Wednesday, February 6, 2013

Disputing Bad Credit From Original Creditors

I love disputing bad credit with collectors and original creditors alike.  Collection companies are easier to force to go away, and sometimes, original creditors can really get you frustrated.  Its not that 3rd party collectors don't get you frustrated as well, its just a bit easier because you know for a fact you've never entered into a contract with them and just about everything they do is a violation of law.  Its fairly easy to prove that you have no liability to them and force them to go pound sand.  But original creditors are a little bit different.

First of all, if you have bad credit from an original creditor, most likely you at one time or another signed a contract (ie. application) to get credit from them. I say most likely, because there are times when they actually have the wrong person and your credit takes a hit through no fault of your own.  But, this is not about identity theft or incompetent mistakes by original creditors. I want to talk about an actual account that you have from an original creditor that is bad and you need it gone.  

The first thing to realize, is that whether you think you may owe the bad debt or not, the truth is, you don't.  You may have signed a contract with them, but was it a "valid" contract?  The law says NO! At least for most.  In order for a contract to be valid, it needs at least 4 essential elements.  They are:
  1. Offer.  It must have a clear stated offer.  One party will do something and the other party will do something.  (They will lend you a certain amount of money for you to use, and you will pay for what you use.)  The offer must have a deadline for how long the offer is good for before it is withdrawn. The offer has to have real numbers (if it has to do with money), not estimates or ballpark figures. The amount that is being lent, the interest, the minimum payment that has to be paid at a certain regular time. The offer will completely define who is loaning whom the money and all the terms to the offer so you know what you're getting into and whom you will owe, and for how long.
  2. Acceptance.  If you can live with the offer and you're content with it, you accept it. If you don't accept their terms, then you don't have an acceptance.  Many times in real estate a seller "offers" their house for sale at a certain price, certain terms (what may or may not be included), etc. A prospective buyer looks at that seller's offer and says, "I like the house but I don't like all the terms the seller wants."  So, he makes a "counter-offer."  When they finally agree, there has been an "offer" or "counter-offer" and "acceptance."
  3. Consideration.  Consideration is generally monetary, but at least something of value is given or a promise of valuable service is offered with a promise of performance for that thing of value. A creditor offers to lend money and will receive the money back plus interest.  The person receiving the money will give something back of value to show the acceptance is genuine. Sometimes its a fee for accepting a card. In all actuality, the SIGNATURE on the application is the thing of value that is the "consideration", though the creditors do NOT disclose that fully.
  4. Meeting of the minds.  This means that each party fully understands EVERYTHING about the contract. This is one of the biggest things that FAILS in a credit card or loan contract.  There is not full disclosure, which means there is a violation of REGULATION Z. There is a violation of the Truth in Lending Act (TILA).  Because of these failures to fully disclose and to have an actual legal meeting of the minds, there is NO VALID CONTRACT. The contract is not voidable, no, it is actually VOID! Null and void. Does not exist.
There are actually a couple other things to a valid contract. One is "capacity", which basically means, does one have the capacity to enter into a contract?  Are they of legal age and sound mind or underage or incompetent.  Without "capacity," there is no contract.  The other one is "legality."  Is the contract for something legal? Is it a contract to perform a legal service or for something that is illegal under the law, so there is no legal way to enforce it? 

So, when disputing with original creditors, you want them to prove that they actually had a valid contract. You want to know if they violated TILA (Regulation Z).  I can answer that for you.  Yes, they did.  They didn't tell you that the "consideration" was YOUR SIGNATURE that they monetized.  It was the collateral.  So, you basically funded your own loan or credit.  They don't tell you that.

They don't tell you that they actually lent credit, not money. They don't want you to know that it is illegal for a bank to 'LEND CREDIT'.  But they do lend credit, and its illegal, and it makes a contract not a legal contract, which makes it void.  So, when disputing, demand from them that they prove to you they lent their MONEY to you and didn't just lend credit and call it money.

Now, when they respond to you saying they investigated your account and everything checks out and they claim that their records are accurate, its your job to hold their feet to the fire.  Respond back to them. Tell them that you received their response and you appreciate that they investigated, but they failed to validate.  You want a copy of the contract with your signature and their employee's signature. You want a full accounting. Every expenditure, every payment, every bit of interest applied, fees, plus the dates every event occurred.  Then, also demand that they source the funds they supposedly lent or did they lend you credit?  You want them to say that they lent you credit, because then they violated federal laws that have been upheld by the US Supreme Court.  It also incriminates them for trying to enforce a contract that is not legal, not valid, is null and void.

Original creditors have to comply with the the Fair Credit Billing Act (FCBA) and there are many states that also enforce the Fair Debt Collection Practices Act (FDCPA), their own version that mirrors the federal law.  These laws are ammunition that helps you remove bad credit from your credit reports.  They are there for you to use.  Stop thinking you legally "OWE" these fraudulent debts. Stop believing that they have to be reported for 7 years. That's an outright lie.  Nothing has to ever be on your credit report. The law actually says that bad credit may NOT stay on longer than 7 years.  That's the truth.  Its your job to challenge them and throw the law at them and make them remove it. Without a challenge, they will not remove anything that can and should be gone. 

If you don't feel like its a job you want to attempt, feel free to email me or call me at the contact info above.  I would love to help you have a credit report you can be proud of and a FICO score that will help you get the loans and credit you desire. 

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