't care whether it was removed
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entirely or if just the negative portion was removed. I wanted a clean slate. Sure,
your score may dive at first, but it's like psychotherapy... LOL. Sometimes you
get a bit worse before you get better. You build your credit, and your scores rise
precipitously. It's all about your goals. Keep in mind that the nutcase series of
letters is aimed at forcing a fully paid creditor to demonstrate that the late-pay
notations in your credit file are:
a) proveably correct;
b) don't violate your civil rights;
c) weren't associated with an "encumbered" consumer protection issue, and
d) don't reference a transaction that was part of a problematic insurance dispute
(with all the laws pertaining to that), among other things. This differs
TREMENDOUSLY from a standard validation letter for unpaid [alleged] debts,
since that standard validation letter is asking for one thing -- proof that the debt
existed. The nutcase series DOESN'T DISPUTE the original debt's validity at all.
The nutcase letters dispute the validity of the NEGATIVE TRADELINE
REMARKS and do that by hinting at one or more violations of consumer
protection laws. It is a perfectly legal letter whose object is not to present as a
psychotic (as some people seem to think, lol) but rather to present as a litigious
nutcase who is "up to something" and who should be dismissed as cheaply as
possible and quickly (by deleting the negative tradeline notations, hopefully, lol).
So... There is actually a series of them...Here is a link...
http://www.psychology.net/credit/nutcase.txt
A few words about when to use Goodwill versus Nutcase... There's no rule of
course, but typically:
-- Goodwill letters work best with fully-paid, still-open accounts with isolated and
relatively minor late-pay notations. Now, of course, we've seen people have
success using this technique with seriously-late and paid/closed accounts as well
(hence, the "no rule" caveat, lol). Regardless, if you've had a Sears account for 7
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years, and you were late twice three years ago, I certainly wouldn't send the
"nutcase" for that because:
1) you currently have a relationship with the creditor, and
2) an isolated example within the context of a valued customer's otherwise
excellent account history really beckons for a "courtesy adjustment" rather than
the implied threat of a lawsuit.
While... -- Nutcase letters work best with paid/closed accounts for which there
was serious delinquency one or more times. So, for example, with my PHEAA
student loans, I was 150 days late several different times over a period of several
years. (Basically, I wouldn't pay for 4 or 5 months and then I would make a big
lump payment to bring it current. I was destroying my credit and didn't even know
enough about CRAs to know it at the time.) In that case, asking for a "courtesy
adjustment" seems like a pretty huge stretch even for the most kind-hearted
customer service employee. So I went with the Nutcase letter and they folded
quickly. If there is a heuristic in here somewhere, maybe it goes like this: There's
lots of overlap, and only you can be the judge, but typically a "courtesy
adjustment request" (Goodwill letter) stands a better chance if the delinquency
occurred within the context of a properly-maintained account -- as wayhigh said
before here. That said... We have seen lots of good responses for Nutcase with
charged-off accounts when sent to original creditors. That's not how the
intervention was designed... so your mileage may vary. Again... my mantra...
1) PERSISTENCE... 2) A VARIETY OF APPROACHES... 3) REPETITION... 4)
PATIENCE
Next intervention... FCBA... The Fair Credit Billing Act requires creditors to bill
correctly and completely. Quoting from the second session of this series...
"The FTC summarizes the statute's prohibitions as follows: "unauthorized
charges; charges that list the wrong date or amount; charges for goods and
services you didn't accept or weren't delivered as agreed; math errors; failure to
post payments and other credits, such as returns; failure to send bills to your
current address -- provided the creditor receives your change of address, in
writing, at least 20 days before the billing period ends; and charges for which you
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ask for an explanation or written proof of purchase along with a claimed error or
request for clarification." Some may remember that in an earlier lesson I briefly
mentioned one proposed FCBA intervention... "In accordance with my Federal
civil rights as stipulated by the Fair Credit Billing Act, you are obligated to comply
with this lawful request for elaborated documentation for billing, including charges
and interest, as well as a full accounting of where each bill was mailed, for the life
of the account, or rescind these reports from every consumer reporting agency to
which you have reported same. Your expeditious handling of this matter is
expected."
So, regarding the FCBA, you want to ensure the following before ANYTHING is
reported to the bureaus...
1) The account was created at your request.
2) Every item billed to an account was billed correctly.
3) Every statement was created in a timely manner.
4) Every statement was sent to the correct address.
5) The creditor never ignored your change of address requests.
6) The creditor never ignored disputed charges.
7) Ignored change of address requests, or disputed charges which weren't
facilitated correctly and in accordance with your rights as stipulated by the
statute, didn't contribute to negative credit bureau reporting.
8) Interest and late fees were computed in accordance with federal law and with
any laws specific to your home state.
9) The creditor didn't break their contract with their customers in any way.
So... lol... Consider this FCBA based credit repair approach...
"Dear XYZ, The Fair Credit Billing Act requires that you bill correctly, that each
statement be sent to the correct address, that you not ignore change of address
requests, and that you facilitate disputed charges in a manner prescribed by law.
The Act also stipulates that you provide lawfully requested information
concerning my account upon request in a timely manner. For that reason,
forward a notarized statement on your letterhead which will attest to your
compliance to the FCBA generally and to my account specifically throughout the
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period I have been a customer. Otherwise, delete the negative marks you have
reported to the three consumer reporting agencies within the timely manner
prescribed by law. Your prompt attention will be appreciated."
Remember my Creditor Heuristics... Anything that smacks of possible litigation
makes creditors nervous. They just don't want to fool with you. They'd rather go
attend to their business. A polite, calm, lawful request just gives 'em the willies.
Keep in mind that these sample FCBA approaches, like the Nutcase approach
(especially Nutcase letter 1)... make no claims. They just look like they're written
by somebody who calmly has it together and is about to escalate.
Yes, 4myfuture, definitely.
Yes... but you should also leverage HIPPA there.
gmta clouds, lol
interesting, tagalong, more grist for the fire you'll set...
The NEXT creditor intervention in this vein is the Dancerat approach. Dancerat
was a participant on another board. I don't think he or she ever registered on
Creditboards, but I could be wrong. But Dancerat used a different tactic.
Unlike the Nutcase series... and unlike the FCBA approaches mentioned here...
(and for that matter unlike the FCRA "prove it or lose it" approach I've described
in previous sessions for credit bureaus)... Dancerat DOES make a claim. The
Dancerat approach actually disputes certain aspects of the underlying debt, so
this should be used carefully. Remember my byword: tell the truth.
Unlike the Nutcase series and Bauer's Knockout tactic which do not disclaim the
original underlying debt, the DanceRat approach uses a "not mine" claim. Here is
a link to the text for that interesting direct-to-creditor approach.
http://www.psychology.net/credit/dancerat.txt
Next I want to mention another one that has achieved excellent results for many
on the net. Dare I say the name... Bill Bauer? (OH NO... I'm being chased away.)
Very good, I'll not review the history, ha. Bill is a cantankerous old coot. And I say
that affectionately. Some dislike him. Others don't. But he wrote a VERY good
direct-to-creditor intervention, and released it to the internet gratis -- which is
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unusual for him. He called it the "Knockout Letter". It's something like the
Nutcase series in that it DOESN'T make a claim. (So in that regard it's
diametrically opposite to the method Dancerat utilized.)
Here's a link to the text for that:
http://www.psychology.net/credit/knockout.txt
The thread that connects all of these is... (and I hope someone here invents the
next super intervention... the more, the better for all consumers) that they make a
request for ACTION or DELETION. They may mention various laws... or even
aspects of various laws... Some make a claim (i.e., "I was NOT LATE"), and
some don't (i.e., "prove to me you have complied with the law; otherwise delete").
It really doesn't matter what silly names we've given to these different categories
because YOU can write one even better. It pays to know the laws, of course...
REVIEW the second lesson of this series... But after you have become familiar
with the various consumer protection statutes... you'll be in a terrific position to
improve upon these, or even trash them, lol, or come up with your own unique
approach. The division between... a) making a claim... versus b} not making a
claim ... will remain of course. You have to decide what you're comfortable with.
Ok... checking my syllabus... lol..see it's really for me to keep me on track
heh ain't that the truth breeze, I've told a couple here, argh... Well... we've
covered the direct-to-creditor interventions... And I've given you a sense of how
they divide themselves into the two categories... And some examples you can
use... Now I'd like to move to the last item on tonight's list of topics... which is...
Third-Party Interventions. This is where you essentially do what we shrinks
always advise people not to do in their families... lol: TRIANGULATE.
Typically, creditors don't want to be embarrassed... They HATE it when
consumers complain to... 1) the Federal Trade Commission... 2) The Better
Business Bureau... and ... 3) Consumer web sites like PlanetFeedback.com
(which I understand is back after a brief hiatus). Has anybody ever seen good
results (or bad) from using third-party interventions? do tell, zappagal
(VERY GOOD... that's right... perhaps the best third-party intervention would be a
letter to your state Attorney General!)
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wayhigh: I'm not recommending or not recommending any of these... and yes,
you should assess your risk... The Knockout Letter is typically "Bill"... i.e.,
contentious. That's why I prefer the Nutcase series (and you knew I'd say that). I
prefer polite, but the Knockout Letter has netted great results as well. It's one
more arrow in the sling. So, again, a VARIETY of approaches may be what it
takes over the course of a year. Very good, zappagal. Ok, let me just end by
encouraging everyone to search Creditboards for references to these
interventions... both the direct-to-creditor ones and the third-party ones. With
respect to the third-party interventions, sometimes it's best to learn about those
just by reading the anecdotes posted to the board. Let me also encourage
everyone to post about their successes and otherwise, so that others will be able
to benefit from your experience. In two weeks... We will dip into VALIDATION,
chargeoffs, collections, and some of the peculiarities of the FDCPA. smile.gif
I think we can all be grateful for this wonderful community. wayhigh... lots of
debate about that... For Nutcase, I love CMRRR, and I love NOTARIZED
signatures because they spook creditors, LOL. It looks like a polite document that
your lawyer prepared... ...but nothing's "required." Try it one way, then try it
another. You'll see the gurus taking positions on all of that -- whether it should be
CMRRR... or whether it should it be typed... or whether it should be hand-
written... or sent with purple ink... etc. Lots of very smart people have opinions
about all of that, and I'm not taking anything away from them by the way... Some
make great points. I've just seen positive and negative results from just about
every combination, so I'm not one who offers that kind of advice.
tagalong... student loan guarantors are like most other creditors... What works for
one sometimes doesn't work for another, so just delve in. I wish there was a
"right" answer. walkingthemaze put it just right Buck, I've seen success both
ways. Definitely work the contacts if you have them. The legal counsel at
Citibank once removed a bad student loan tl for me when the customer service
reps said "no way" "1-2 Punch" next session -- it's a variant on validation.
END CREDIT 106
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LESSON SEVEN TRANSCRIPT
CREDIT 107: FDCPA Street Fighting, 12/1/2005
Tonight we'll delve into dealing with some of the nastiest people on planet earth.
And I understand they're pretty nasty on that other planet too... (and perhaps
there are a few nice ones...) talking about debt collectors.
Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- FDCPA brief
-4-- What is validation?
-5-- The sequence
-6-- Controversy abounds
Well... as I hope everyone knows... collection agencies and their employees are
regulated by a federal statute -- The Fair Debt Collection Practices Act. That law
was enacted in order to protect all of us. And the REASON it was enacted was
because debt collectors did (and still do, unfortunately) demonstrate questionable
business practices. Until the FDCPA became law, debt collectors could call you
on the telephone anytime they liked. They could threaten all kinds of legal action,
some of which they weren't actually entitled to pursue. They would threaten
"debtor's jail" (something that doesn't exist in the United States) (but don't travel
to Uruguay!) They would telephone relatives, bosses, friends and embarrass the
alleged debtor. So Congress passed the FDCPA in order to stem such practices
and to give consumers some teeth. As we discussed in Lesson 2... The FDCPA
in a nutshell...
1) Provides behavioral standards for acceptible third-party collections behavior.
2) Specifies that CAs must always include several legal caveats in their dealings
with debtors. (Before, CAs would employ all kinds of shenanigans to mislead
consumers regarding who they were.)
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3) Allows the debtor to formally request (i.e., by letter -- hopefully certified and
sent with return-receipt requested) that the CA "cease and desist" from
communicating with the debtor further.
4) Specifically details a consumer's right to request further information regarding
an alleged debt... Among other rights.
I would specifically recommend that anyone who is being pursued by collection
agencies (CAs) read the act. Has anyone actually read all or part of the FDCPA?
some yes, some no... it can be confusing... I hope tonight that we'll delve in and
give some shape to the material so that you'll be less confused! Since we're
talking about actually READING the Act... LOL... I hate to give homework... but I
heartily recommend it...Let me help those who've not read it at least join the
group who've read parts of it...here's a link...
http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
Read it tonight or tomorrow, LOL. Note especially certain sections...let me help
those who haven't read it at all... annotate the Act a bit
Collectors can't call after 9 pm or before 8 a.m., That's YOUR local time, by the
way. Look for that in this section... FDCPA � 805 (a)(1).
Collectors can't telephone you at work if you tell them not to...
Look for that in this section... FDCPA � 805 (a)(3)
Collectors should NOT give information about you to third-parties (friends, family,
coworkers, etc.), and that's here: FDCPA � 805
Also, there are some FTC Opinion Letters which underscore that... These do not
carry the force of law, but they have proven to be quite influential with most
judges in courtrooms as evidence...
LaScuola, Halverson, Jones, Borowski, Zbrzeznj, Fisher, Atteberry, Kwait.
(Those are the names of the FTC Opinion Letters.)
By the way, has anyone ever come across or referenced FTC Opinion Letters?
They're found at the FTC site. Great, a few people. Some not...
Ok... I'll cite a few more for the transcript.
Here's a good FDCPA citation... If you inform a CA that you no longer want them
to contact you, they cannot. But note the following
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CAVEAT>>>Most informed folks will serve up the excellent recommendation that
you only inform them not to telephone you. So that's why many of us don't
recommend telling them not to WRITE you.
The FDCPA citation for that consumer right is HERE >>> FDCPA � 805 © ...
You'll find an excellent Cease & Desist example on Creditboards in the letter
archive. By the way, there's so much material that I hate to gloss over (but this is
a beginner's course)... but let me reiterate something anyway... CEASE &
DESIST can be very powerful. Many CAs will oblige. And the ones who don't...
can be sued... with a $1000 statutory award for every infraction. There are 46
folks in the room, and we won't cover small claims this time...
Citation... FDCPA � 806 and FDCPA � 807 give you specific rights against
other abuses. Threats, etc. Ok, moving along in the syllabus... We've reviewed
the major sections of the FDCPA and provided specific citations for you to
review. Next... "What is validation?" Let me start by describing a scenario. I
knock on your door. At your house. "Hi, I'm Randy Padawer with the Randy
Padawer Collection Agency." "And you owe me $500." "And if you don't pay, I'm
going to ruin your credit." The door slam is one thing. You want to know who I
am. You want to know that I actually own the debt I claim I do. You want to know
that you actually incurred the debt once upon a time. You want to know what that
$500 is about... because the only Sears debt you ever owed was for a third of
that. So the FDCPA accords you the right to information. Now, let me clarify a
few things. Some people say flatly... "You can only request that information within
30 days."
Before I go into this, I want you to jot this down... 1691g© from the FDCPA:
"The failure of a consumer to dispute the validity of a debt under this section may
not be construed by any court as an admission of liability by the consumer."
In other words, just because you FAIL to dispute the debt within the 30 days
doesn't mean you have resigned yourself to whatever they say. We don't quote
that enough. We roll over. And sometimes our experts roll over with 'em. Now,
having said that, let me backtrack a bit. The FDCPA says...
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"If the consumer notifies the debt collector in writing within the thirty-day period
described in subsection (a) of this section 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 a 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." That's where the 30-day clock reference
originates within the act. Note that it doesn't say anything about validation. In
fact, the word "validation" only appears TWICE in the Act... in the table of
contents... and as a section header. You can request validation at any time.
That's your consumer right. Now... Will a judge stand behind you? Sometimes
yes, and sometimes no. Some judges will cite the 30-day thing (in error, I think)
and some won't. Some judges despise debt collectors. But no law limits your
ability to request information. AGAIN... YOU MAY NOT PREVAIL IN COURT.
BUT YOU MAY. In any case, a request for validation sometimes results in a
consumer-friendly response no matter when it was sent.
Question... Has anyone here ever had a tradeline wiped off a credit report, or an
alleged debt removed, in response to a request for validation (irrespective of
when the letter was sent)?
I want those who read this transcript in the future to be encouraged.
Like every credit repair intervention cited so far, sometimes it works, and
sometimes it doesn't. But let me say this... If you are outside the 30-day initial
collection period, don't let that dissuade you from pursuing the other side
vigorously if that's what you need to do. Because, as we've seen in this transcript
tonight, sometimes it works and sometimes it doesn't... and that's irrespective of
that 30-day period. Results matter. Now... if you're looking for slam-dunk court
case, then, yes, if you've pursued it within the 30 days, you're in a MUCH more
powerful position. Regardless, if you're looking for a clean report... you should be
encouraged. It can work. The operant word there is "can.". Now... let me move
onto another point of interest. Here's another one for Gryf's notes, LOL... A
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validation letter is not a dispute. It is a request for information. You don't know
whether or not you are going to dispute the debt because you don't know if you
owe it yet. You're saying, simply, "excuse me, I've never had an account with
ABC Collections... I don't know you... Please identify yourself better and tell me
about this alleged debt. Otherwise lose it and remove it. Thank you." That is not a
dispute. The dispute comes AFTER. Just because you have requested validation
doesn't mean you have disputed anything, Yet. On a related note, tonight I'd like
to do something exciting, LOL... I *NEVER* have said anything like that in the
first six lessons... I hate hype. But this is exciting. The exciting thing is this... a
new court case... October 17, 2005... Southern District of Indiana, Recker v
Central Collection Bureau, Inc. Here's the gist... A debt collector who
simultaneously verifies and resumes collection activity violates FDCPA. Timing
becomes central. In other words, a court has affirmed that validation is a
separate event from the debt collection period. This is too new for me to
elaborate HOW we will benefit, but we WILL. And, I hope you'll find it and read it.
And post it to Creditboards. That means... If the collector sends what they
consider is verification (and THAT's the word used within the paragraph under
the Validation heading, by the way... PLEASE never get caught up with people
who want to argue those two words with you... it's a time-waster)... anyway, if the
collector validates or verifies or sends adequate smokes signals, etc., and at the
same time says, "NOW YOU MUST PAY" in the same letter or if they do
ANYTHING during that period that smacks of collection, you have a case law
citation to present in another court... or... you have a nifty citation to reference in
your next letter to them. Please consult with your attorney if needed, since I am
not one, and this is not one-on-one legal advice. Also, please do your due
diligence regarding research... ask your friends on the board before citing any
case law (or statute for that matter). Now, let me reference TWO MORE laws that
many of you know well. The first one is one we like, and the second one is one
we don't, LOL. First... Spears v. Brennan 49A02-0003-CV-169, Spears was a
mixed case, although it was settled MOSTLY in favor of the consumer. We like it
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because... The signed contract is not enough. It merely shows the presence of
an original agreement. It doesn't prove that the customer still owed money.
The second citation seems to refute that, but I'd like to delve in a bit there too,
and that one is indeed Chaudhry v Gallerizo. By the way, when you search the
board for Chaudhry... also search it for the misspelling Chaudry... people always
leave off the second "h" but you may overlook some very good information, so
search both ways. As you see, they LOVE to cite Chaudhry because they CLAIM
that this case TRUMPS federal law. In other words, they say that since a section
of Chaudhry says that a simple note that the consumer owes "this much" is
enough information in response to a validation request... that must mean that the
FDCPA (a FEDERAL statutes) has been overturned. Now isn't that crap? LOL.
Plus...By the way, that's Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999).
Anyway... Plus, when you read Chaudhry, you'll see that the CA had already sent
some information. They actually sent what some of you hope you never see....
which is... a lot of substantiation. The consumer pressed it. And the CA
responded with just a note the next time. And the consumer pressed it again,
took 'em to court and lost. The citation about the single line being enough is...
TAKEN OUT OF CONTEXT. (Ditto re: WhyChat's analysis.) So YOU have the
right to snap right back at 'em with that. Plus...let me be clear... The CA in that
case provided a bunch of validating information. It was the SECOND PASS
where they provided a "look, we're fed up and want our money" note. The case
itself was about something specific.... plus, as you just mentioned...if you don't
happen to live in the 4th District, it's not the law of the land EVEN IF your
situation was EXACTLY as Mr. Chaudhry's. So don't let them cow you with
Chaudhry. So don't let the validation-debaters cow you with the 30-day warning.
You just go, go, go. You do not give up any right when you request information.
Again, you may not win in court. But, then again, most of you won't go to court.
Most are interested in clean credit reports. And of those who do go to court, you
MAY win! Ok... Moving on... I want to list some FTC Opinion Letter names for
your reference that discuss CAs who refuse to validate... Mezines, Cass, Berger,
Bergstrom, Castle, Miller, Wollman, Krisor... You've got some homework now,
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LOL! There's obviously not time to discuss every one... Now... About collectors
who threaten to sue you outside of where you now live or where you lived when
you incurred the ORIGINAL debt (which is a no-no, by the way): Reference
FDCPA � 811 (a) (2). Also reference this excellent case citation... Yu v. Signet
Bank, California Court of Appeal, First Appellate District, Division Four, 69 Cal.
App. 4th 1377, decided 02-16-1999. And this FTC Opinion Letter... In other
words, if you incurred the debt when you lived in Kentucky... and now you live in
Minnesota... and the CA is in Kansas... that CA better not try to sue you in
Kansas. They'll need to file in either Kentucky or Minnesota. Otherwise they are
SCREWING with your civil rights. I hope this is helpful so far...During tonight's
seminar, you've been provided serious annotations from the FDCPA... Also
references to some very relevant FTC Opinion Letters... Also, some good cases
(and of course there are lots lots lots more for those who want to delve in) to
cite... Also, some encouragement regarding pursuing CAs... irrespective of the
calendar. Also, some testimonials within this transcript from those who confirm
that opinion vis-a-vis credit report results. And finally, you've been reminded that
a request for validation is not the same as a debt dispute. So.. Now I'd like to turn
to the SEQUENCE, which is the next item on our syllabus...Basically, beginners
will hear a bunch of stuff... terms... like... validation, verification (and people
killing each other over those words, lol)... etc. Let me just provide an
oversimplified sequence for newcomers...
1) You request validation of a debt.
2) They either send you something or not from a debt collector
Courts have not yet defined exactly what constitutes good validation. This works
in your favor. You are not obligated to be satisfied with what they send, LOL. Of
course, you can be satisfied if you want to be! Basically, you want a lot of
information. Now... sometimes you have to be realistic about how far you want to
pursue this... whether you will go to court or not... when to hold 'em... when to
fold 'em (anybody care to sing?) If you contend that they haven't provided proof
of the debt... you can contend that they have violated the law by continuing to
collect... If the debt is small, most CAs would rather just move along to the next
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person who will wither and cry on the phone rather than deal with a
troublemaking citizen who knows their rights. Now, if it's a $32,000 alleged debt
to Citibank, you can bet that they're going to pursue you if you owe the debt!
We've known one or two charlatans in our community who've made a job out of
cheating creditors, suing them, sometimes winning, and bragging about it. Let's
not name names. Please. But... That is certainly not the way I would recommend
you live your life. I guess that's enough to say about that. Each state establishes
their own guidelines with respect to when a debt is no longer collectable (i.e., the
statute of limitations). A SOL doesn't prevent someone from attempting to collect.
The SOL simply provides you with what's called an "AFFIRMATIVE DEFENSE".
That means... They can continue to collect. You go to court. They say, "Judge,
he or she owes me this money." And you say, "Judge, before this matter
proceeds further, please know that I have an affirmative defense regarding the
statute of limitations of this debt, in accordance with the law of this state." That is
an affirmative defense. They can collect. They can sue. And if YOU don't assert
your affirmative defense... the judge may not do it for you (he may, or may not)...
The validation process is separate from their collection activity. Much more for
everyone to discuss on the board. Ok... back to sequence...
1) You request validation...
2) They respond...
3) You send an "estoppel" letter...
4) They respond...
5) You send an "intent to sue" letter.
Now, keep in mind, this sequence isn't the "only way" or the "right way"... It's just
a way that has benefitted many I know... but... You may see other sequences
that may be better for certain (or many) situations. Now, on to the difference
between estoppel and intent-to-sue... Estoppel references an old English
common law practice. The word is actually used in several contexts, I
understand... (and again, let me reiterate my non-lawyer status)... but in our
context we talk about "estoppel by silence"... In other words, the CA failed to
provide validation, which is "silence" even if it was a frivolous response.
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By their "silence," they are essentially admitting an inability to fulfill the lawful
request. So, you're saying, "Hey, I asked for proof of this debt. I'm willing to pay
any debt I owe, but you haven't shown that I owe this... and we know how debt
collectors are... which is why consumers are protected... So... you must stop."
That's estoppel in a nutshell. It's just the next letter in a sequence that can be
effective with a CA who is sick of fooling with you. (And who may worry that you
are a litigious crazyperson who'll drag 'em into court, which they may not want to
do even if they think they'd win.) First, validation, then estoppel, then the intent-
to-sue letter. You can find all of these letters I believe on Creditboards -- and
certainly lots of references to them. Keep in mind that they don't mind being a
nuisance. You don't have to be more polite than them. You be a nuisance too.
Now to the last topic on our syllabus...
-6-- Controversy abounds. Probably NOTHING inspires more debate in our
wonderful consumer advocacy community than the things I have dared to
discuss tonight, LOL. People will argue, as I said, about whether CAs validate or
verify, or if OCs validate or verify, etc. Some of the people arguing I respect
VERY much. I just prefer not to get into that. I would recommend that you search
the board for "reaging" and "re-aging". As we've seen, the FDCPA references
"verification" within the Act. There are clear rules about it. Now, another
controversy... I have seen posts on various discussion boards on the net where
the person gives a play-by-play about what constitutes a validation letter... and
they instruct everyone that a validation letter must include a debt dispute. ARGH.
Of course, you *could* do that. But you're doing too things at once. You're
saying, "please prove this to me" and "this is definitely not mine" at the same
time! If you know for a fact that something is definitely not yours, then there's no
need to ask for proof. It matters because of that 30-day reference. The FDCPA
says you must "dispute" the debt within 30 days of first collection. Now, again, it
gives quite a lot back when it says that if a consumer doesn't do that, then they're
not necessarily giving up their right to assert that the debt isn't theirs. So that
seeming contradiction keeps the courtrooms busy... and keeps the debaters on
the board debating... but... if you understand that a validation request is not a
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dispute, then, in the words of some lawyers I respect, you skirt the issue
altogether. They come back and say, "Nah, nah, you didn't dispute this within 30
days..." and you ...
1) cite the FDCPA reference that says that you don't have to roll over and
2) you say, plus, I haven't disputed anything... I'm issuing a lawful request for
information... proof... competent validation... You just keep hammering them.
(If that's what you want to do.) Ok... I am going to do something I regret... It's
soooooo late.... We've gone over by almost an hour, and amazingly almost
everyone has remained! So I thank you for that. I hope tonight was helpful.
We've covered the syallbus.
END CREDIT 107
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LESSON SIX TRANSCRIPT
CREDIT 108
This is the last of our series. For those who are showing up for the first time
tonight, I really want to give a caveat... You probably will never need to file a
lawsuit... and that's the topic of this last seminar of the series. I really don't want
the newest newcomer to get the idea that we're all about lawsuits here. You can
literally clean up "impossible" credit reports and never set foot in a courtroom. If
you'll keep that in mind, I'll feel a bit more comfortable proceeding.
Tonight's session is the third of the second group. Tonight's syllabus...
-1-- Course overview and format (which we've already done)
-2-- Brief review of the previous sessions
-3-- Being litigious
-4-- Types of "credit repair" lawsuits
-5-- Collecting evidence
-6-- The small claims process
-7-- My complaint letter example
I'll draw from my own experience... Some of my fellow old-timers remember a
half-decade ago when I successfully sued the three credit bureaus. More about
that shortly. On to the meat of tonight's syllabus...
-3-- Being litigious, I'd like you to develop a mindset... even if you never go to
court... a litigious mindset... Now... some people mistakenly believe that "being
litigious" means turning into your grumpy Uncle Abe who yelled at everybody.
Fortunately (or not, if you enjoy screaming), that's not the way to be. Think in
terms of a lawyer in a courtroom who calmly states his or her case with deadly
seriousness and then sits down. Think like the detective who deliberately collects
evidence. Your evidence are the letters you send and receive. Your credit
reports. And perhaps even tapes of certain telephone conversations (in cases
involving CAs who call you before you send a cease & desist). Screaming,
yelling, cursing, slamming the phone, threatening, etc., may make you feel
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powerful. But it probably will do nothing to assist your case. In fact, we'll talk a bit
tonight about how "playing dumb" sometimes entices the other side to break the
law (their fault, make no mistake). Now, that said, let me reassert the message
from Session One... Be honest. Never misrepresent. On to the various types of
credit repair lawsuits. But first... Let me throw out a question... I realize this is a
seminar for beginners... but we welcome the experience and wisdom of those
who've ran around the track a few times already too... Has anyone here ever filed
a lawsuit against a credit bureau, a creditor, or a collection agency? many no's of
course... Would you be willing to tell us about it (if you can) with just a few
summary sentences? very good... when the other side doesn't show, the plaintiff
(you) get awarded what's called a "default judgment", Here are some common
violations directed toward credit bureaus (and of course there are others):
-- FCRA violation: not properly verified the debts as valid within the reasonable
time period prescribed by statute
-- FCRA violation: tradeline verification despite proof that such verification is
impossible ... by the way, that "reasonable time period" has been held by courts
to be 30 days... the final transcript will be cleaned up some so folks don't have to
jump around to follow… ok, more common violations directed toward credit
bureaus….
-- FCRA violation: insufficient and incomplete investigation
(keep in mind these are things you can sue over)
-- FCRA violation: failure to provide information regarding an investigation
pursuant to 611(a)(3)( C)
-- FCRA violation: failure to provide the requisite notice regarding an
investigation's procedural and contact information pursuant to 611(a)(6)(B)(iii)
let me retype the end there pursuant to 611(a)(6)( B )(iii)
-- FCRA violation: willful noncompliance with the Act
That one's a very general one. It's nice to stick onto a lawsuit. Basically, if a
credit bureau demonstrates a pattern of neglecting to comply with the law, one
presumes that they are DELIBERATELY doing wrong. The next two lawsuit
complaints directed toward CRAs aren't specific to the FCRA... that's this one...
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-- FCRA violation: failure to provide information regarding an investigation
pursuant to 611(a)(3)( C )
ok, these next two aren't FCRA-specific
-- Defamation of character
-- Negligent enablement of identity theft
Basically, if they say nasty things about you (like you don't pay your bills on time),
then they are defaming your character by definition... and especially so if they
have made an error. Remember our message from the FCRA Street Fighting
seminar... Credit bureaus enjoy no governmentally sanctioned "official" status.
Rather, they are privately owned (except for Equifax which is publicly traded...
but still owned by its shareholders) entities whose primary business is to buy and
sell information (i.e., gossip) about you and me.I'm no lawyer. So this is a good
moment to reiterate that... and also to plug the board here which is filled with
folks who stand ready to discuss every topic, LOL. :) More seriously, if a CA calls
you at 2 in the morning for 17 days in a row, that would indeed be 17 violations...
with a statutory award of $1000 per… which brings us to the next list... common
violations directed toward collection agencies (CAs)... (and again, there are
certainly others):
-- FDCPA violation: telephone contact despite a lawful cease and desist notice
Right, the statutory award doesn't preclude additional damages. We sometimes
see lawyers in our Creditboards community... Do we have one in the room
tonight? (Wouldn't that be handy, LOL?)
-- FCRA violation: failure to provide information regarding an investigation
pursuant to 611(a)(3)( C ) now that's for credit bureaus..I'll continue listing
potential violations for CAs next (not inclusive)
-- FDCPA violation: harassment or abuse (pursuant to 15 USC 1692 d )
-- FDCPA violation: actual or implied threat
-- FDCPA violation: insufficient and incomplete validation
-- FDCPA violation: continued collection activity during period of validation or
dispute… By the way... the case cited last week... Recker v Central Collection
Bureau, Inc. ... provides additional ammo for this one
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-- FDCPA violation: communication with third parties (pursuant to 15 USC 1692 c
)
-- FDCPA violation: false or misleading representations (pursuant to 15 USC
1692 e )
-- FDCPA violation: unfair practices (pursuant to 15 USC 1692 f )
-- FDCPA violation: willful noncompliance with the Act
(this last one much like the FCRA one referenced for bureaus above) gotta love
the "willful noncompliance" and, again... LOL
-- Defamation of character
although that may be less strong with CAs... in cases where they are only
communicating with you ... but coupled with -- FDCPA violation: communication
with third parties (pursuant to 15 USC 1692 c ) the "defamation of character"
complaint can have teeth…. Well, in the case of CAs... if a CA manages to let
your boss or a neighbor (or whoever) know who they are and why they're calling
you then they have not only violated the FDCPA but, if they cannot provide
adequate validation, then they have essentially told an untruth about you
i.e., they have defamed your character. Usually, when one files a lawsuit against
a CA, it lists multiple violations if there are more than one. That's also true for
CRAs. When I sued the bureaus... and you'll see my sample complaint shortly...
I listed multiple violations on the same suit.When it comes to a credit report, it's
the CRA who defames you if they sell the erroneous information to others...
despite your assertion that the information is wrong (and if it is indeed wrong)
his question... if the CA reports incorrectly to three bureaus, does that constitute
three separate violations at $1000 a pop? very good.. Ok, to continue...
common violations directed toward OCs (again, not all-encompassing):
-- FCRA violation: credit report accessed sans permissible purpose
(this refers to when a company puts an inquiry on your credit report without any
permissable purpose) (i.e., they can't show that you applied for credit,
employment, insurance, etc., and neither do they have a prior relationship with
you) Just for the sake of covering the material that isn't beyond my expertise,
LOL, let's defer questions just a bit for the moment...
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-- FACTA violation: reporting incomplete, innacurrate, or otherwise erroneous
data to a consumer reporting agency
-- FCBA: incorrect or untimely billing (within 30 days of statement receipt)
-- FCBA: refusal to provide lawfully requested account information
and once again...
-- FCBA or FCRA or FACTA violation: willful noncompliance with the [Name of]
Act
I wanted to mention a special case... Sometimes newcomers will see someone
refer to the "1-2 Punch".. Basically, here's how that works. When a consumer
requests validation regarding an alleged debt... the CA cannot continue what's
termed "collection activity"... which includes reporting to bureaus.. if they do,
they've violated the FDCPA so... The "1-2" part of the "punch" works this way
1... you request validation
2... when you're sure they've received your lawful request
you immediately dispute with the bureau. If the CA "verifies" the account during
the period they're supposed to be gathering the validation materials for you,
they've violated the Act. Some people believe that testing the limits of a CA's
compliance isn't ethical. I have an opinion... for what it's worth.. ... I believe that
nothing limits a consumer's nuisance quotient. Irrespective of whatever letters
you write, a CA has a duty to abide by the principal federal statute that regulates
their profession. We've seen good results with the 1-2 Punch. Timing is
everything there. It may be worth a try. Keep in mind that even if your goal isn't to
collect damages (and mine wasn't... my goal was simply to clean up my reports)
you can "collect your evidence"... line your ducks up... and use an "intent to sue"
letter (search the board for good examples) to net a CRA deletion. You want to
send that CRA dispute within just a few days of their receipt of the validation
request.. Ok...About the next item on tonight's syllabus...
-5-- Collecting evidence… oops... let me mention one other special case...
it was listed above briefly this business of inquiries and what the FCRA terms
"permissable purpose"... It's the creditor's responsibility to demonstrate that they
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had "permissable purpose"… Think of it this way... permissable purpose" only
refers to companies which take a look at your report as with inquiries
Let's say there's a Verizon inquiry on your report. You don't have a Verizon cell
phone. You don't remember telling them to pull your credit when you had that
conversation with the salesman. (Did your spouse hand over your SSN?)
It's Verizon's job to demonstrate that they did indeed have permissable purpose.
If they can't, you may have excellent leverage for crafting a letter... especially one
of the strong "intent to sue" varieties (again, search the board for examples) and
netting a deletion of the inquiry... And if you like the courtroom... You may be
able to settle for the $1000 statutory award. Ok, I'm going to move forward
-5-- Collecting evidence.. Basically, everything you do in credit repair is
evidence. Your requests for information from OCs or CAs... Your request for
information (or outright disputes) directed toward CRAs...evidence your concern
that you may have been damaged in some way. Their responses constitute
evidence. Let me do all caps for just a moment. (something I'm usually loathe to
do):)
NEVER THROW ANYTHING AWAY WHILE YOU'RE ENGAGED IN YOUR
CREDIT REPAIR CAMPAIGN. Even the most benign response may show that
the other party is lackadaisical about your concern. Keep it all. How many people
have stacks of reports, letters, etc., on their kitchen table or computer desk,
LOL? (I sure did.) spouses hate that stuff, don't they? :) :) Ok... keep it all
So that's the first type of evidence collection. The second type is really particular
to dealing with CAs. If you elect to deal with CAs by phone...and that can be a
good choice... despite the pat advice you sometimes hear but again if you elect
to deal with CAs by phone... then you MUST record them. otherwise, forget it...
send a cease and desist letter to them and only deal with them with written
correspondence. There are 1-party states and 2-party states...I'll explain
1-party states refer to those states where only 1 of the tapes parties needs to
know about the recording in order for the taping to be legal that means... if you're
doing the taping and you're one of the people on the call, then it's legal in those
states.. 2-party states (and there are fewer of them) require BOTH parties to
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know about the recording, if they told you the call may be taped, then you can
tape too, now...here's an interesting distinction that isn't often elaborated
if someone calls YOU..and YOU live in a one-party state..then you can tape,
irrespective of where they are it's not your responsibility to catalog their call
center geography but if YOU initiate a call to a two-party state... or if you live in a
two-party state and you initiate the call.
END CREDIT 108
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