Why Charge Offs Shouldn't Be Paid

Many times when I review clients' credit reports I see paid charge offs.  My stomach gets a sick feeling every time. Paying off a charge off might help the score a bit because it changes the balance to zero, improves the debt ratio, and potential creditors like seeing that the alleged debt was paid, but it's still a derogatory account and will always be a derogatory account.

The truth is, that creditor has already been paid for that charge off, even before it was charged off, but they never told you.  These creditors always fail to fully disclose every important aspect of credit accounts. That voids the contract. It voids the account. The account and contract were never valid because of fraud and lack of disclosure by the creditor.

One thing these creditors fail to disclose is that the account is insured to protect them from loss of asset due to default or other credit loss.  Did you know that? Did they disclose that to you?  They're supposed to. In over 30 years of doing credit repair, I have only seen the disclosure 1 time.  ONE TIME, and that was years ago.  Haven't seen any disclosures in probably over 15 years or so.

I'll explain the insurance in a bit but here are some other things they don't disclose.  They don't disclose that they are prohibited from lending you money from their assets or their depositors' assets.  They are prohibited from lending you their credit. They are lending you your own money that you first lent them, which means that you funded the account that you are using to shop or spend. They are converting paper (your application, service agreement, loan papers) into negotiable instruments and depositing them into the newly created account to fund the account and essentially lend them money.

The National Bank Act of 1864 and National Banking Act of 1933 are where you can find the regulation that states these financial institutions cannot lend money from their assets or their depositors' assets.  Supreme court case law repeatedly has ruled that these financial institutions cannot lend their credit.  Here are a few cases but there are many, many cases that uphold this. 

"A national bank has no power to lend its credit to any person or corporation…" Bowen v. Needles Nat. Bank, 94 F 925 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44 LED 637.

First National Bank v. National Exchange Bank 29 U.S. 122, 128

California Bank v. Kennedy 167 U.S. 362, 367

Concord Bank v. Hawkins 174 U.S. 364

You will find the requirements related to the insurance banks have for each account in 15 USC Section 1605.  Let's talk about this insurance and how it supports my opinion that charge off's should not be paid after the fact by the consumer.

FDIC rules require creditors to charge off written contracts at 120 days of default and revolving credit accounts at 180 days of default.  However, creditors can file a claim against the insurance for a credit account at 90 days of default.  That's 30 to 90 days prior to when that creditor is allowed to charge off the account.

Once the insurance claim is launched the creditor shortly thereafter receives the money to pay off the balance of the account which they claimed is a loss of asset.  Please tell me, whose loss of asset was really affected?  Not the creditor because they didn't have any skin in the game.  How can I say that?

Remember I stated that these financial institutions are converting paper (agreements, applications, etc.) into negotiable instruments.  Well, they don't own these negotiable instruments.  They belong to the consumer whose name is signed on the bottom. Under Title 12, negotiable instruments are to be treated as CASH!  Whose cash?  The consumer's cash.  That is what is deposited into the newly created account. That is what funds the account.  The CONSUMER funds the account, not the creditor, so the consumer should be the recipient of the insurance payment, not the creditor who has not lost a dime!

But let's go over the insurance and charge off actions. Since they get a payoff for the insurance claim they place for the "default" , the balance is paid off.  Why then do they charge off the account 90 days later, when the default timeline hits 180 days (or 120 for written contracts)? The balance was paid off by the insurance so there is no amount left to charge off.  Did you ever think about that if you knew about the insurance?  

Since the consumer funded the account and continued to deposit more money in the form of "payments" and the creditor never lent any money or credit since that's forbidden by law, and then the creditor swipes the insurance payment by fraudulently claiming they are experiencing asset loss, why do they need to charge the account off?  The insurance paid it off. In reality, the account was paid as agreed from the get go by the consumer and credit reports should reflect that.

But since these liars will never report the truth and will not correct the record, the consumer needs to not give them more money by paying a charge off but instead, demand that they prove their claim. Demand that they prove they lent something, that there was equal risk and full disclosure, and a truly valid contract.  Since they cannot provide that, put the squeeze on them and remove that bad account from your credit, get them to close their file, and work on rebuilding your credit without paying that derogatory, false account that is void and was void from the origination of the account due to an invalid contract, fraudulently created by them, the fake creditor.

Hopefully this sinks in and you will stop and think about how they are trying to dupe you, before you pay off a charge off that you do not owe.  

If you like this content and find it useful for you or someone you know, please think about making a donation to support continued content to help you fight your credit fight.  Thank you in advance!

Fighting Collections - They Are All Fraudulent!

I'm going to warn you right from the start that this is going to be a fairly long post. But I believe it will be an easy read and you will learn some very important information. Some of it may seem unbelievable but I assure you that it is true. Look, I've been doing this for over 31 years now. I can prove what I'm saying and I have proven it in court for quite a few of my lawsuit clients.  So grab your munchies and something to drink and let's start class!

It amazes me that people pay collection companies when they really don't owe the debt. Maybe they feel they have a moral obligation or they are stressed out and think paying them is the only way to make them go away. Maybe they've been convinced that they owe it and no one has taught them the truth about collections. Maybe it's a combination of the above, or all of the above, or some other reason that makes sense to them. Almost no reason makes sense to me.

Talking about collections with me makes me just go off, spewing out one fact after another and sometimes I get so riled up I get potty mouth. Yep, I do blow it occasionally when it comes to collections. Their fraudulent behavior and bullying, harassment, lies and stubbornness sometimes sets me off.  I'm going to teach you about collections today and I promise I will try my hardest to keep my words clean so as to not offend anyone or put bad language in front of youngsters that may read this.

Let's start from the beginning and we'll assume the original account is a credit card account, (but this scenario applies to most types of collection accounts including medical, utilities, insurance, cable/telecommunication accounts as well).

When you are approved for a credit card account, you are given plastic and a credit limit. When you spend using that card, the bank/card issuer convinces you that they lent you money/credit limit for you to spend. But that's not the truth. Banks are not allowed to lend money from their assets nor their depositors' assets.  It's also completely illegal to lend credit.  So now that you know that banks can't lend money or credit, what are they lending you?  The answer is NOTHING! 

What actually happens is that credit card agreement with your signature becomes a negotiable instrument. Your signature gives it energy and value. Title 12 instructs banks to treat negotiable instruments as cash. In accounting, a bank treats it as "cash equivalent" and that means that YOU FUNDED THE ACCOUNT!  The instrument has your signature on it. You own it. But they NEVER disclose that to you. You are actually making a loan to the bank but they trick you and convince you that they lent you something, totally ignoring that you were the one lending something.

Let's skip over to contract law for a moment. In order for a contract to be valid, there are 4 main elements, in addition to being bilateral - meaning 2 signatures, 1 from each party. The 4 essential elements are Offer, Acceptance (you have these two in your contracts), FULL DISCLOSURE, and EQUAL RISK. Your credit card account contract is missing the last 2 essential elements for a valid contract.

To have full disclosure, they would need to inform and advise and disclose to you that YOU are the one who is funding the account. They would have to disclose to you that the account is going to be insured in case of asset loss for the bank's favor and that you will be paying the insurance premium for that asset loss insurance (known as "credit default swap"), and get your written consent to the amount of the premium. They would need to disclose that they will most likely only service the account and transfer "ownership" to a special purpose vehicle such as an asset backed trust. They would need to disclose that this is securitization and that by separating the payment stream from the note, the contract is void. 

To have equal risk, both parties must have something to lose. What do the banks have to lose? They don't lend anything. They are insured against loss, they sell it and transfer it, they get tax credits. WHAT DO THEY HAVE TO LOSE? The only thing I can think of is insane amounts of illegal profits that they really aren't entitled to. But really that doesn't fit either because they insure everything! They can't lose!  Anyhow, I hope I've explained why the banks don't really have a valid contract.

Now, moving on to the creation of collection accounts and the fraudulent nature of them. 

You have your credit card account and you're using it and paying it regularly and consistently and then something happens that causes you to be late. You get hit with fees. You catch it up and use and pay and use and pay but you get to a point where you just can't keep up with the payments and you default on your agreement. The account gets further and further behind. So you try to work something out with them but still you can't keep up.

Let's say you asked me to try to talk to them about the account. So I call them up and say that I want to discuss account number  1234XXXX, and see what can be done to save the account and get back on track.  They ask me if I am Mary Doe and I tell them, no, I'm Shannon, Mary's friend, or sister, or whatever. They will then tell me that they cannot discuss the account with me or anyone except Mary unless she has given specific authorization or a Power of Attorney to speak with them on her behalf.  This is important to understand. They CANNOT share any information about Mary's account with me or ANY PERSON (corporations are also defined as a "person") without a request, agreement, authorization, or Power of Attorney specifically naming that person as authorized to communicate and receive her account information. THIS IS IMPORTANT!

Well Mary can't catch up the account and at 180 days, the bank needs to remove it from their books and they charge it off.  But wait! Remember that they insured that account in case of loss due to default or other credit/asset loss?  They never tell you this but at approximately 90 days, they are allowed to file an insurance claim for that asset loss. The insurance company then issues a check for the amount of loss they claim they will or have incurred. The account is now PAID OFF IN FULL.  Remember who paid the insurance premium?  That's right, it was you - whether you knew it or not you were charged the premium and you paid it. Or maybe I should say your negotiable instrument paid it. 

That insurance payoff happened at approximately 90 days of default. Remember I told you that the banks charge off the account at 180 days? That charged off amount is the balance they report to the credit bureaus, or an amount near the amount of the charged off amount. IT'S A HUGE LIE!  The account was paid off by insurance that YOU paid for. The balance is $0! They charged off NOTHING! Scam! Fraud! Lies! Schemers!  Your credit reports should ALWAYS show the charged off account has a $0 balance. Oh heck no! It shouldn't even be a charge off. You paid off that account in full at approximately 90 days of default. And that's not even taking into consideration that you funded the stinking account in the first place so you never really were in default and didn't even need insurance to pay it off. I swear! Now you know why I get so worked up. But oh, it doesn't end there.

When they do their charge off of the account, next they recoup some more money by filing a Profit and Loss on their taxes. This allows them to take a deduction or receive a credit for that asset loss.  Funny how they conveniently forget that they never lent a dime, never lost a dime, actually made money (from your payments and insurance payouts), and still benefit from the P&L. You'll see that P&L on your credit reports quite often under "Account Status." 

Now that they've squeezed out as much money for that account as possible for the time being, they use the credit reports to try to extort that fake balance out of you. Some people fall for it and you will see a Paid Charge Off on the credit reports. Many times people pay them because of the threat of being sued. Oh the greed of the banks!  

Banks don't always hold onto charged off accounts. Sometimes they crunch the numbers and figure that it's more beneficial to sell off the charged off accounts. This is where the 3rd party collection company enters the picture. They usually bundle up a lot of charged off accounts and sell them as debt portfolios.  Then "debt buyers" purchase them. I really hate the title of "Debt Buyers." They don't buy debt, they buy YOUR INFORMATION.

Now please recall the little scenario of me trying to talk to the bank on Mary's behalf. Do you remember why they wouldn't talk to me or anyone else about her account?  They, by law, cannot share any information with any person without Mary's consent. They can't share info or communicate or negotiate without her authorization or a Power of Attorney, or an agreement such as a company stepping in and paying off the account  for which she would have contracted to now pay them. An example of this would be similar or the same as a refinance.

When banks sell off their portfolios of charged off accounts to a 3rd party collection company or misnamed "debt buyer," they are selling the account information only, because remember, the account has not only been paid off by insurance, but also charged off and received tax credits. But, they NEVER contact the account holders and get their consent to share that information  with any other party. They do it behind your back! They do it without your consent and without your knowledge.

I declare that this is collusion between banks and collection companies to perpetrate identity theft on account holders.  Collection companies get these accounts, create new accounts that you know nothing about then send you a bill claiming you owe them. Wait!  Where's the contract? Contract law requires a valid bilateral agreement between you and another party. It requires offer and acceptance. When dealing with a collection company, there is No upfront offer and acceptance. There is no full disclosure - they ALL know that the true account balance is $0 and I've confirmed that with a broker for debt portfolios. They KNOW! Lastly, it's obvious that there is NO EQUAL  RISK! It is impossible to have a valid contract with these debt collectors. It is also highly likely that collection accounts are insured as well. I'd guess that I'm about 95% sure of it.

WHAT A HUGE SCAM ON CONSUMERS! GRRRR!  I know some of you are feeling what I feel when discussing this huge fraud on consumers. It's an outrage!  It's intentional and willful and corrupt.

I'm not advocating not paying your bills because it all starts off with a failure to disclose, no real lending, no truly valid contract, etc. I believe that in this society, you have to play the credit game in order to achieve the American dream of home ownership and purchasing cars, or personal loans, renting a place to live or renting a car, turning on utilities, getting insurance, getting a cell phone, or whatever. You need good credit to obtain additional credit or financing for major purchases. I'm just  wanting you to be aware and awake. I just want you to understand about collections and learn to fight back. I don't ever advise anyone to pay a collection account though. It's all a sham. 

Demand validation of these collectors. Demand they produce a valid contract. Demand they produce a signed authorization. They shouldn't be on your credit report for any reason but since they are, they certainly should not be there without an authorization to collect information and make communications about you and an alleged account. They can NEVER truly validate. There is no valid contract and there is no POA or signed authorization. They've never lent anything to you. They are not named on original contracts with original creditors so they don't even qualify to subrogate/substitute themselves on to a contract. They have no interest to protect. They haven't been aggrieved and are not entitled to seek redress. 

I hope you've learned a lot from this post. I hope it gets you fired up to fight back. I hope the information helps you to see success against these 3rd party collectors to get them off your credit reports and out of your lives! 

If you have collection accounts that you need off your credit reports and you don't want to take on the fight alone, contact me because I love my work. I love fighting to get these thugs off your reports and out of your lives. 

Repair Your Credit Before Buying Or Selling A Home

We're coming up on Summer and that is usually a hot time for buying or selling a home.  You need to consider the shape of your credit before you take the leap to either buy or sell real estate. It might seem like it doesn't matter how your credit is when you are selling your home but believe me, you are a prime target for the collection vultures. They're definitely preying on potential buyers but sellers usually have equity and they want to get hold of some of it as well.

For sellers, you're not going to be able to hide the public records like tax liens and judgments. The title company will almost always force you to pay those off before they will allow you to close escrow.  You may also get hit with claims from creditors and collectors that get wind of your transaction.  It's not hard for them to find out that you are selling your home so you really need to take care of your credit issues before you open escrow, and preferably before you even list your home for sale.  

Many times sellers are also going to be buyers. Again, you will want your credit in the best shape possible.  Even if your new lender doesn't require you to pay off certain alleged debts prior to funding, getting these things either paid or off your credit reports is most likely going to raise your credit scores, which will give you a better loan rate and save you thousands - even hundreds of thousands of dollars on your home loan and possibly other credit down the line. 

Some lenders will approve you for a loan with a mid FICO score of only 580. That is typically an FHA loan. However, debt to credit and debt to income ratios play a part in qualifying for a loan.  The higher your score, the better your interest rate. The less debt, and yes that includes 3rd party collector debt, the better your ratios are going to be. Many times your lender will tell you to pay off  the bad debts showing on your credit reports.  That's not necessarily the best advice, many times it is bad advice, but then again, they don't know credit repair the way a professional credit repair expert knows it.

I HATE, HATE, HATE anyone having to pay a 3rd party collector anything!  If you've read even just a few of my blog posts, you'll know that and you'll know that I stand firm in my claim that you don't owe a collection company a dime!  This is one of the main reasons that if you are contemplating buying or selling a home in the near future and your credit is not perfectly clear of these types of accounts, you need credit repair help soon.  You may also be in a position to need to rebuild your credit as well. This is where getting together with a professional credit repair consultant can really assist you in getting ready to buy a home.

Two other main items to address before buying a home are tax liens and judgments.  These are public record items but many times lenders don't pull public records reports on borrowers. So, if they are showing on your credit reports, you want to get them off. Otherwise, your lender might make paying them off a condition of  funding your loan.  Again, removing these types of items are where hiring an expert to assist you really helps you save many thousands of dollars.

I don't worry too much about removing bankruptcies from credit reports. It's not like you can hide the fact that you've had one (or more) in the last few years.  You have to disclose that on the loan application.  If you don't disclose it, you run the risk of being accused and possibly prosecuted for bank fraud. Don't go there.  

Bankruptcies are VERY difficult to remove from credit reports. You have to disclose the fact that you've had one when you apply for a home loan, so I just wouldn't worry too much about removing them.  Yes, attempt to remove them, but don't feel defeated if it doesn't come off.  At least it's not like a collection, tax lien, judgment or charge off showing a balance that might need to get paid in order to close escrow if it's showing on your credit reports.

Interest rates on home loans are still pretty decent but they're not going down; they're going to be going up. Now is the time to get to work on your credit if you're thinking of buying or selling a home in the near future. If you're thinking about buying in less than a year, then its probably best to hire someone to assist you. 

If you're needing to move and you're going to rent, if your credit has collections and public records, you are in the same position as a potential home buyer.  Landlords want to rent to people that have good credit. If they see you have tax liens,judgments, collections, charge offs with a balance higher than $0, they're going to choose to rent to someone with better credit  than you.  Your score will also reflect a lower number as well and that is a turn off to landlords.

 Credit repair is what I've done professionally for over 30 years.  My business partner has done credit repair for over 20 years.  We've taught other credit repair companies how to do it successfully. We are true experts. We want to help you purchase your home.  We want to help you keep the equity your home has earned.  We want to help you be able to rent your next home.  We want to help you. 

If you're ready to get your credit reports looking much prettier and your credit scores higher, we'd love the opportunity to help you reach your goals.  Email me today. Let us get you into your next home!  My email address is futurefico@gmail.com if you would like to contact me directly. You can also go to our website and fill out the form to get started with a free consultation. Just go to InsightCreditGroup.com so we can fight for you.

How To Write Bureau Dispute Letters - Part 2

I am very late at getting out this post and I am truly sorry.  I have been swamped with my own clients' letters and real estate duties and just haven't had the time to get to this.  Please accept my apologies for the long delay.

Let's get to the bureau disputes.  We will cover charge off's collections, repo's, foreclosures, settled accounts, accounts included in bankruptcy (IIB), and public records.  One thing that is important for you to know about some derogatory accounts is that some are not worth disputing.  Take charge off's for example.  If they are reporting a $0 balance, I don't bother with them.  I'm telling you that in more cases than not, if you remove them, your score will likely drop.

Accounts with $0 balances, even though derogatory, usually have more positive attributes that affect the score than the negative aspects, so they offset the damage that is being done.  Deleting them removes the good factors and the bad factors but because the good outweighed the bad, your score will drop.  We see this time and time again for clients that are adamant about removing old charge offs and settled accounts with $0 balances.  We warn them, we advise against it, but if they insist, we go after them and when we start seeing them removed, we see the score drop pretty much every time. I personally think that a higher score is more important than a totally pretty credit report.

Collections:  Always negative and I don't care if the balance is $0, I'm going to go after deletions on these.  Typical disputes are as follows:

• (Round 1) I do not have any account with this company, have never heard of them and this needs to be deleted. 
• (Round 2) You told me to contact this company and I have done so. FDCPA 809b requires this to be deleted until they validate.  I have requested validation and they have not produced it. Delete this now.
• (Round 2/3/4...) Please produce the contract used to verify this account because I have none with them and the information you have is inaccurate.
• Please provide the sworn affidavit used to verify and the accompanying documentation as required pursuant to Black's Law Dictionary which defines what "verification" actually is.  ~ then I copy/paste the definition of  "verification" to the letter.

Charge Off's:  This is only for accounts showing a balance, past due or both.  Typical disputes are as follows  - Do not dispute all the errors at one time. Dispute them 1 at a time, round after round:

• (Round 1) The balance (and past due/or past due) on this account is incorrect. It should say $0. I do not owe any monies to this company for this account. Please correct or delete this.
• (Round 1 or subsequent) You are allowing an inaccurate history of this account to be reported.  Please investigate, gather documentation proving accuracy, or delete this from my credit report.
• (Round 1 or subsequent) This company does not have any information to verify as they have reported over and over in the history that they have "No Data (ND)".  As this is unverifiable, FCRA Sect. 611 REQUIRES you to delete this.
• (Round 2 or subsequent) This is not verified. I contacted the furnisher as you told me to do and they have either refused to provide any documentation or they are unable to provide documentation proving the claim or the accuracy.  This remains inaccurate, incomplete and not verified. You are REQUIRED to delete this immediately according to FCRA Sect. 611.

Repos:  Many times you will have a repo auto loan account that has a balance because of a "deficiency" remaining after they sell the car.  I treat these as charge offs and dispute the same way but some times add a little twist.

• (Round 1) You are allowing this company to furnish an incorrect balance.  The balance needs to show $0 because this account was paid in full by the asset protection insurance attached to it. Please correct to $0 or delete this account immediately.
• (Round 1 or subsequent) Please investigate the history reported on this account. It is absolutely inaccurate. Correct or delete this immediately as anything inaccurate about the information they have furnished requires correction or deletion according to FCRA Sect. 611. Take care of this immediately.
• For Repo accounts with a $0 balance I suggest that you send the company a notice to Cease & Desist ALL communications regarding the account. Advise them that furnishing or verifying information with credit bureaus is considered a "communication" according to the courts and a violation of your C&D notice.  For these types of repo accounts, once you have issued your notice to them your dispute should be as follows:
• (Round 1) I do not have any account with this company and they have been issued a notice to Cease and Desist all communications with you.  Please delete this account immediately!

Foreclosures:  Sometimes foreclosure accounts will have a balance.  This is an obvious error. Dispute this as follows:

• (Round 1) This account is inaccurately and erroneously reporting a balance that they know should be $0. Their intentional and willful furnishing of inaccurate information is a violation of FCRA Section 623 and according to FCRA Section 611 you MUST correct or delete this immediately.
• (Round 2) I have contacted this company and requested the proof that they are reporting accurately.  They have failed to provide it within the 30 days the law allows them. This is inaccurate and unverified and you are required to delete this according to the FCRA. I expect you to comply with the law and remove this slander immediately!

Settled Accounts: For all settled accounts that are original creditors (except for repos), leave it alone!  For collections, send them a full Cease and Desist (C&D).  Then follow up with a bureau dispute that says:

• (Round 1) I have no account with this company nor have I ever signed any contract to do business with them. They have neither lent me anything nor have they provided services to me for which I requested.  They are under an order to Cease and Desist and accordingly, this must be removed from my credit report immediately.

IIB Accounts:  Because a bankruptcy obliterates all debt, you no longer have any account with the creditor. It has been eliminated. If you had a bk that was dismissed, no account was in a bankruptcy because according to the courts, a dismissed bk is the same as never ita bk at all. Sometimes they erroneously report a balance as well. Dispute as follows:

• (Round 1) I do not have any account with this company. Please delete this.
• (Round 1) This account claims it was included in a bk. If that were true, which it is not, this would be violating the federal bk stay. Delete this immediately.
• (Round 1) This account is erroneously claiming I owe them money, which I do not. This is an error and according to the FCRA, inaccurate information must be deleted.

Public Records:  Hopefully before you dispute these you have removed any addresses associated with it, especially bankruptcies. Do not send the court clerk or county recorder letter yet.  You may send the FTC staff opinion letter with the first round if you would like.

• Bankruptcy (Round 1):  Your information is inaccurate. I do not recall having a bankruptcy on the dates you are reporting and there are blank fields making your information incomplete as well. The FTC has publicly stated that your public record information is often inaccurate, which is the case in what you are allowing on my credit report.  Delete this immediately!
• Bankruptcy (Round 2): You are big, fat liars!  You claimed that you verified this and told me to contact the furnisher. You claim that the court furnished and verified the information. I did as instructed and they gave me a letter claiming that they neither furnished the information nor verified the information. They are the only ones qualified to make a verification regarding this alleged bankruptcy and they did not verify. You are allowing slander on my credit report.  See the attached letter from the court proving that you are allowing erroneous information on my credit report and are falsely claiming that it is verified. Your butts need to be sued if you do not remove this from my credit report. It is inaccurate, incomplete and NOT VERIFIED! Delete this immediately!

• Tax Liens (Round 1):  I have NEVER had a valid tax lien. Further, according to my state statutes/the IRS (pick one), taxpayer information is confidential and not allowed to be on any taxpayer's credit report. (if you know your state statute, insert it in your dispute). You need to get this crap off my credit report immediately as it is inaccurate and damaging to me and may be actionable for statutory damages, actual damages, and punitive damages. Delete this NOW!
• (Round 2): Please see the attached information from the county recorder which you claim furnished and verified this tax lien.  It proves you are huge liars. How do you get away with this stuff and how on earth do you sleep at night? You should be in jail for causing injury to consumers. This was neither furnished nor verified by the county recorder. Get your false information off of my credit report now!

• Judgments: Even if you have had a judgment, you can demand that they verify it and since they are accusing, the burden of proof lies with them. If you have a default judgment, it is not a valid judgment, it is a "Void" judgment and carries with it the right to challenge it at any time. In order for a judgment to be valid, the case must have at the trial a plaintiff, a defendant, subject matter jurisdiction (which can be challenged at any time) and a competent witness (sworn affidavit by a witness with first-hand information that testifies and produces the accompanying documentation to back up the testimony).
• (Round 1): I am not aware of any judgment against me for $XXXX. I do not believe you are furnishing accurate information and I need you to investigate this and provide the documented proof that your information is 100% correct. Otherwise, please delete this immediately.
• (Round 1):  I do not have a valid judgment against me. You are allowing false information on my credit report. Delete this immediately.
• (Round 2): I have proof that you have lied about verifying this bogus judgment. The only persons qualified to verify it is the court or me, and I can't verify it and they claim they didn't verify it. See the attached from from the court proving that you have lied and that this remains unverified. The FCRA requires that this be deleted until you get proof from the court exclusively that this is mine - which obviously it is not!  Delete your inaccurate, incomplete, and unverified information immediately!

Okay, this should provide you with a really good start to cleaning up your credit report.  I cannot guarantee that any or all of these disputes will work every time because you are relying on two other parties per account to obey the law. Unfortunately, creditors, collectors and credit reporting agencies have notorious reputations for ignoring the law and doing whatever they please.  I do hope that you will see more success using some of these disputes than you have been getting or that most people get using boiler plate disputes.

Please remember never, ever to admit anything to a credit bureau.  It is THEIR JOB to get the proof and it is the furnisher's job to provide you with the proof (which is why I dispute with both the bureaus and creditors/collectors). I never, ever advise sending proof of a paid tax lien, paid judgment, or bankruptcy paperwork to the CRA's. If you do, you are giving them what they need to keep these public record items on your credit report for a full 7 years after that event.

If you decide you don't want to do this on your own, I would love to assist you with your credit repair. Also, if you have trouble removing tax liens or judgments, paid or not, we have an escalated proprietary process that can help.  By law, we are not allowed to guarantee any results, however, we do have a 100% success rate removing them.  We would love to assist you with removing them if you would like us to.

Best wishes for your credit repair venture. You can be successful so don't believe the naysayers that claim ugly credit has to stay on your reports for 7 years or more. That's an ignorant statement and totally untrue. Whether it's accurate or not, the furnisher has the responsibility to prove it and the bureaus have a responsibility to maintain maximum accuracy.  If it can't be proven, a claim of accuracy should not be made by anyone.  Also, you may think it's accurate and you may think you owe monies, but I'm here to tell you that you that you have been deceived.  Your contracts with creditors were never truly valid and no 3rd party collector has a lawful claim against you.

Stand up for your rights.  Fight hard for your credit to be repaired. You are to be congratulated for taking the steps needed to get your life and credit back!

If you have found this blog helpful to you, please consider donating as a sign of your appreciation for information I have freely given to you.  The "Donate" button is on the right side bar.  Thank you for your generosity.

Will Paying Off Old Collections and Judgments Improve My Credit Score?

One question I get asked a lot is "Will paying off old collections help or improve my credit score?"  The answer to this is No!


Oh, you want an explanation?  Okay, here it is.  If you've read some of my old posts, you'll know that I often say, once bad, always bad.  In other words, if you have a bad trade line or bad credit entry on your report, especially from a collection company, whether you pay it or not it is bad.  If you pay it, it is just a paid bad credit entry.  So, you don't want to pay it, you want to get it removed.

What if you feel like you have a moral responsibility to pay the debt?  My suggestion, get therapy and get over it!  Okay, I'm kind of kidding.  But think about it.  If its a collection company, did you sign a contract with them - uh, nooooo.  You don't sign a contract and set up accounts with collection companies, they buy old bad alleged debts and then try to make you think you owe them.  But you don't owe them.  You NEVER owe them.

Did you watch the video about how loans and credit really work? I love that video.  He makes it so clear.  First of all, banks and creditors don't lend money. They create it with a few strokes on a keyboard.  They don't lend credit - well, actually they do, but that is illegal.  It is fraud and they get away with it all the time because these different entities have brainwashed and manipulated your thinking to make you believe you actually owe money that was never lent to you.  

Besides the fact that none of these creditors every really lend any money to anyone, they insure this made up debt and after 3 months of no payment, they put in a claim for insurance monies and at 6 months, they charge it off and take tax credits as well.  So, how are they hurt? Oh, well, they get hurt in that they didn't make as much of an obscene profit as they were hoping for, but, they still got money from you that you didn't really owe and they got interest for money they never lent, and they got tax credits and they got insurance monies.  

What did you get in return? You got to buy something with credit collateralized by your signature, which they insured and sold many times over and never applied the money they got from the sale of your promissory note to the phony baloney credit you used. You got harassment and credit dings, and higher interest rates and extra exorbitant fees. You probably got denied credit.  Wow, now there's mutual consideration and fair trade.  What you actually got is a void contract that they never disclosed to you, that they actually had no right and have no right to receive any money from you.

So, what good comes of paying collections or judgments? Well, if you're trying to get a loan or some new credit, the lenders/creditors like that you pay your alleged debts. But your score doesn't really go up too noticeably.  It may go up a little bit when you pay off a judgment because it really helps your debt to credit ratio.  But, what you may not realize is that when you pay these old, alleged debts, it resets your date of last activity (DLA) and that's like fresh bad credit and then you get to fight with the bureaus for another 7 to 10 years to get the crap off.

Oh, and paying off accounts with a settlement agreement.  Should I even go there? That makes me want to scream!  If you pay off an alleged debt with a settled, less than full payment, you know what you get for that moral decision?  You get a new DLA on your credit report and you get a form 1099-C to pay taxes on cancelled debt. Yes, taxes on the magic money that the creditors already got a tax break and big fat insurance bonus on. And you get a lower credit score because you didn't pay in full, as agreed. And, since it was probably already a bad debt, now you have a paid bad debt.

Do you see why I don't like the idea of paying off these old alleged debts?  Judgments, sometimes you just don't have a choice because they put liens and garnishments on you. The best thing to do before you get a judgment, is to set yourself up with some asset protection to block them from getting anything from you.  Then, in 10 years, most likely they are not going to renew the judgment and you're good to go. If you've already had a judgment put against you and your wages have been garnished or you've paid it already, make sure you get that notice of satisfaction and make sure they record that with the courts or they will be screwing you over on your credit for many years to come.

If your credit has these negative trade lines, bad credit, derogatory credit entries and you are ready to fight but need some help, please email or call me.  If you don't fight back and if you don't try to repair your credit reports, they will just stay bad.  Collectors, creditors and the bureaus will not go out of their way to remove old bad credit on their own most of the time. It is up to you to make them do it. I would love to help you get your credit back to when it was looking much prettier.  My contact information is up at the top on the right. Please call me or email me so I can help you get started.

How Bad Credit Affects Your Credit Score (Part 3/3)

Part 3:  The effect bad credit habits have on your credit score

In the first 2 parts we talked about 2 of the most popular credit scoring models. Now I'm going to try to expose how the different bad categories affect your credit.  When I say "categories" I'm talking about collections, charge-offs, liens, late pays, judgments, bankruptcies, and accounts that are showing "Settled".  All of these things are negatives and hurt your credit score.  What's worse, is that they cost you money in higher interest rates, higher insurance rates.  Even your ability to get a better paying job, (or a job at all, in this economy), can be affected.

When you have negative credit on your credit report, the negatives cost you the most points when they are newly reported.  As time goes on, your score will raise a bit, regardless if you paid off the negative tradelines or not.  I always tell people that a negative is bad and once bad, always bad - even if its paid. It is just a "Paid" bad and costs you points.  In fact, when you pay an old negative, it sets a new date for how long that negative can stay on your credit.  That's one of the reasons why I don't advocate paying old debt at all.  You need to get those off, not just showing paid.

Exactly how the scoring and how many points for each baddie is figured, I can't say.  I do know some general information.  They like to keep the percentages and algorithms a secret.  Its my opinion that they do this because they don't want everyone having good credit.  Bad credit is Big Money.  Think about it, when you are offered pre-approved cards in the mail, they are almost always attached to higher interest rates, annual and sometimes monthly fees, teaser rates to start off with and then the rate jumps, and almost always, the type of cards offered are for people needing to rebuild their credit.  

These companies get your information from the bureaus.  The bureaus sell your information. They have lists of people grouped and categorized for sale. Those with bankruptcies approaching 2 years, those with paid collections or charge-offs, low FICO score range lists.  This is one of the main ways bureaus make money.  Now, these companies offering the credit cards, the ones that buy the lists from the bureaus, they stand to make a ton of money because the interest rates and fees are higher than what someone with A credit will accept.  As I said before, bad credit is big money, its big business.

So how many points do these negative items cost you?  Its not the same amount for every person. One thing that affects the amount your score will drop is what the FICO score was before the negative was placed on the credit.  The higher the credit score, then the more points a negative mark will cost you. I believe because this is true, that the points it costs you is a percentage of the starting score.  Also, the amount of points you get back when you get the negative removed is generally going to be less than the amount it cost you because the longer the negative is on your report, the less it costs you.  In other words, every time your credit score is updated, you may gain a few points.  Sometimes it updates because a new negative is put on, but it can be offset by the score raising a little bit, from the length of time older baddies have been on the report.  So time and changes to the report affect the score.

Here are what some of the different "baddies" will cost you in points, and why you need to get these deleted from your report, not just paid off.  Remember, its based on what your starting score it.

New Collection:                   Avg. 50 - 150 point drop for each one
Points lost are based on your starting score and the dollar amount of the collection reported.  It is a confusing formula, but this is what I have learned through research.  Initial points lost 50-100 for the first $236 then another 35-50 points lost for each additional $354. Then, they add back some points ranging from 76-175.  On a $1200 collection with a starting score of 700, there would be a loss of approximately 112 points.
Charge Off:                          Avg. 50 - 150 point drop for each one
Points are lost based on your starting score, but don't forget, this point drop is in addition to all the drops your score has suffered from the points lost for each 30 day late pay (and 60 - 180+ late pays), and then, when they sell it to a collection agency, you get dinged again when they report!
Late Pays:                            Avg. 60 - 110 point drop for each one
Points are lost based on your starting score.  The higher your score was to start with, the more points it costs you. With each successive late payment, it should drop less and less because the score is lowering each time.  But, late pays really hit you hard and cost you a lot of points.
Bankruptcy:                        Avg. 130 - 240 point drop
Points are lost based on your starting score.  You see the effect right away, but it causes all the collections, judgments, anything included in the BK to show paid. By the end of 2 years, your credit score can really see some recovery.  I've seen some credit reports that had the whole payment history removed on accounts that were included in the BK.  Removing all those late pays, helps offset the huge point loss you get from BK's.
Foreclosure:                        Avg. 85 - 160 point drop for each one
Points are lost based on your starting score. Don't forget, you have been losing a ton of points all along with the late pays and NOD's (I don't know what an NOD point cost is - I figure probably similar to another late payment).
Judgment:                           Avg. 50 - 150 point drop for each one
Points are lost based on your starting score. Again, you've most likely lost points already for late pays and charge off, and collection. This is just another hit with a hammer. Time passing does help. Paying it helps because it really affects your debt ratio, and if you try to buy or sell a house, it will have to be paid before escrow can close.
Settled Account:                 Avg. 45 - 125 point drop for each one
Points are lost based on your starting score. You've probably been hit with late pays, charge off, and / or collections, costing you a ton of points before you get to this scenario, then you get to lose more!  But, I absolutely loathe settling accounts. First, I don't agree that you actually owe most creditors, and definitely not a collector.  But what's worse, is you will get a 1099 Tax Form making you pay taxes on the amount forgiven as if it was income!!!!  Can you hear me screaming not to do this?
Maxed Out Account:             Avg. 10 - 45 point drop for each one
Points are lost based on your starting score. I think the higher monthly payments you have to make on the account are worse than the point drop you get.  Besides, as you keep making payments, you'll recover from this one fairly quickly - at least if you can make more than just the minimum payments.
"Hard" Inquiries:                   Avg. 5 - 55 point drop for each one
Points are lost based on how many you have in a short amount of time. If you're applying for credit all over the place, that's going to cause a lot of "hard" inquiries - the kind that cost points and everyone that pulls your credit can see. If you're applying for a mortgage, they don't count multiple pulls against you though, if they are within a 30 day period, because they know that loan officers may be required to pull several times when "shopping" your loan to get you the best rates.  Also, points from inquiries only affect your score for 1 year, and then there is no impact from them at all.

When you remove negatives like these from your credit report, you can expect to see your score increase.  I don't know the formula for that either, but you can sort of figure it will be about half the points from the low end to half the points of the high end in the point range for each item.  This is because time heals a bit and the points you initially lost are greatest right away then slowly you start getting some back.

Well, I hope I was able to give some information that may answer some questions. Please remember that because the algorithm is not disclosed, these numbers are just from testing and tracking done by research groups trying to have a better understanding of the scoring formula, and bits of information that FICO releases to give a little insight into how they score in order to help people manage their credit.                      

How Bad Credit Affects Your Credit Score (Part 1/3)

Part 1:  Breakdown of Your FICO Score

Some of the most common questions I get asked about credit repair are related to how my score is figured and how much will my credit score go up by removing these negatives.  I wish I could just give people an easy answer like, "Collections cost you 10 points each and charge offs cost you 20 points, etc." but its not that simple.  The FICO Score is broken up into 5 categories, but also, people are broken up into categories - or more so, demographics.  It is also based on what your previous FICO Score was before the negatives hit your report. The FICO Score is the model used by almost every lender when applying for major credit.

The five categories of a FICO Score are A) new credit; B) credit mix; C) credit history; D) length of credit history; and E) debt amounts.  I'll try to explain them in an easy way to understand:

• New Credit: This makes up 10% of your score. This is why having inquiries from "hard pulls" affect your credit score.  One or two over several months is not a big deal. But, if you're applying for credit all over town, on the internet, etc. it starts to ding your credit.  New credit is not bad but when you start having lots of inquiries and lots of new credit, all in a short time, your score will go down. The thing that adds back points in this category are utilizing the new credit, paying on time, and time itself.
• Credit Mix: This makes up 10% of your score. It means different types of credit. Revolving credit, installment credit, auto loans, mortgages, charge cards, credit lines, etc. Auto loans and mortgages are installments usually but so are some furniture and appliance store accounts. Student loans are also installment credit.  They like to see that you can handle paying different types of credit on time.
• Credit History: This makes up 35% of your score and represents how you have paid for your different reported accounts. This is where late pays affect your score, and they DO affect your score! It is also where charge offs and collections are factored in. Bankruptcies, judgments, tax liens and other bad credit items all are scored through this category.
• Length of Credit History:  This makes up 15% of your score. This is the category that rewards you for time. If you have credit cards that you've had for several years, it is a plus for your credit. This is the category that reinforces why you should not close "Old accounts" that you are not using. Go spend $5 on something and pay it off. Those oldies offset the affects of bad credit a bit, and when you get "baddies" you really want to hang onto the good ones.  In fact, these old trade lines are what really help your score when you start repairing your bad credit.  Can you imagine if you remove all your bad credit but had closed all your old good credit? You would have NO credit!  So, don't close those old cards, even if they have old lates on them. Lates fall off over time.
• Debt Amounts: This makes up 30% of your FICO Score. This is why finance professionals advise you to keep your debt balance at 30% of your credit limit.  Ideally, you should keep it at 19% of the credit limit because this number is where people have seen the highest credit scoring when they have done tracking and studied it.  Maxing out credit cards and credit lines burns your score pretty badly.  Paying regularly and paying them down so there is a greater ratio between the credit limit and the credit spent (balance) improves your score.

There is also another type of score you see on your credit reports. This is a "VantageScore".  I will explain this one on Part 2.

Watch Out For New Credit Card Fees

How many times have you gone to a retail store, usually small, or a gas station, and when you were going to use your credit or debit card, they charged you an additional fee?  ARCO gas stations are famous for their 35¢ charge for using a debit card. Those fees are completely legal.  But, charging to use your card as a credit card, those charges that merchants sometimes hit you with, has been illegal -- until now.  In January, merchants can now charge fees or surcharges when you purchase something from them with a credit card.

In the summer of 2012, the major credit card companies finally settled a lawsuit to the tune of $7.2 Billion dollars, yes, with a "B" for not playing fair on their credit card charges with all merchants.  However, part of the fine print of the settlement now allows merchants to pass on that surcharge to us, the consumers.  It may be in the form of a percentage of the sale, something like 1.5% - 3% or a set amount of some small amount similar to ARCO's 35¢ fee or Carl's Jr.'s fee of 75¢ to $1.50 per debit card transaction. The bad thing is, these fees start out small, mostly like nuisance fees, but over time, since its now legal to charge them on credit card purchases, I don't doubt we will see merchants slowly raise them up, up, up.

Many of the larger merchants, like WalMart, have publicly stated that they are not going to pass that surcharge on to the consumer.  But, there's no doubt that there will be many of the smaller local merchants all over the country imposing it on their clientele.  I have no doubt because though it has been illegal for years, there are some small stores and gas stations that I go to that have always charged the fee whether it is debit or credit.  Me and my big mouth, I always tell them that its illegal to charge it when I'm using credit.  Its a violation of their merchant agreement with the credit card issuers, and it is a violation of law in my state.

Most states are going to allow this surcharge to be passed on to the consumer but there are 10 states that have laws in place already and they are not changing those laws to accommodate merchants, even with this court approved settlement agreement.  The ten states that will still outlaw passing on the surcharge to consumers or charging consumers a "convenience" fee are:

• California
• Colorado
• Connecticut
• Florida
• Kansas
• Maine
• Massachusetts
• New York
• Oklahoma
• Texas 

 I'm in California. The law that makes this kind of activity illegal is California Civil Code 1748.1(a) and it says this:  

      "No retailer in any sales, service, or lease transaction with a 

       consumer may impose a surcharge on a cardholder who elects 

       to use a credit card in lieu of payment by cash, check, or 

       similar means.  A retailer may, however, offer discounts for 

       the purpose of inducing payment by cash, check or other 

       means not involving the use of a credit card, provided that 

       the discount is offered to all prospective buyers."

So, if you're in one of the above states, look for this law in your state's civil code.  If you are charged that fee illegally, and you want to do something about it, you can contact your state Attorney General or you actually have the right to sue for actual damages x 3 plus attorney and litigation fees.  Most people won't want to sue over such a small amount, I imagine, but contacting the state Attorney General, oh, and you can contact your credit card company and dispute it and complain to them as well, and that merchant will get in trouble.  They will get a warning at first, but repeat offenders may actually lose their privilege of accepting plastic payments, which will probably negatively affect their business.

You can also fight back by not using credit in those retail locations that legally or illegally charge that fee and going somewhere that allows you to purchase something without penalizing you for paying with  your credit card.  I use my debit card as a credit card but I've stopped using the major credit cards for a number of years now.  They just make too much money for nothing.  They illegally issue credit (when they are banks, its against the law for banks to lend credit) and they violate the Truth in Lending Act (TILA), Regulation Z, and further, they just create the money out of thin air, monetize your signature on your credit application and sell it, without ever giving you or crediting you the money they made off of it.  Then, they charge you to use your own money (yes, they didn't lend you a dime, and they made money before you even got the "credit" by selling YOUR signature), and then add interest charges, late charges, over the limit charges, fees for making your monthly payment, and if you're late, they put a strike against your credit.

 So, this is just a heads up on some new expenses you will probably start incurring this year, thanks to the greed of the credit card companies.  They are the ones that charge merchants and they pass it on to you so that their businesses don't suffer. Big banks and credit card companies, always finding ways to stick it to the little people and get richer and richer. Please don't take my opinion on being rich wrong. I thoroughly believe people should work hard to make as much money as they want and they should be able to keep it or spend it however they choose.  I just have a major problem with the way banks and credit cards make their money and am against bailouts for them when they don't need them, the consumers do. The consumers are the ones footing the bailout bill in the end also.  Besides, they have the ability to create "money" out of thin air, pretty much whenever they want, so I just have no pity for them at all.

If you're not going to be feeling these surcharges and fees because your credit cards are in collections or charged off and you can't pay them, read some of my other posts about disputing those collection accounts and collection agencies. You can repair your credit. You can restore it to where it was before so that you can get credit again.  You may think that you actually owe these credit card debts and somehow have to find a way to pay them. Please look through my blog and read the posts that will help you.  

As always, if you have questions or comments to make, feel free to hit the comment button below. If you need help with your credit, you can email or call me anytime.  That contact information is a the top right side of this page. I would love to be able to help in any way I can.

The Season to Not Worry About Your Credit!

Well, the Christmas season is here and I imagine many people are out using their credit cards to purchase gifts for loved ones.  It is wonderful to be able to have the credit available to be able to do so.  But many people are not so fortunate, and when I say many, I mean the majority of people.  Credit card companies are being very tight with giving credit, giving decent credit limits, and boy do they love to pack on the fees.

I'm not trying to be a downer, so I apologize if it comes across that way.  What I am actually getting at though, is that it is best to have good credit so when you do use those cards, you are getting the best rates and the highest credit limit possible.  Lower rates save you money and high credit limits are great for improving your credit, if you don't max out the cards. The better the debt ratio, the higher the fico score.

Now, if you have used cards or credit and are struggling to pay the bill, don't fret.  If you are behind on your payments, or you've stopped paying altogether and they have charged off or are getting ready to charge off, more power to you.  I'm not advocating not paying bills, but when the burden is too much and you have more important liabilities that need your hard earned money, credit cards are the last thing you should be paying.  Its much more responsible to pay car payments and rents or mortgage payments than credit card bills.

If you are still paying the bills but are struggling, call them up. Most will give you an extension, and many will actually work out payment plans with you, if even just for a temporary amount of time.  If they have charged off and you are starting to get harassing telephone calls and letters from collectors, you hold the power in your hands.  By the way, what I mean by "harassing", is any call or letter that you just don't care to get. You will need to respond, but only respond in writing.  Don't talk to them on the phone more than you have to.  In other words, tell them that you don't talk business on the phone so they will need to put down in writing and mail something to you.  If they want your address, tell them that since they seem to think you owe them something, they should have your address on some contract you supposedly signed with them.  That's it.  Don't give them any information other than to tell them to put whatever they had to say to you in writing and throw it in the mail.

For those who are now dealing with collectors, or you're pretty sure that you're going to be real soon, you need to know what I'm about to tell you.  If they are not the original creditor, YOU HAVE NO OBLIGATION TO PAY THEM!!  Yes, it looks like I'm shouting but I want you to take notice of what I'm saying.  You DID NOT sign any contract with them.  They are not on your original contract.  They bought an alleged debt that they were not a party to.  They did so voluntarily and they did it on their own behalf, not yours.  The law is very clear about this.  It calls them "Voluntary Payees" when they pay a debt (purchase it) when not asked to do so by you (think Refinance).  

When you are in the above situation, please don't just ignore them, that is hazardous to your wallet, your paycheck, your bank account, and your credit report.  Immediately send them a letter demanding validation. What this means is you need to demand that they prove that they have documentation that shows you entered into an agreement with them.  They don't have it and they can't produce it.  They will try to send you some stuff maybe, like paperwork from the original creditor.  Fine, but that shows a contract between you and the original creditor - NOT THEM!  Usually though, they will send a bill.  When you demand validation, a bill does not meet the criteria.  They have now violated the law. Why? Because, until they provide full, legal validation (which they are incapable of actually doing), they are prohibited from continuing or resuming collection activity.  You have also just given yourself a level of protection against being successfully sued by them,

So, that's my little tidbit for today. Now, go enjoy your shopping, breathe a sigh of relief about trying to pay illegitimate and financially overwhelming obligations.  And, remember the true reason for the season, the real purpose for gift giving - to symbolize God's gift of his Son Jesus, who died to save us.  That's what Christmas is really all about!

Feel free to contact me if you need more information or help with your credit repair.  My contact info is above.