Monday, July 12, 2010

Collections, Charge Off Required to Approve Short Sale - Part 3

Well, we covered dealing with the original creditors and collectors, now we're going to talk about the credit bureau.  This is what you are going to do to remove the collection entry from your credit report.

This process is what is called the 1 - 2 Punch.  After you send the letter to the collection company, and you will be sending that CMRR, which means Certified Mail, Return Receipt, you are going to wait to get that green card back. When you get that back, you know that the collection company has received your letter.  Now you will send to the credit bureaus, whomever is reporting this collection, sometimes just 1 or 2, usually all 3.  

You will dispute this by telling the bureaus that you do not now, nor have you ever, entered into a contract with scumbag collection company and that they need to see an actual contract signed by you to verify, or remove the entry immediately.  It is at this point that I also insert the definition of "verify" from Black's Law Dictionary into the letter.  What the definition of "verify" says is (and I'm going to paraphrase here) the person who verifies must have 1st hand knowledge (which they don't, they are 3rd party) and  be willing to testify under oath in a court of law.  That's a real simple example of what the law says, but that's the main gist of it.

I also tell them that should they claim to verify, according to the law they must provide verification proof. This means that they are supposed to send you the name, title, and contact information for the person who verified the entry.  The truth is, bureaus break the law here at this point all the time. There is case law against all 3 because of insufficient verification.  It's all done electronically and they can't provide that contact information.  So if you're trying to  prepare for a case against them as well, this is one of the violations they will almost always commit.

Now, the reason this is called the 1 - 2 punch is that the law says that collectors must cease collection activity when they receive a demand for validation.  Verifying with the credit bureaus is considered collection activity, according to the law (FDCPA).  So, many times you will remove this entry on the first shot out, because they can't verify within 30 days with the bureau, as a result of not being able to validate with you.  Oh, how I wish that was always the case.  The  truth is, credit bureaus and collection companies break the law - hard to believe, huh!

The bureaus will play the blame game and collection companies will play stupid.  That doesn't hold up in court though, so always keep copies of everything you send and document, document, document.  Okay, should you have to send a second or 3rd letter to the bureaus, include a Notice of Fraud. You need to put them on notice that they are now a party to fraud by verifying something that cannot be validated because you have no contract with the collector. Put in a self executing contract, that says they realize their actions or in-actions will cause them to be held liable and that you will sue them.

I'm not going to say that everything always comes off this way, but the truth is, most stuff does.  They don't seem to mind threats of being sued. I'm sure they see threats of suit everyday.  But, when you put the law in black and white, incorporated into your letters, there is a human being that is reading it and updating the file.  So, though there may be no decency left at the corporate level, hopefully you will get a data entry person reading your letter with some respect for the law.

I hope this helps many people fight back and improve their credit scores.  I hope that it helps ease the pain of some of the short sale drama lenders put people through.   Remember again, keep copies of everything you receive or send, keep your receipts and green cards from the certified mailings, and always document.  This includes phone calls: name of company, name of person speaking, time, date, what was said.  You may need it some day.  If they ever try to sue you, file a counter suit and show up at court and show your documented proof that you have tried to validate and they have refused to comply with the law. Then, not only should it be removed from your credit report, you'll make some money for your efforts and their lawlessness.

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