If The Credit Bureau Verifies Your Bad Credit Dispute

If you've been working on repairing your credit, it is highly likely that when you get your reports back from the credit bureaus, you will see, or have seen, that they have verified one or several of the disputed negative items. This is actually a common occurrence in the process. There is a simple explanation for this, though, it's not a delightful reason.
 
When you make your dispute, you may explain in detail why the item should be removed from your credit report. The FCRA demands that the bureaus verify the accuracy of what you are disputing with the provider of that information. However, they don't call them or send a copy of your letter, or even electronically question the provider with the same specifics that you presented in your dispute. Instead, they electronically reduce your dispute down to a general 2 digit code that represents the "category" of your dispute. There are no details included, just the code.
 
So, they send this code electronically to the provider of the information, who then has to reply to the bureaus with a code back agreeing that the information was not accurate or they use a code to say, "yep, we verify that our information is correct". The credit bureaus have 30 days to get back to you to inform you of the results of their "investigation". Doesn't really sound like an investigation though, does it?

Now, you have rights under the FCRA to demand from them proof of the investigation and their method of verification. You can request the name of the person they spoke to, their title, and their contact information. What they will then send you is a basic form letter saying that they electronically verified, and that's all they are going to do for you. So, you will have to demand again that they provide the method of verification, but this time, you must do it correctly. Better yet, do it right the first time, when they send the form letter, send the demand again with an intent to sue letter.
 
You are probably wondering how to do this the right way. The way I do it is, I include the definition of verification from Black's Law dictionary in the letter. I include the law from the FCRA that gives me the right to receive their method of verification. I also include case law for each of the bureaus that the courts shot them down for verification that does not meet the standards of the FCRA. I also include an intent to sue for willful non-compliance with the FCRA.

If you have contacted the original creditor regarding the account you are disputing, get the contact name and information of the person that you talked to. If they do not have the information, ask them to put it in writing and send it to you. Once they have sold it to a collection company, 99% of the time, they do not have the information on the alleged account. 

Send a copy of this letter to the bureaus along with your demand for method of validation and intent to sue letters. They are not going to contact them because they don't have time for that. Most likely, at this point, they will remove the negative credit from your report. If not, you should follow through with either a complaint to the attorney general of your state, the better business bureau, and/or sue them in small claims court. You could actually, if the damages add up enough, sue them in Federal Court, because the FCRA is a federal law and they violated it!

One more thing, just because they reduce your dispute down to a 2 digit code, don't skimp on your dispute.  This is going to be proof that they have not even attempted to verify your dispute accurately.  Usually the code they use is so general and it does not come close to expressing the information you gave them. This can be used against them.

What Is Debt Validation?

What is "debt validation"?  You will need to know what this is if you decide you want to repair your credit or get collectors off your back.  I am going to explain it to you based on what the law expects from debt collectors. You will request these things from the collectors in a letter to them, sent CMRR (Certified Mail Return Receipt).  This is what the FDCPA constitutes as Validation:

1. They need to identify the Original Creditor
2. They need to disclose what the money they say is owed, is for
3. They need to explain how they calculated the total they allege is owed
4. They need to send the contract with your authentic signature agreeing to pay them what they say you owe
5. They need to prove that the alleged account is not out of the Statute of Limitations
6. They need to supply their license numbers and registered agent information
7. They need to show they are licensed to collect in your state.

 Number 1 is self explanatory.  Number 2 is possibly a credit card, loan, services rendered, etc.  Number 3 is to make sure they are not adding additional fees.  They are only allowed to go after monies owed to the original creditor, not their added collection charges and junk fees they make up to pad their desired profits.  Number 4 is the contract between you and the original creditor.  They will never send you a contract between you and them because they don't have one, unless you signed an agreement with them ~ which you should NEVER EVER  do! 

Number 5, every state has a statute of limitations. This is the the length of time that the state allows a debt to remain active.  It starts at the date of last activity, the date that you last made a payment.  California is 4 years.  You can look up your state statutes to find out their limit.  The last two items (numbers 6 and 7) do not apply to every state.  Some states do not require collectors to be licensed to conduct business in their state.  These states are: California, Georgia, Iowa, Kansas, Kentucky, Montana, Oklahoma, Pennsylvania, and South Carolina.

One thing that is great about validation is that Collector's rarely have a copy of the original contract from the original creditor.  But more importantly, they don't have a contract with you!  Why would you agree to pay a company monies that they claim you owe when you never entered into a contract with them?

Validation is a great weapon against third party collection companies.  You see, the law says that until they provide validation when requested, they cannot legally continue collection activity.  Actions that are considered "collection activity" are things like:

• Sending you a bill
• Calling you at work, home or cell
• Contacting people who they think may know you
• Contacting your employer
• Reporting to the credit bureaus after you put them on notice to validate
• And my favorite(!) Verifying with the credit bureaus

Any of these activities by them after you have requested validation from them and have the green card from the post office back, is a violation of the law.  Your follow up letter to them should include that they have violated the law, call them out on each violation and attach a $1000 penalty for each one.  You can demand that they now either provide full validation or remove the item from your credit report and pay you a reduced amount to make you go away.  Let them know you know your rights and advise them that you are reserving the right to sue them for those violations and damages and mental anguish, for which there is no maximum limitation.

It would serve you well also to include a limited cease and desist phrase in your letter.  This tells them that you will only allow communication from them in writing from now on.  It will benefit you to keep everything in writing.  Paper trail.  Evidence you'll need, should you sue or counter sue them.

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.