My 3 R's For Disputing 3rd Party Debt Collections

Although I have several articles on this blog dealing with how to fight back against debt collectors, I still get a lot of emails and calls asking for assistance with collections whether it is how to demand validation, how to follow up, is what they got validation, etc.  I don't have time to write letters for everyone that calls and emails me for help.  I can't do that as it wouldn't be fair to my clients that hire me to help.  But, for those of you DIYers, I'll try to answer some questions here and give guidance to help you have more success.

In the credit repair world, we all used to want clients with a bunch of collections to remove.  They were always the easiest derogatory item to address and see success on. But times have changed.  Collection "accounts" are not always easy to remove anymore.  Quite the opposite. These companies have become obstinate, stubborn, still liars, but just defiant really.  They don't validate yet they refuse to remove their slander from reports as quickly as they should.  Some just flat out ignore you or refuse to remove unless you sic the big dogs on them or launch a lawsuit against them.  So I understand the frustration.  Hopefully the following information will help you get even better results.

Let's discuss my 3 R's you need to ALWAYS do with these thugs.  This means you do them with the first correspondence you get from them (Dunning Letter), every response you get from them when you have done a bureau dispute, and every response you get from validation demands and follow up letters you send to them.

1.  RESPOND

You absolutely ALWAYS need to respond to them.  If it's a 30 day initial period in which you can dispute their claim then do it within 30 days. Tell them you are exercising your right to dispute their alleged claim and are demanding validation.  If it is a response from a bureau dispute that says something to the effect of  "We received your dispute from a CRA and have investigated and our records are accurate and blah, blah, blah - we're marking it as disputed" you need to respond. 

If it is in response to a demand for validation and they do not tell you that they are removing it and closing the file, you need to respond. If it is a response to your follow up letter or your response letter, you need to respond. YOU ALWAYS NEED TO RESPOND! If it is a letter claiming that they can't determine the nature of your dispute or that it is frivolous, you need to respond.

2. REJECT

You always need to reject their claim that they validated or verified something.  You always need to reject that their records are accurate. You need to tell them that they failed to send what you requested which means they failed to validate.

Some generic letter saying they investigated and their records are accurate is not validation nor anything close to validation.  It is an unsubstantiated and reckless claim that amounts only to hearsay. They are liars. Are you going to take their word for it without any proof?  I sure wouldn't.

Sending a long detailed medical bill from the original medical facility is not validation. It is a list of services and charges from someone other than them.  That needs to be accompanied by a contract between you and the collection company with your signature and their representative's signature on it.  If they include the admitting form with your signature saying you'll be responsible, well, that was between you and the medical facility, not you and the collection company.

Even if you checked the box that they could share your information and that they might forward it to a collection company, unless the company that is trying to collect is specifically named in the original contract, you are not liable to them.  You have the right to choose who you decide to do business with. It's contract law. Without a contract showing you agreed to do business specifically with that company, they have nothing and you owe them nothing.  Reject that claim!

Sending old billing statements from a credit card company is the same thing. Its not validation. Where is the recorded assignment from the original creditor to them?  How much did they pay for your information? Notice I did not say your debt.  They did NOT purchase any debt. They purchased your information and it usually comes on an excel spreadsheet accompanied by a few of the final billing statements around the time the original account was charged off.  They are missing a big piece of the documentation though.  Where is the contract showing that you agreed to do business with them specifically?  Reject that claim!  Without a valid, bilateral contract (2 signatures, 1 from each party), they do not have a valid claim and they don't have validation.

Whatever a 3rd party collector sends you, no matter if it's a whole stack of stuff, it is NOT validation.  They MUST be able to produce a contract between their collection company and you. That is the vital document that establishes a claim and seals validation. They don't have it! REJECT, REJECT, REJECT THEIR CLAIM.

3. REFUSE

Every contact they make with you telling you that you owe something is an offer to contract with you. Refuse to contract with them.  Tell them you do not do business with collection companies and you don't pay companies that you don't owe. You're not going to start now and you refuse to contract with them.  

Why would you agree to pay someone that you don't owe and that can't prove they have any valid business agreement in place with you? I wouldn't.  Refuse their demand, refuse to contract with them. Again, everything is contract law.  In fact, when they claim they have a valid contract because they purchased the account with all rights of assignment and interest, you need to reject that immediately and throw 73 AmJur 2nd, sections 90 and 93 in their face.  This is Supreme Court case law!  

73 AmJur 2nd, Sections 90 and 93 state that they cannot substitute onto a contract unless they have an interest to protect.  That means that they have to be clearly and specifically named on the original contract to have an interest to protect.  Further, it states that they are a "Stranger to the transaction" and a "mere volunteer."  It is saying that you don't owe them.  They do not qualify for subrogation, which is substitution, under the Doctrine of Subrogation.  They are not qualified.  Don't go and agree to pay them anything. Instead, be very clear and Refuse to Contract with them.

3rd party collectors have no valid claim against you.  They have no contract with you. They cannot truly validate their claim. They have no interest to protect. They didn't buy any debt from any company, they only bought account information about you without your knowledge and without your consent and definitely without any business agreement in place requested by you.  That is the only way that they can substitute onto a contract they have no interest to protect, is by you requesting their assistance to pay off the alleged debt and you would then agree to be responsible to them. CONTRACT LAW!  It is what you have protecting you.

So, always respond, always reject their claims of owing them something and false claims of validation/verification, and always refuse to contract with them.  

If you are tired of dealing with these liars, thieves, scum sucking, extortionists called 3rd party collectors and debt buyers and are tired of the back and forth fight you have to stay on top of, I would love to assist you in the fight.  My partner and I have been at this successfully for 50 years combined.  In fact, this month I am celebrating my 30th year in the industry. I love the fight and am passionate about helping others get rid of the bad credit that is holding them back.  I get tons of emails about how my assistance has helped people get jobs, buy homes, cars, and start over.  I would love the opportunity to help you too!

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 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.

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.

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.

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.

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Validation Vs. Verification ~ Defeating the Chaudhry Claim of Debt Collectors

I have not written anything lately because for one, I have been very busy but the second reason is because sometimes I just don't know what would be a good topic to cover.  However, I'm working on a couple lawsuits for clients right now and today, my client sent me the plaintiff's response to her Motion to Dismiss.  The whole entire thing looks like it was put together by an intern with no experience writing briefs or no consistency of thought. Its like they decided to whine that nothing was relevant so boohoo, the court should not grant her motion.  They threw all kinds of stuff into their response, and as I have been researching, I came across a website that had one whole section that was word for word verbatim of one of the points in their response.  Can you say "copy/paste"?  So lame!

Anyhow, the one thing that jumped out at me is the forever favorite fall back case law that they quote, Chaudhry v. Gallerizzo.  Now, I have written about this case law and how to throw other case law back in the collection agency's face.  But here's the problem.  Our court system has what are called "Circuit courts" and they represent sections of the country.  I'm in the 9th Circuit designation.  Unfortunately, many of these circuit courts have upheld the Chaudhry decision for collection lawsuits so you need to know how to fight back.

The Chaudhry case upheld a very minimum standard for Verification.  But, you shouldn't be sending a "Verification" letter to collectors.  Verification is what credit bureaus do.  You send collectors "Validation" letters.  Though it may seem that verification and validation are the same thing, they are NOT!  Collectors love to use the word interchangeably but we need to stand firm on this.  Validation is the Proof. Verification according to the Chaudhry decision, is making sure they have the right person.  They only have to provide you with the Original creditor name, account number, dates, amount owed to supposedly prove that they are attempting to collect from the correct person.   They claim that they don't have to provide detailed records.  They may get away with that explanation during the dispute process, and they might get away with it in court, but not if you know more about Verification and Validation.

The best way I think to explain this so you can beat these lying vultures, is to bring legal resources into the argument.  You start with defining the two words.  Now, I look through many different legal dictionaries that would have some standing in court. You want to build a case against the collector through the dispute process so that you have this folder full of a documented paper trail where you have taken it to them and they continue to violate the law.  That way, when you've had enough, you have the ammunition to sue them, or you have the case built to defend yourself if they take you to court first. Hopefully, there won't have to be any litigation and you can get rid of them by showing them how they will fail if it goes to court.

Validation according to Black's Law Dictionary is "Assessing an action to determine it is complete, correct, implemented and delivering the correct outcome." I actually like the definition given by the Oxford Dictionaries better.  To "Validate" means "to check or prove the validity or accuracy of something" and "Validation" is a derivative of the word "Validate."  Now, did you notice that it means to "PROVE" the accuracy?  This is important.  My favorite definition that is very clear comes from Merriam-Webster, which says "to show the existence or truth of, by evidence." Remember this while I give you the definition of "Verify."

Verification according to Black's Law Dictionary is "... averment that the party pleading is ready to establish the truth of what he has set forth." Also, it goes on to say, "The examination of a writing for the purpose of ascertaining its truth; or a certificate or affidavit that it is true." Now, it also gives some case law and you will see how these collectors fall short.  The court said "Confirmation of the correctness, truth, or authenticity of a pleading, account, or other paper, by an affidavit, oath, or deposition." McDonald v. Rosengarten, 134 111. 126, 25 N. E. ; and Summerfield v. Phoenix Assur. Co. (C. C-) 65 Fed. 296; and Patterson v. Brooklyn, 6 App. Div. 127, 40 N.Y. Supp. 581.

Did you catch what these definitions are saying?  Its saying that "Validation" is the documented proof. Its not just "yeah, we have the right person and here's what you owe and who the original creditor is that you incurred the debt with." Oh, no.  Not even close!  Validation is the PROOF!!!  Don't forget that.  You demand validation, you demand proof.  You are not demanding hearsay, which is what they give you. Hang on to this stuff. Its powerful and important.  I'm so not done destroying their claim of "verification" yet.

Okay, let's tear apart their claim of "Verification."  Did you notice that not just in the definition, but in the supporting case law, that "verification" is them attesting to or certifying or confirming that their claims are true and they can prove it in court?  That's what verification is.  It is swearing under oath that you can prove your claims.  I'm going to break this down for you even more.  When in court, who can testify as a witness?  The answer is, a person with FIRST HAND KNOWLEDGE!  They saw something for themselves, they had the conversation, they were a party to whatever situation, etc.  If they do not have first hand knowledge and try to testify that they heard that the defendant told the other person something or the company claimed that the defendant ran up the debt---STOP RIGHT THERE!  That's HEARSAY and not allowed in court.  Its not evidence of squat!

Oh but there's so much more regarding verification.  A 3rd party collector CANNOT themselves verify any alleged debt.  Why? Look at the last couple paragraphs above.  They were not on the original contract. They were not a party to the original transaction.  They were not personally involved from the get go nor were they employees of the original creditor nor did they ever personally handle the alleged account when it was with the original creditor.  All they can provide is "Hearsay."   Now let's look at what the FDCPA says about verification.  I'm tying this all together and you will see very soon how you can whip their butts with this stuff.

The FDCPA regarding "Verification" and "Validation" of debts is found in 1692g. I'm going to show you how they do not verify nor validate when you demand validation. It is found in (b) of 1692g.  Here's a portion of that which is very important. It says, "...the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, AND a copy of such verification or judgment or name and address of the original creditor, is mailed to the consumer by the debt collector."  I capitalized the "AND" for emphasis.  They have to send you a copy of the verification.  What is verification again?  It is swearing under oath that they can provide the proof.  How many times have you received a response from a 3rd party collector that has the name of the original creditor, amount of debt, relevant dates, etc. accompanied by a notarized statement from the original creditor "verifying" that they have the proof and are willing and able to testify with first hand knowledge that the 3rd party's claim are valid?  I'm willing to bet that 99.99% of you will say "NEVER!!"

They don't send a statement from the original creditor, sworn under oath, by someone authorized, willing and able to testify in court. That means, they never truly verify the alleged debt. When they send copies of statements, computer printouts, letters claiming they consulted with the original creditor or checked their records, they send you the name, address, amount, etc., but no notarized statement from the original creditor, remember this:  They have not validated, they have not verified, they have failed.  

So they can throw the Chaudhry v. Gallerizzo case at you all they want. They can throw other case law at you like Graziano v. Harrison claiming that computer printouts are sufficient. But, if they lack true verification, a notarized statement by a qualified representative of the original creditor that they attest to the validity of the alleged debt and will testify as much with the documentation, in court, they have failed at validation. They have failed at verification. They have not qualified their claim to allow them to resume or continue collection activity in accordance with the FDCPA.  

That's how you shoot down their bs. That's how you take it to them in your disputes and in your lawsuits, whether initiated by them or you. That's how you should win!

I'd love to hear from you.  If you have questions, email me or call me. If you don't want to repair your credit by yourself, I'd love to help you. Again email me or call me.  My information is up at the top on the right hand side. If you loved this information and it helps you, please leave a comment below.  I don't allow spam with links to porn sites or substandard credit repair sites to post.  But, I love legitimate comments and recommendations for more credit repair topics you'd like me to cover.  Those will be approved right away.

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.