Why You Should Demand Validation From Debt Collectors

The majority of questions and requests for assistance are about debt collectors and 3rd party collections. These companies want your money but they did nothing to earn it or deserve it.  They are not owed anything and you really need to fight back to avoid paying them what they are not owed and to increase your chances of not being sued by them.

Many credit repair companies and many consumers as well dispute these items directly with the credit bureaus to get them removed. Sometimes you can have pretty good results for your credit reports by just disputing with the credit reporting agencies (CRA's) but most of the time, and especially if you are using an online tool to dispute, your results are not going to be great and sometimes not permanent.

But here is what I view as the problem with just disputing with CRA's. You're only disputing the accuracy for the most part.  Many people tell me they just dispute them as "No Contract" and most of the time I hear that the results come back as verified.  Even if the item is removed, it only means that the company just didn't respond in time or preferred to just let it be removed from the credit reports. Because you really don't demand validation through the CRA's, you haven't blocked their collection efforts.

Just because something isn't furnished to your credit reports doesn't mean they can't attempt to collect from you.  In order to block their collection efforts, the FDCPA says you must demand validation in writing. Once you have demanded validation, they must cease all collection activity until they validate. A demand for validation is the tool or weapon you need to use to get them to back off.

Now, many times these thugs make claims that they have checked their records, or that they have verified or that they have fulfilled validation requirements and they just continue on with their collection activity.  However, a well constructed validation demand letter will protect you in court if it lands there. When I say well constructed, I'm not talking about the nonsense you find online.

Eeesh!  I hate those ones where people say "This is not a refusal to pay..." and then goes on with a bunch of regurgitated stuff that makes up a validation form letter.  Do you think I would ever tell a company that isn't owed a dime and I know it that I'm not refusing to pay?  Oh, heck no!  My letter tells them I REFUSE TO PAY YOUR BS ACCUSATION unless you can prove me wrong!  Then I tell them the documents they need to produce to prove me wrong.

If you don't tell them what they need to produce, they can just skirt by and make whatever claims they want. Many times they will come back with a lame response such as "...there is no basis in law to send you the documents you're requesting...", I'm paraphrasing.  Well, I don't see that often, though I do occasionally.  But what I put in my validation demand letters is a legal citation for each item I'm requesting from them. So when I respond to that nonsense, I call them out and point them to review each case law cited, each federal act cited, each law, state or federal cited, and so on.

A competent and forceful validation letter is critical, folks.  This is power if they sue you or you decide to sue them. I've stated in other posts that validation is the Proof they need to come forward with and verification is the Sworn Testimony that MUST accompany it. They must have both. Without 1 or the other or any of what is demanded, they have hearsay but they don't have validation. Hearsay is inadmissible in a court of law and the courts have said it is incompetent.

So, you either need to learn what to demand and the laws, case law, or whatever appropriate legal ammunition that relates to each item requested to back up your demand, or hire someone who knows how to craft an effective validation letter.  If you don't demand validation, they can continue coming after you. They can continue to furnish on your credit reports. They can initiate a lawsuit against you. 

Demanding validation properly and always responding to their claims and rejecting their false claims is key. One more important thing about validation.  A demand for validation is rarely done with 1 letter. What I mean by that is, it is rare to send one letter and then they respond with a  letter telling you they're closing their file and removing the lie from your reports. These collection companies are getting very bold in their lawlessness, very stubborn, and they require a fight.

You must always respond. If they claim they've already addressed it and further similar communication will be trashed (well not exactly but that's what they sort of mean), you still need to respond.  YOU must be the last one to respond to anything other than "We're closing the file and removing our BS from your credit reports."  

You have a right to demand full validation. Know your rights. Exercise your rights. Fight back and don't back down. Basic bureau disputes don't completely protect you. You need to dispute with the CRA's but you Need to Demand Validation.  If you want someone who knows this game, knows the laws to use to back up the demands, will fight for you, contact me.  It's what I'm good at.  It's what I'm passionate about. I want to see you win this fight! 

You can reach me at futurefico@gmail.com or 951-801-2828

I'd love to fight for and with you. 

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How To Beat Debt Collectors At Their Game

Last month I focused a lot on 3rd party debt collectors going after foreclosed homeowners and the deficiency they feel they are entitled to. This month, I'm going to go more into detail on how to beat these collection companies no matter what type of collection account they are on the warpath for money over.

If you receive a notice in the mail from a debt collector telling you that you now owe them for some debt, maybe its a medical collection or a charged off credit card, or even the difference left over after a car repo, it should tell you clearly that you have 30 days to dispute the debt.  If the first contact you have with a debt collection company is that they call you on the phone, you can confirm your name if you want, but do not confirm your birth date, your social security number, your phone number, your address, or anything else.  Do not acknowledge that alleged debt.  Tell them you do not communicate with companies like theirs over the phone and if they have something to say to you, they can put it in writing and mail it to you.

Once you have received that letter, its time to start the fight. You want to immediately fire off a letter disputing the alleged debt and demanding validation.  I go so far as to not even call their account number an account number. Its a reference number.  I do this because there is no way I'm going to acknowledge that my client has an account with them.  This is their own made up account number to try and make you think their claim is legitimate. So, this is where you start to fight back.

Your validation letter should tell them that you are responding to their letter and you do dispute their claims. In fact, you will need them to validate and prove to you that you owe them that alleged debt.  You see, there may be some alleged debt, but do you owe it?  That's what they need to prove.  Don't fall for the lame Chaudhry minimum standard of "verification" of the alleged debt. You don't need verification and they can't provide that anyhow since they are a 3rd party.

You are demanding validation, which is the proof, the documentation that supports their claim.  You are entitled to receive from them a copy of the contract showing you agreed to do business with them. That means that the contract names them as the creditor that actually lent something to you of value, and your name agreeing to compensate them or pay them back for what they claim they lent you.  Then it has to have your signature on it.  A contract between you and the alleged original creditor is not a contract between you and the 3rd party collector and it isn't full validation.

You will also need to tell them to provide proof that they own the alleged debt or that they have been authorized to demand payment, which means its been assigned to them by the original creditor.  Sometimes they will send a bill of sale, and that doesn't happen too often, and occasionally though rare, they'll send you a copy of their assignment. But sending this, even with a copy of the original agreement, is not full validation.

You are also entitled to ask them to provide a full accounting.  This is not just 3 years(or however many they send) of billing statements but also means an accounting ledger. The accounting ledger should show every charge, every fee, interest added, credits, debits, payments, every single event that changed the amount on the alleged account. Billing statements that show what was charged that month is important too because you have the right to say, "Hey, I didn't buy that or authorize that." Leave that for the courtroom though.  We never want to admit anything to a 3rd party debt collector.

You will also want to tell them that since they furnished information to your credit reports, they are required to have your consent to do so in writing, so they need to provide a copy of that consent or authorization.  They won't be able to provide this but this only helps remove them from the credit report. It is not part of validation and will not mean they have to stop trying to collect if they can't produce it.

A couple other things to ask for is proof that the alleged debt is not outside the statute of limitations and if you're in a state that requires licensing and/or bonding, you need to have copies of those documents as well. You also have the right to ask for a full chain of assignment, which means every collector that has ever had it in their possession, and proof that their collection fees are agreed to in the original contract. Heck you can actually even tell them that you have a right to know how much they paid for the alleged debt because that is closer to the phony baloney amount they should be trying to collect.

After you dispute with them and demand validation, you want to write to each of the credit bureaus and dispute each of the collections with them. You will do this about a week or two after you send the letters to the collectors.  This is very important because once you demand validation from a debt collector, they are required to stop all collection activity. Verifying with credit bureaus is considered collection activity and if they do it before they send you validation, they've just broken the law.  They actually need to remove the information they have furnished while its in dispute.  

Many times you will see comments on your credit report saying that "consumer disputes" or similar language.  If those comments are on a 3rd party collection account, that is a violation of law and proof that they are breaking it. Since communicating via the credit report is considered collection activity, putting a "dispute" comment on there doesn't void the fact that they are still trying to collect when they are supposed to stop all collection activity.  Its just proof that they are ignorant of the law or they don't give a rip about the law.  We're going to jump back to bureau disputes in a bit.

Now, when debt collectors respond to your dispute and demand for validation, many times they will send you the name, amount and a few tidbits of information about the alleged original account and then tell you that they have verified.  They haven't, that's hearsay. If they send you any documentation, it might look like they've proved the alleged debt, but its not validation. Its not proof you owe them.

Your response is a very important part of beating them.  You don't want to attack their response until you get the results from your bureau disputes though.  This is because not all of the collectors will usually reply to your demand to validation but they will respond to the bureau dispute by claiming they verified it.  That's a big NO-NO.  You are also going to want to check those bureau disputes and see which collectors were stupid enough to comment that the alleged account is disputed.  You will be using these things against them and this is very effective to make them hit the road.

Now that you've received your bureau dispute results back and the debt collectors that have bothered to respond to your demand to validation are pretty much all back to you, its time to contact the collection companies again.  For those that told you they are closing the file and notifying the bureaus, you don't need to send anything to them.  Just make sure they actually deleted. If they didn't you will dispute that again with the bureaus.  For those that claimed they verified, you need to get real tough with them.

Your response to those who claimed they validated or verified in response to your demand for validation, you need to tell them something like this:  "I've received your letter claiming you have validated (or verified) the above reference number. But the problem is, you didn't provide the documentation that proves I owe you anything.  Where is the contract between your company and me? Where is the full accounting because I can't just take your word for it that I owe some company I've never contracted with, some made up number?  Where is your license and bond?  In fact, from what you sent, I can see that you are trying to collect for something that is outside the statute of limitations for my state (if that is the case).  

You also haven't proved you have any right to be on my credit report because I know for a fact I've never contracted with you nor consented to you being able to make any communication on my credit reports.  You're violating the FDCPA by continuing collection activity and you're violating the FCRA by furnishing information and verifying unvalidated information, disputed information, erroneous information, when no access to my credit reports has ever been granted to you.

So, get your crap off my credit reports until you can provide some proof that I actually owe YOU! You haven't done that yet and by law, you are to cease collection activity immediately.  I reject your hearsay as being validation or verification. I reject the bills you sent as being validation because they are not. I reject any of your claims of validation or verification because you haven't proved anything."

That's pretty much how a follow up letter is written.  Now, for those that verified with the bureaus but didn't bother to even respond to your demand for validation, you should send them a letter similar to what I just gave you but blast them for verifying without even responding to your demand for validation.  You can even tell them that you intend to sue them for their FCRA and FDCPA violations if they don't remove this reference number and information they furnished to the bureaus from your reports.

Now, your follow up letters to the bureaus will be to dispute each one as having demanded validation from each one and they have not validated and therefore are still Unverified so please delete ASAP.  By the next time you get your responses back from the bureaus, you should see some great results.   Sometimes though, they just don't have any respect for the law and they keep leaving their bs on your report. You may need to keep attacking them month after month to remove these stubborn ones.

I hope that those of you who are working to improve your credit will take this information and use it.  It does work.  Its a basic attack and it's based on laws written to protect you from scum like debt collectors.  Remember, you don't owe these punks so fight to keep your hard earned money in your own pockets, not theirs.  Its your right to spend your money as you want, not give it over to these extortionists who will continue to harass you in an attempt to steal it from you if you don't knock them down and out of your lives.

Now, for those of you that want help with removing collections, we are extending our Christmas special into the New Year!  We use advanced techniques and put laws, case law, statutes, Supreme Court rulings and more in the debt collectors' faces. We go well beyond the attack shown above to get you the fastest results possible, all while staying ethical, honest, and within the law. Our special is valid through January 31, 2015.

Our special will save you anywhere from $100 - $300 depending upon the number of collections on your report, as well as other derogatory items.  To qualify for the special, you need to have at least FOUR 3rd party collectors furnishing information on your report.  You will need copies of your credit reports for all 3 major bureaus so get them together and contact us so we can help you have a new, pretty credit report in this exciting New Year!  My email address and phone number are up on the top right hand side of this blog.  I look forward to hearing from you and helping you fight the debt collectors and win!

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Disputing 3rd Party "Debts" After The 30 Day Requirement Has Passed

Many times consumers get letters in the mail from debt collectors saying that they have some debt with this company and they need to pay the bill. Some will claim they are offering this great one time settlement offer saving you 40% or 50% off the total if paid by some date.  Really?  Should you take them up on it when I can show you how to save 100% of that ridiculous bill?

The letter, which is called a Dunning letter, is required by law to have language in it that says you have the right to dispute this debt within the next 30 days.  But what if you decided to blow them off and throw away the letter? Do you lose your right to dispute it after the 30 days has passed? Let me explain how this law actually helps you.

Here's the thing about this law. Its FDCPA §609 or 1692(g).  This law says that they must inform the consumer of their right to dispute the alleged debt and if the consumer does dispute it during the 30 day period, then the collector must stop all collection activity. Now, it doesn't say that they can't furnish information on the credit report in the first 30 days, but if they do, your best chance of making this never go on or make it come off quickly from your credit report, is to dispute in the first 30 days.  This is because furnishing information on someone's credit report is considered collection activity.

But if you don't respond in that first 30 days, the law does not say that you can't ever dispute it.  I've had collectors tell my clients that they don't have to validate because it wasn't disputed within the first 30 days.  They are absolutely correct. But, these punks are spinning the truth. You see, there is nothing in the FDCPA that REQUIRES them to validate. Nope, not at all. BUT...what it does say, is that if a consumer does dispute, they MUST cease all collection activity until they validate - if they choose to.  If they choose not to validate, then, that's fine, it means they choose to delete it. Its one or the other.

The FDCPA also says that if a consumer disputes, they have to notify the credit bureaus that the account is disputed. Here's the fun part of that. The bureau employees are so uneducated in the FDCPA they don't get that they are going to help the collection agency violate the law. They put a comment on there that the account is in dispute. I really crack up at this.

The FDCPA just told them that they have to stop collection activity if the consumer disputes. So, the collection agency notifies the bureaus that its in dispute and a dispute comment goes on the report.  What does this mean? How is that a violation of the law?  Well, when they tell the bureaus the account is in dispute, they are not supposed to be instructing them to put a dispute comment on there, they are supposed to be deleting the account from the credit report.

What they have effectively now done is continue collection activity (because its still on the report) but now they are broadcasting to anyone who sees the report that they are breaking the law. Do you understand this? Its simple. They just need to delete  it!  

So, even if you have missed that 30 day period, your right to demand validation or dispute is not revoked. You can dispute at any time. Its just that they've been better trained at removing them from credit reports when they get a dispute during the first 30 days, than they are educated about how to handle disputes they get after the first 30 days. They obviously  are not taught well that any dispute at any time, means that for a 3rd party collector, it absolutely must be removed from the credit report until they fulfill validation.

I sure hope you understand this and use it to your benefit!  Dispute away, tell them to remove it until its been validated, and if they just put a "dispute" comment on there, well, if you sue them, you just earned an easy $1000 bucks!

Feel free to comment on this or email me with questions.  I'm here to help you successfully get rid of the ugly stuff on your credit reports and get it looking pretty again!

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How To Write A Validation Letter

I get a LOT of emails asking how to write a validation letter so I'm going to try to explain it again here.  Validation letters are NOT sent to Original Creditors.  Validation letters are NOT sent to Credit Bureaus.   They are ONLY sent to 3rd Party Collectors.

When you get a letter from a collection company, the first time you receive one from that company, they should be very clear that you have a right to dispute their claim within 30 days.  This does not mean that they won't be putting it on your credit report or that they haven't already put it on your credit report.  But it does mean that they will have to immediately stop collection activity when they receive your dispute or what we call a Validation letter.

Sometimes you never get that first letter or maybe you did and you ignored it, but you have a copy of your  credit report and you see a collection account on there.  You will want to dispute this with a Validation letter as well.  Even though you may not have disputed within the first 30 days of being notified that this collection company is hot on your trail, or you never knew about it until you saw your credit report, once they get the Validation letter from you, they must stop all collection activity.

A Validation letter is demanding proof that you owe them something.  You have the right to challenge their claim and make them stop collection activity pursuant to the FDCPA (Fair Debt Collection Practices Act).  Collection activity can be phone calls where they are pressuring you to pay something, another "bill" saying to pay, and even verifying the alleged debt or updating the alleged debt on your credit report.  They must stop ALL collection activity until they prove the alleged debt is yours.  The only things they are allowed to do at this time are to 1. Prove the alleged debt is yours; 2. Mark the alleged account as "In Dispute" on your credit report; or 3. Send you a letter stating they are closing the file and removing it from your credit report - or similar language to that effect.

A Validation letter should always be sent Certified Mail and preferably with a Return Receipt.  These are some of the things that you will want to keep for your "paper trail" if you end up in court against these suckers.  So, always keep a copy of each letter sent and the certified receipt showing they got your letter. Also, keep every letter they send you. You will be able to find violations they commit and also whether or not they responded and if they sent all the information you demanded in your Validation letter.

Validation letters can be short and to the point, or long and full of laws, or anywhere in between.  The best Validation letters are the ones you write yourself. The worst to use are the ones you find all over the internet or in some book where you said everything they did, word for word.  You want to make the letter your own. Put it in your own words. If you're pissed off and feel like letting them know, well then make sure your letter gets that across to them. I believe its absolutely fine to not be nice in a letter to any collection company. They are ruthless, rude, law breaking  scum, so why would you have to be nice to them?  Write from your heart while you make sure you demand they try to prove their claims.  If that's not you, if you just would  rather be nice or plain matter of fact, that's perfectly okay too.

The letter to them will start off with a Dear Sirs, or To whom it may concern, or some sort of generic salutation. Then you tell them you either received their letter claiming you owe them something or you have a copy of your credit report and saw that they are furnishing information on it that they think you owe them something.  Then you tell them you don't believe you owe them anything and you are disputing their claim and you demand that they stop all collection activity pursuant to the FDCPA.  You don't have to put that its pursuant to anything if you don't want, but whether or not you say that, it is pursuant to the FDCPA and they know it.

Make sure you reference the alleged account number that they assigned to the alleged debt. Now you can tell them what you want them to provide to you.  You definitely want a copy of the alleged contract that shows you agreed to do business with them.  You want a copy of the contract between you and the alleged original creditor. You want a full accounting - meaning, how did they determine how much they claim you owe them.  They usually have added extra charges for interest and collection fees so they need to explain exactly how they got to the amount they are telling you to pay them.

They also need to provide proof that they have a right to collect the alleged debt.  This means they will need to show the contract between them and the original creditor, or whoever they got the alleged account from, and the full chain of assignment. This means, if they are not the first collector claiming you owe this alleged debt, they need to show every single collection company that had it from the original creditor, through every 3rd party scum bag, to them.  Now if you are in a state that requires collection companies to be licensed and/or bonded, they need to provide copies of those items as well.

Another important item that they should be able to provide to you, is the date of the last payment and proof that the alleged account is not outside the Statute of Limitations. If the alleged original account is Time-barred, this is a fantastic way to get rid of them fast.  Some companies don't care and will continue to try to collect and may even sue you on Time-barred debts.  As long as you make no payment to them, make no payment arrangement with them and never admit you owe the alleged debt, it will stay time-barred.  You have to be very, very careful here. In some states, just acknowledging that you ever owed the alleged debt is enough to start the Statute of Limitations clock all over again, so DON'T DO IT! Don't admit Anything - Ever! Don't make a payment to these fools - Ever! Don't agree to a payment plan - Ever!

The next thing I believe you should tell them, and I think its very important to say it in writing, is that under no circumstances do you authorize or give them consent to furnish any information to your credit reports nor to take any action that would result in an inquiry on your credit report from their company. You should tell them this whether they are on your credit report or not.  In order for a company to inquire or furnish information on your credit report, you must give your authorization for them to do so.  Read my previous post, just before this one, so you understand what it takes for them to be able to have anything to do with your credit report.

Now, if they are already furnishing information to your credit report, also demand that they provide a copy of your consent and/or authorization that allows them to furnish or inquire on your credit report. Remind them that without this proof, they must remove all traces of their slander from your credit reports.

You really don't need much more than this in your validation letters. If your want to, you can use case law or the actual laws that give you the right to demand everything you have told them to provide to you, just to give your letter even more weight. You can use something you find on the internet and request the same things those letters say, but again, put it in your own words.  Don't use a form letter and don't copy word for word from those letters. They just don't have as good of an effect or result  as your own letter will have.

Okay, now you've come to the end of your letter. Here is something super important. NEVER, NEVER, NEVER sign your name to the letter.  You may type it or print it, or stamp it, but Don't Sign in YOUR Handwriting!  Also, NEVER, NEVER, NEVER give them your social security number. And nowhere in your letter at all, NEVER, NEVER, EVER admit that you owe them diddly nor that the alleged original account belongs to you.  

You don't ever want to acknowledge anything other than you received their correspondence and/or you see that they are reporting on your credit reports. They are the ones that should be sending you proof.  You have NO obligation to send them copies of ANYTHING or to disclose anything to them. No copies of old bills, no social security number, no utility bills, no driver's license, no birth date, no whatever they claim you need to send them as proof of anything.  You are not the party needing to prove something - THEY ARE! 

If they are requesting you send them something, it means that they don't have what it takes to even come close to resembling validation. The minute they start asking for you to provide any type of information is time for you to tell them you know they obviously are fraudsters and have no proof of any alleged debt and they need to go pound sand.

So, this is how you write a Validation letter. Hopefully you will craft an excellent one that successfully gets them out of your life and off your credit reports. I'd like to tell you that you will probably be a lot more successful if you can respond to their initial letter within the 30 period. But if you've missed it or never received that "Dunning" notice, don't worry. You still retain your rights, you just need to exercise them and be consistent. Don't accept their claim of validation, don't accept anything other than they are ceasing the game with you and always respond until they give up and go away.

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Collection Agencies Have NO Right To Inquire Or Furnish Information To Credit Bureaus!

It is my opinion, based on consumer protection laws, that collection agencies have no right at all to inquire on anyone's credit report nor furnish their bogus information on anyone's credit report.  It may be kind of a bold statement, but its the truth.

For today's topic, I'm going to show you why, based on real laws, they actually are not allowed to inquire or furnish information to credit bureaus.  There is one exception that I can think of, that is still sort of iffy, and I'll explain that as well. We are going to concentrate on mainly two laws, which you should be familiar with by now, the FDCPA and the FCRA.  I will also bring in my fav for 3rd party debt collector scumbags, good ol' 73 American Jurisprudence (AmJur) 2nd, Sect. 93.

I want to state that just because they don't have any legal right to be anywhere on someone's credit report, doesn't mean the law prohibits them from attempting to collect from consumers.  But, just because they can sleazily attempt to collect (and I mean that in the sweetest, kindest way), it never means anyone owes them squat.  Let's go over 73 AmJur 2nd, Sect. 93 first.

Oh, I just love this. It says, in case you haven't read it at least 5 times before on this blog, "The right of subrogation does not exist for a stranger to the transaction."  In normal everyday, non bar-attorney speak, it means there's no right to "substitute" (subrogate) yourself into or onto a contract (transaction), if you weren't originally and specifically named in the contract (a "stranger").  Do you understand what this is saying?  A 3rd party collector is NOT named on the original contract between the consumer and the "creditor", so they cannot claim that anyone owes them anything.

What if they bought an alleged debt from an original creditor and claim the purchase included all rights of interest and assignment?  Hmmm, does that mean that they are now owed something? Hah! Look at the previous paragraph again.  Its pretty clear.  It doesn't matter if they bought it, they were assigned it, they traded something of value (or not) for it, or however they acquired it and got their greedy corporate hands on it, if they were not on the original contract, no one is obligated to pay them a dime!  With NO VALID CONTRACT, they also can't validate, verify, nor may they place info on the credit reports.

Now, take a look at the FDCPA. This law is called the Fair Debt Collection Practices Act. I personally see very little need for this law, except to reiterate how collectors should treat people and to let consumers know that debt collectors don't really have the rights they try to claim they have.  FDCPA Section 805(b) says: 

          COMMUNICATION WITH THIRD PARTIES. --Except as provided in Section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

I underlined the last part where it says "if otherwise permitted by law". Why do they say "otherwise"?  Could it be that they know that they are trying to trick you by the way its worded, into believing that it is permitted by law? If you took out the part that is underlined, then it would be saying it is permitted by law.  Read it that way and see for yourself.  By adding that last little section of the statement what they are saying is, "its not permitted by law, but if you can find a law that permits a debt collector to communicate with a credit reporting agency in connection with the collection of a debt, then hey, we'll also allow it."  I'm telling you, and I ran this by my trusted and expert mentor (who happens to be a legal genius, Pr. Atty Gen. and super close friend) and a whole hosts of credit industry professionals, and they concurred.  The FDCPA is saying debt collectors are not allowed to furnish information regarding alleged debts on consumers' credit reports.

How about the FCRA?  The FTC has already concluded and published opinion letters from their legal staff that state reporting on credit reports is a communication.  Case law such as Heintz v. Jenkins came to that conclusion also.  FCRA Section 603 says:

     (o)  EXCLUDED COMMUNICATIONS. A communication is described in this subsection if it is a communication
(5) with respect to which
     (A) the consumer who is the subject of the communication
          (i) consents orally or in writing to the nature and scope of the communication, before the collection of any information for the purpose of making the communication;
          

The FCRA also doesn't allow 3rd party collectors to inquire on consumers' credit reports. Hopefully you've heard the term "Permissible Purpose."  I'm going to show you how this absolutely never gives collectors the right to inquire on credit reports. They never have "Permissible purpose."  FCRA Section. 604 says:

     § 604. Permissible purposes of consumer report
a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
    (3) To a person which it has reason to believe
    (F) [otherwise] has a legitimate business need for the information
         (i) in connection with a business transaction that is initiated by the consumer; or
        (ii) to review an account to determine whether the consumer continues to meet the terms of the account
*(I crossed out the word otherwise so it doesn't confuse you without reading the rest of that section)

Each of these laws says the same thing. Unless the consumer authorizes it prior to them taking action, it is illegal for them to inquire or furnish information. There is no doubt in my mind that what the law says is exactly what it means.  The sad thing is that credit bureaus fail to require compliance with the law, which means they also are violating the law, because they put profits before consumers' rights. They put money before obeying the law. Its a sad shape this industry is in when all of them don't sweat it or worry at all about breaking the law because they make so much dirty money, they can pay off whoever they need to, whether it is a consumer that wins a lawsuit against them or maybe the courts, judges, lawyers, CFPB, FTC, ...you get what impression I'm getting by their bad behavior.

Okay, I said I'd tell you the one exception that I still believe is sort of iffy. That would be when a consumer pays a 3rd party collector for an alleged debt that they probably wouldn't have paid had they known better.  Just because someone pays a collector does not mean that the collection agency will or has to remove it from the credit report. And, the act of paying them establishes a business relationship with them. The reason why I say its still "iffy", is because the transaction was NOT initiated by the consumer.  It was initiated by the collection company because in most cases, the payment was extorted by the collection company that guilted the consumer or harassed the consumer into paying them.  I'm somewhat jaded, to put it mildly, but that's my opinion on why most consumers who give any money to a collection company do so.

But look at the law again. Regardless of the business relationship established by the payment to the collection company, the law says that the business transaction has to be Initiated by the consumer. I reiterate that it is my opinion, that consumers do not go out looking to transact with 3rd party collectors and therefore, collectors have not met the conditions required by either the FDCPA nor the FCRA for inquiring or furnishing information on consumers' credit reports.

I hope you've enjoyed the information I've presented in this post and I hope if you are working on getting your credit report as accurate as possible and as derogatory free as possible, that it will help you reach your goals.  If you would like experienced expert assistance to help you manage your credit data, please contact me.  My contact info is up on the top right hand side of the page. I love helping people and believe that I can help you achieve the results you are looking for.

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.

How To Deal With Collection Agencies ~ Part 4 (States With License and/or Bonding Requirements)

This is my final post in this series and I'm sorry that I'm so late in getting it out, especially for those of you who have been checking and waiting for it.  This post is about a very important tool to use against the collection agencies who are harassing you, badgering you, or simply just trying to take your money from you.  I cannot stress enough how important it is that you don't just go and pay these 3rd party collectors.  It will add years of negative credit to your credit reports and can be so much harder to get them to come off when they've been paid.

Now, we've covered a couple tools already. States that have their own version of the FDCPA, and my little bonus of UCC codes on that one. Then, the Statute of Limitations (SOL) for each state.  Here's a little bonus on the SOL that I recently discovered, and those of you in states that have ridiculously long SOL's are going to love this.  UCC 3-118(g) and UCC 4-111 state that the SOL is 3 years!

Yep, 3 years. UCC 3-118(g) is important for credit because this has to do with negotiable instruments and conversion of an instrument.  That's what they do with credit accounts, be it credit cards, credit lines, mortgages, "money lent" by financial institutions. They don't lend money, they lend credit, which is illegal, and they convert the loan docs, application, eg. promissory note or negotiable instrument, whatever you want to call it, into "money. 3 years, folks, 3 years!

Okay, lets get into this last tool.  Many of you are going to love it. This tool is a list of the states that require debt collectors to be licensed and/or bonded to conduct collection activity within their borders.  This usually goes for debt collection law firms as well.  They used to love that they could get away with their sleazy tactics because they were a law firm. But now, if debt collection is the main function of their law firm, they are lumped in the pile of cow poo that is the 3rd party collectors and junk debt buyers that try to collect from consumers.

Most states publish a list of all the licensed debt collection companies.  Some states allow collection acts if they are licensed in other states with similar licensing requirements.  Also, some states have cities that have license requirements as well, to protect the residents of their cities from these scum.  It is wonderful!  I've included the web addresses to look up the collection company or information how to get a list of the 3rd party collectors to see if the ones bugging you are licensed. Most of these state sites have links or instructions how to file complaints against them too.

I want to apologize to those of you who live in states that don't seem to care enough to enact legislation that requires these bullies to get licensed or bonded.  I know, its not me that should apologize, it's them, but you know they will never issue a sincere apology to you. I'm in that same boat as many of you. I'm in California and they don't require licensing or bonding for debt collectors here either.  Its sad. Personally, I think its because its such a money making business for the state to get the court fees from all of them and all the consumers who get sued and lose or have to pay a court filing fee to fight the collectors.  They probably make much more by allowing all that fraudulent nonsense than they would through licensing fees.

Well, read on!  Here's the list!

STATE and TERMS	WHERE TO FIND LIST
Alaska - Only requires license for companies located in Alaska or out of state collecting for original creditors located in Alaska.	http://commerce.alaska.gov/CBP/Main/SearchInfo.aspx
Arizona - Allows collection agencies that have a valid license in another state that has similar licensing requirements and has a reciprocity clause to collect without obtaining an AZ license	http://azdfi.gov/lists/CA_List.HTML
Arkansas - Requires a license whether they are located in the state or not, if attempting collection on a resident of Arkansas	http://www.asbca.org/collect_search/
Colorado - Requires all debt collectors to be licensed and to maintain an office in the state, open to the public, if they want to try and collect from residents.	http://www.coloradoattorneygeneral.gov/sites/default/files/uploads/cab/CabReport.pdf They update the list every month I think, but I believe the link stays the same.
Connecticut - Have to have a license to collect, regardless of whether they are located in state or not.	http://www.ct.gov/dob/cwp/view.asp?a=2233&q=297872  There's a link at the bottom that is updated to view current licensees and also a tab on the left to verify a license.
Delaware - Must be licensed to collect in the state. They pay $75 to be licensed as Mercantile/collection agency but sometimes they license under personal or professional services as well.	https://dorweb.revenue.delaware.gov/bussrch/ This page has a search feature and the ability to download the list of licensed businesses.
Florida - Must be licensed if located in state. Must be licensed if out of state and collecting for creditor in state or soliciting accounts from creditors in state. Are not allowed to collect on medical bills for services covered under HMO's.	https://real.flofr.com/ConsumerServices/SearchLicensingRecords/Search.aspx
Hawaii - Must be licensed and bonded. However, for out of state collection companies, if they are licensed and bonded in another state, they can apply for an exemption. But, the exemption is not automatic. It must be approved and granted by the state.	http://pvl.ehawaii.gov/pvlsearch/app This link is to search for licenses. http://hawaii.gov/dcca/pvl/programs/collection/ This page has a link to file complaints against the collectors and look up their complaint history as well!
Idaho - Must be licensed whether in state or not to try to collect alleged debts from residents	http://finance.idaho.gov/CollectionAgency/CollectionAgencyLicense.aspx
Illinois - Must be licensed unless they are out of state and are licensed with equivalent requirements from that state	https://www.idfpr.com/licenselookup/licenselookup.asp
Illinois - City of Chicago Only - Must have a license in both Chicago and the state license. However, if they have an exemption with the state of Illinois, they can get one in Chicago too.	https://data.cityofchicago.org/Community-Economic-Development/Business-Licenses-Current-Active/uupf-x98q
Indiana - Must be licensed and bonded.	http://www.in.gov/apps/sos/securities/sos_securities
Iowa - Not required to be licensed but must register if they collect $25,000 or more in a calendar year. Applies to creditors and collectors	http://www.state.ia.us/government/ag/images/pdfs/Contacts_ICCC_Notification_Fe.pdf
Louisiana - Must be licensed and bonded	http://www.sos.la.gov/BusinessServices/SearchForLouisianaBusinessFilings/Pages/default.aspx
Maine - Must be licensed and bonded	http://pfr.informe.org/ALMSOnline/ALMSQuery/Welcome.aspx
Maryland - Must be licensed and bonded	http://www.dllr.state.md.us/finance/industry/licsearch.shtml  You can search by name or location.
Massachusetts - Must be licensed and they use a service called Nationwide Multistate Licensing System (NMLS)	http://www.nmlsconsumeraccess.org/  Looks like its for mortgage brokers but its actually for debt collectors too
Michigan - Must be licensed whether in state or not to try to collect alleged debts from residents	http://www.dleg.state.mi.us/verify.htm
Minnesota - Individual debt collector (human being) and the collection company they work for must be licensed.	http://mn.gov/commerce/banking-and-finance/consumers/license-lookup/license-lookup.jsp
Nebraska - Must be licensed and bonded	http://www.sos.ne.gov/licensing/collection/pdf/licensed-collection-agencies.pdf
Nevada - Must be licensed and bonded	https://fid.online.nv.gov/datamart/selSearchType.do?from=loginPage
New Jersey - Must be bonded whether in state or not to try to collect alleged debts from residents	http://www.nj.gov/treasury/revenue/collagency.shtml  You have to request a verification of the bond by mail.
New Mexico - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents	http://rldverification.rld.state.nm.us/Verification/Search.aspx?facility=Y  In the "License Type" drop down list, select collection agency
New York - City of Buffalo Only - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents	http://www.city-buffalo.com/Home/City_Departments/EDPIS/Licenses/LicensedContractors
New York - New York City Only - Must be licensed whether in state or not to try to collect alleged debts from residents and must include license number on all correspondence	http://www.nyc.gov/html/dca/html/licenses/license_check.shtml
North Carolina - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents.	https://sbs-nc.naic.org/Lion-Web/jsp/sbsreports/CompanySearchLookup.jsp Use "company type" for drop down to collection agency http://www.ncdoi.com/ASD/ASD_Consumer.aspx  Use this link to file a complaint!
North Dakota - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents. This includes every branch office they may use for collection activity	http://www.nd.gov/dfi/regulate/reg/regulated.asp
Oregon - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents.	http://www4.cbs.state.or.us/ex/all/mylicsearch/index.cfm?fuseaction=main.show_main&group_id=20&profession_id=22&profession_sub_id=22000&profession_name=Collection%20Agencies
Rhode Island - Must be licensed whether in state or not to try to collect alleged debts from residents.  May also have to have a bond.	http://www.dbr.state.ri.us/documents/divisions/banking/program_operations/List_of_Debt_Collectors.pdf
Tennessee - Must be licensed and bonded. However, for out of state collection companies, if they are licensed and bonded in another state, they can apply for an exemption. But, the exemption is not automatic. It must be approved and granted by the state.	http://verify.tn.gov/
Texas - Must be bonded whether in state or not to try to collect alleged debts from residents	https://direct.sos.state.tx.us/debtcollectors/dcsearch.asp
Utah - Must be registered with the Div. of Corporations and Commercial code and bonded whether in state or not to try to collect alleged debts from residents	https://secure.utah.gov/bes/
Washington - Must be licensed and bonded whether in state or not to try to collect alleged debts from residents. Also includes debt buyers.	https://fortress.wa.gov/dol/dolprod/bpdLicenseQuery/
West Virginia - Must be licensed and bonded and have an office in state to perform collection activities	http://apps.sos.wv.gov/business/corporations/
Wisconsin - Must be licensed and bonded to collect in state. Out of state exemption if only performing collection activity via "interstate telecommunications and interstate mail."  ~ To me, this sounds like they can't sue you if they are out of the state and don't have a license or bond and they have an exemption.	http://www.wdfi.org/fi/lfs/licensee_lists/
Wyoming - Must be licensed and bonded and have an actual office with resident manager in the state. Every office or branch must be licensed and bonded. Exemptions for collecting business and or commercial debt or law firm collecting for the TRUE name of the original creditor.  Also, do not have to be licensed if the alleged debt they are attempting to collect originated out of state on the internet or by mail.	http://audit.state.wy.us/banking/cab/cablicensees.htm

Now, I hope you noticed that Illinois has a state licensing requirement but so does the city of Chicago. This means that if you live in Chicago, Illinois, the debt collector has to have a license for both the state and the city of Chicago.  I can honestly say, this is one thing that it appears Chicago is doing right!  If you get a bill from a debt collector, and you demand validation and they respond, you've got them.  Heck, you've got them if they aren't licensed. REPORT THEM IMMEDIATELY, at the same time you send them a "Ha, Ha, you're gonna get it" letter!

The state of New York DOES NOT have any licensing requirements. But the city of Buffalo does and New York City has licensing laws too!  Its not as good as Chicago, but heck, if you live in one of those two cities, you're faring better than the rest of the folks in the state of New York that live in other cities!

Make sure if you're in one of these states or cities that require licensing, registration or bonding, you look up that 3rd party collector. You never know, they may not be licensed, and that will make your credit repair efforts that much easier! Some states may have quirky little exemptions,  but for the most part, all of these states require some sort of licensing and/or bonding.

You should use this tool.  Also, I urge you to file complaints on these 3rd party collectors for every little violation that they do. You may have to do a little bit of searching on your state's correct government website to find how to file a complaint, but do it.  If they get repeated complaints from consumers, they will get fined and can get their licenses revoked. Getting these companies banned from collecting in your state helps all consumers. Then it may be a little easier to get bad debt removed from your credit reports because they will NOT be allowed to report on your credit reports in any way, shape or form because it is considered "collection activity" and without a license, it is blatantly illegal!

I like giving you assistance in your fight to rid your credit reports of these blood suckers and I hope that this information helps your pursuit of pretty credit a bit easier.  If cleaning up your credit is a bigger job than you want to handle on your own, please give me a call or email me.  I'd love to be the one you choose to help you.

Challenging Chaudhry v. Gallerizzo From A Collection Agency

If you have been working on repairing your credit and you have sent validation letters to collection agencies, you probably have received or will receive a semi-form letter back saying that they have verified the account and they are correct.  Then they will put in a little modified excerpt from the Chaudrhy v. Gallerizzo case decision to justify their laziness and to deceive you into just accepting their false claim against you.  The modified excerpt looks like this:

"verification of a debt involves nothing more than the debt collector confirming in writing that the debt being demanded is what the creditor is claiming is owed. The debt collector is not required to keep or provide detailed evidence of the alleged debt."

When I see this in a response for one of my clients, I crack up because it just blares out to me that they don't have anything.  You see, the Chaudrhy decision is not about validation with a collection agency!!  They take a small piece of the decision and quote it, but they fail to tell you that it has nothing to do with them, has nothing to do with validation, and further, you didn't request "verification", you requested "Validation" and that is something different.  

Just so you know, the Chaudrhy decision was about legal fees.  The verification of the legal fees was being challenged and the court said that the law firm just had to confirm in writing that the fees they were claiming were the fees that were owed.  Legal fees are not collections, unless it has been assigned or sold to a collector.  Legal fees are fees that the attorney charges for services rendered.  Since when do collectors render services that you "hired" them to perform for you?  I'll answer that for you --> NEVER!!

The best way to challenge this type of letter is to send a follow up letter letting them know that you are not an uninformed idiot and that their feeble attempt at validation doesn't even come close to the legal requirements set forth in the FDCPA and appropriate case law.  I usually use some of that language in my response letters and then I follow up with laws to defend my demand for validation and what is required.  They are in the business of collecting and they are supposed to know the law, yet they are usually fairly ignorant, deceptive to consumers and flagrantly in violation of the law.

Here is a sample of what I put in my letters that you can modify and use against these obnoxious criminals. (Yes, I consider them criminals because they consistently break the law and commit extortion, mail fraud, violation of the RICO Act (racketeering, etc.), and violating both the FDCPA  and FCRA, among other illegal acts.)

 Dear Sirs, (you can put in the name that they may put on their letter or say To Whom it May Concern, what ever is your fancy)

I am in receipt of your letter dated 01/01/13 in which you claim you have verified the account which I am disputing and in which you attempt to quote a portion of the Chaudrhy case decision to justify your response or to attempt to deceive me, or both.  Please understand, your feeble attempt at validation is a joke.  In fact, you claim you verified when I didn't request verification, as we both know that verification is merely requesting that you have the right name, address, account number and original creditor.  Further, your verification doesn't meet the criteria as defined in Black's Law Dictionary which includes being able to testify to the verification under oath.  I Demanded Validation, which you did not provide.

Since  you are supposedly professional collectors, you should be aware that if you fail to validate, you are barred from "verifying" with the bureaus as that is collection activity, which is barred until full validation has been accomplished.  The Chaudrhy case is not about debt collectors and validation, it is about attorneys' fees.  Maybe your incompetence and laziness has prevented you from actually reading the entire case and the entire court decision.

I am requesting from you AGAIN, Validation.  Here is what I want from you:  The alleged contract with both my wet ink signature and your employee's signature establishing that we have agreed to do business together.  Provide proof that at least the four main elements of a contract have been met.  Provide me with the alleged contract between the alleged original creditor and me, and proof that at least the four main elements of a contract have been met.  Provide me with proof that you have the legal right to collect this alleged debt.  Provide a full accounting for the alleged account - all charges, payments, interest accrued, all fees, and the corresponding dates for which every event occurred.  (Spears v. Brennan).  Prove also that this alleged debt is not time barred, or in simpler terms for feeble minds, outside of my state's statute of limitations.

Please be aware that because you put on the bottom of your letter that it was an attempt to collect a debt, you are already in violation of the FDCPA, and until you validate, you are guilty of mail fraud, racketeering, extortion, and a slew of other felony violations of the law.  So, until you fully and legally validate as I have requested, or rather, have demanded from you, you are required by law to cease all collection activity.  Should you fail to validate within ____ days, you are to delete any and all references and reportings of this fraudulent and alleged debt from every credit bureau and or repository to which you have reported it to and you are banned from ever selling or assigning this alleged debt to another collector, as that would be another violation of law by conspiring to harass and extort again, along with other violations of law.

I then go on to quote some samples of collection activity, give them a certain number of days in which to comply with my demand for validation and usually put in a limited cease and desist.  Sometimes I add some more case law to back up my requirements for validation.  I also usually put in there that I am not requesting verification but am demanding validation pursuant to the FDCPA 15 USC 1692g Sec. 809 (b).  Then I end it with a Sincerely, and my client's name.

So, don't be afraid to send another letter challenging their arrogance and deception.  You don't have to be sweet and nice, because, when are they?  And why would you be nice to law breakers?  I don't care if the original debt was actually yours. It doesn't matter anymore.  You don't owe it to the original creditor anymore because they charged it off and got tax credits, got reimbursed from the insurance that they had on it, and they made profit by selling it.  They made money 3 times just in those ways, but they also made money from every dime you paid on it since it was created out of thin air and they never actually lent any real money to you in the first place.

So, fight, fight, fight, and challenge, dispute and challenge some more.  Its your legal right and like I always say,  "just like when you're a defendant in court, the burden of proof is not on you, it is on them."  Make them prove it.  Oh, one last thing.  They can't legally prove it!  If you want to know why, read some of my other posts regarding AmJur and "Subrogation."  You will be pleased with what you learn!

If you have any questions or comments, please hit the comment button below. (I love questions and comments).   I will respond to you.  If you have questions that you don't want to post on here, you can email me.  The link to that is up at the top right of this blog!

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