Monday, January 29, 2007

Credit Repair has a Secret Weapon

By Marc Chase

Credit Repair can be easy if you have the right tools. One of the hardest parts of repairing your credit report is deciphering the laws. This "how to" article is written in terms that are easy to understand and cut through the legal jargon.

Let's say you owe Mike (original creditor) $100.00 and a Guy named Steve (collection agent) comes up stating he wants $100.00 on behalf of Mike. Would you just hand him your money, or ask for proof of who he is and that he has the right to collect the $100.00?

This is called Debt Validation and is a very powerful tool for credit repair. Let me explain.

You can write Steve and ask for the following and he must provide it all or he cannot collect the $100.00, nor can he report it to the credit bureaus.

  • - A contract between him and Mike proving he owns the debt or was hired to collect it. Think about it. If he cannot provide that contract, he is just some guy named Steve asking for $100.00
  • - Account statements from Mike. Perhaps you paid mike $20.00 of the $100.00. Mike will have records of that. Steve has to provide you with that and IT CANNOT BE his own statements - they have to be from Mike.
This is important! Steve (collectors) like to provide their own printouts and this is not legal. It must be Mike's original accounting and come directly from Mike. So, here's the process to credit report repair, using Debt Validation:

Step 1: Send a letter to Steve Requesting the above information e.g. proof he has the right to collect the debt and Mikes original statements which itemize the debt and payment history.

Step2: Dispute the debt with the Credit Bureaus at the same time.

Step3: Wait about 30 days and you'll get a letter from Steve which will have one of the following results.

Most Common: Steve's own printout which is a violation of the FDCPA, you can then sue Steve and have it removed from your credit report. Remember, it must be Mike's personal records.

Pretty Common: No response in which case it will be removed from your credit report.

Somewhat Rare: Steve Provides the contract showing he has the right to collect the debt, a copy of thecontract you signed with Mike and your payment history.

The latter is the legal method for Steve and is Rare. For some reason, Steve (collectors) still are not smart enough to follow all the rules. However, if he finally got smart and provided all the information that is required, you have one more trick.

Check and see if he is licensed in your state to collect debts. Most states require licenses, bonding and insurance to collect debts. It is very common for Steve to get those items in his own state, but not each state he attempts to collect in.

If your state requires those things, Steve must obtain them in your state and any state he attempts to collect in or he has no right to collect.

Marc Chase is a Partner at My Credit Group Inc. – A nationally recognized authority on credit report repair and authors of "The official guide to credit repair & credit repair companies."

4 comments:

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ALEISH said...

The key to credit problem is discipline. Be punctual, pay your bill on time because

late payments, collections, and bankruptcies. They have a big negative impact on your credit score.

If you have credit problems and want to rebuild your credit, here is the list of lenders that approves bad credit creditcard and bad credit loans.

brian said...

I agree with Aelish to an extent. Obviously paying your bills on time is
just makes sense.

However, Credit Report Repair is also about
fixing errors.

Even if a debt was your fault whether intentional or unintentional it doesnt give
debt collectors the right to re-age debts, call employers, illegally collect on debts that
are past the statutes of limitations.

Credit repair is about education, not tricks and loopholes. People fall into bad times
But are still entitled to fair and accurate credit reporting.