Removing 3rd Party Collections From Your Credit Report

The most common negative credit that I see on credit reports are "collection" accounts.  If you have them, you are part of the majority.  There are a number of reasons to get them off of your credit. First, they're bad.  Who wants bad stuff on their credit report?  But here's a few other reasons: 

• They lower your FICO score
• If you pay them, they are still bad
• If you don't pay them and try to get a mortgage, you will have to pay them
• If you refinance your house, escrow will take part of the money and pay them
• Your interest rates on new credit, auto loans, house loans, refi's, etc. will be higher
• And the most important one in my opinion -- YOU DON"T OWE THEM ANYTHING!!

One of the problems with collections is if they can't collect from you, they leave bad and negative information on your credit report, but then they sell it to another collection company and the harassment and negative reporting on your credit report starts again.  They ding your credit with non-permissible pull inquiries, then they go and claim you have an outstanding debt with them and drop your FICO score some more.  Some will even sue you.  You need to get them OFF!

It starts with Validation.  If and when you receive a letter from a collection agency, you need to respond right away.  Write a letter to them, preferably within 30 days, disputing the alleged debt.  Tell them you are not asking them to Verify (as in name, address, etc.) being correct. You are challenging the validity of the alleged debt and they need to send proof that you owe them.  Send your letter to them certified mail with return receipt.  It costs you about $5 - $6 bucks but its worth it.

If you did not receive a letter from the collection agency and you found out about it because you saw it on your credit report, when you write the letter, tell them that you have received a recent copy of your credit report and were stunned to find out that they have put false information on it.  Then you follow through with demanding validation and that you're not requesting verification.  The credit report should have their contact information on it - mailing address, not phone number.  You NEVER want to talk to them on the phone.  They are trained to intimidate, pressure you, get money out of you, get you to admit something, any and everything they can, and intend to and usually do, control the conversation.  You do NOT want this scenario.  Stay off the phone and keep all communications in writing.

After you get the green card back from your certified letter, now you can dispute with the credit bureaus.  Collectors are not allowed to verify with credit bureaus until they provide validation.  Remember, validation means proof, real proof that you owe them.  Proof is not some bill or computer generated statement with your name and their account number on it.  Proof is an actual contract between you and them, that you actually signed and they actually signed.  It is documentation of monies given to you with an accounting of every cent used, every cent paid, every bit of interest applied, and the date any of those events occurred.  

They may claim you had an original account with some other party and they have been assigned the right to collect it.  They need proof of everything about that as well. They need the original contract between you and the original creditor with your true signature and a qualified employee of that original creditor, they need the full accounting, they need to provide proof of the assignment or the purchase they made from the original creditor.  

I really need to make a comment here about original creditor information requested from a 3rd party collector.  I mainly ask for it just to force them to do some work.  Personally, I don't give a rip if they can provide it or not.  If not, they go away a bit faster, but since they are not on the original contract you allegedly signed with the original creditor, they have nothing and you owe nothing.  3rd party collectors are NOT ON ORIGINAL CREDITOR CONTRACTS!  Therefore, you OWE THEM NOTHING, NADA, ZERO, ZIP, ZILCH!

Remember this and quote this when they try to claim they have rights to collect:
The right of subrogation does not exist for a stranger to the transaction.  73 AmJur 2nd, Section 90.  

Now I will explain this in common, easy to understand language. "Subrogation" means to substitute. "Does not exist" means is not allowed. "Stranger to the transaction" means someone or some entity not on the original contract.  So, here we go again in easy to understand wording:
There is no right to substitute someone or some entity that was not on an original contract. It is not allowed. 
 Now, this includes attempts to collect based on assignment, sale/purchase, or trade.  See?  The collector cannot substitute himself to collect money because he believes he was assigned the task or he purchased the bad debt, or traded some bad debt for a different bad debt.

Now, in order to get the bad or negative credit off your credit report, you have to dispute with the bureaus.  I generally don't recommend saying "its not mine" because you want to save that one for a last resort and if you do, they'll usually put fraud alerts on and want you to provide some identity theft stuff to them.  However, you can say it in a way that gets the same message across.  You can say, "I have never done business with this company and I have no idea who this company is."  You can almost always find plenty of other errors in the way they report as well.  They usually say you have late payments or your date of last activity was prior to the account being open.  An account has to be open before you can be late on it -- common sense there! Challenge dates, challenge amounts, challenge the account number, but only challenge 1 error at a time.  If you keep challenging the same thing or things with every dispute, they will send you the dreaded "frivolous" letter and refuse to re-investigate. 

If the collection company obeys the law, they will not verify with the credit bureaus because they haven't provided validation.  That is the best possible scenario.  It happens many times.  But, there are also many times that they just ignore the law and verify again.  You will need to send follow up letters to the collectors and follow up letters (repeated disputes) to the bureaus if they don't come off right away.  Don't expect them to come right off, right away because they are all scum.  Expect to fight. Expect to have to wear them down. But, be pleasantly surprised and proud of yourself for fighting back when they do come off.  Its a wonderful feeling and a beautiful sight!

If there is more information you need me to delve into on this subject, please leave me a comment below.  I will get it and I will respond.  I may even write a whole new post addressing your questions or different situations you need help with.  If someone posts a comment and you have a similar question, please add your comment too.  I want to be able to help as many people as I can.

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.   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 Long Does It Take To Fix My Credit?

This is a question I get asked quite often. There is no way to put a date or time period to it. There is a general time line that you can expect, but you see, you are not in control of how soon or how long it takes for the credit bureaus or collectors/creditors to respond to your dispute.

So, here I want to explain a basic time line to give you a general idea.

• You get your credit report - same day usually, unless you request it by mail from the bureaus, then expect 15 - 30 days.
• Review and highlight the negatives on your report. Categorize them into collections, charge offs, and judicial. Usually, collections are 3rd party collectors, charge offs should be original creditors, and judicial will be tax liens, bk's, judgments, etc. Write their correspondence address on your list as you will be using this on your letters and for mailing. This can be done the same day you get your credit report, so you are still at 1 day.
• Start writing letters. You will write one type of letter demanding validation from the 3rd party collectors. You will write a different type of letter to original creditors. Now, you can demand validation from them, or if its something simple like 1 or several late pays, you can be specific and just tell them you want to validate the late pays because you don't recall ever being late. Then you request for them to remove the late pays from your report. Many times they do just that. Instead of the hassle of validating, they just remove them, especially if they are old.
• For the judicial entries, guess what? You can actually demand validation for those baddies! The thing is, courts don't verify or validate, so I would be shocked to hear that someone got validation back from the court. Tax liens are a different story though. Those would be disputed with the IRS. You would demand validation the same as you would of a 3rd party collector. That is what they are. The IRS is a collector and not a government agency. They've done a good job at fooling everyone, haven't they! Writing the letters can take you anywhere from a few hours to 2 days at most. So, I would say, you are now on Day 2.
• Now that you've finished the letters, you will need to mail them. These letters need to go CMRR (Certified Mail, Return Receipt). So, some time before you start your credit repair, or after, just trying to cut time here, pick up some green cards and green and white certified mailing supplies from the post office. They are free! It should take you no more than an hour to get everything addressed - envelope, green card and receipt, and ready to go to the post office. You do need to go to the post office to mail these. Cost is under $6 a letter. Okay, that is still day 2.
• Collectors and creditors will have 30 days to respond to your dispute. But, you should receive your green cards back within a week - 2 weeks, tops.
• Next step is to write your letters of disputes to the credit bureaus. These do not go out before you get the green cards back. You must wait till you get those first. 1 letter to each Experian, TransUnion, and Equifax. You can dispute every item on each one at the same time. But, DO NOT DISPUTE THE BK AT THIS TIME!!! So, getting the letters written, envelopes addressed and mailed, 1 day. You're up to about 2 weeks.
• The credit bureaus are to respond to your dispute in 30 days. So, the time line now is about 45 days 

You should see a little improvement at this time. You will repeat this process again and again, to get things off your credit. Each dispute with the credit bureaus needs to attack the negative item differently so that they don't label it frivolous and stop the process for 6 months.

The disputing process is a little more detailed than what I've given here because I'm just giving general info, but figure a 30 - 45 day cycle for each round of disputes till you get most or all of the items off.  Expect 2 to 3 rounds at the least and more like 6 -12 months, sometimes longer when there are BK's and things like that.

If you have any questions, please feel free to comment below or email me. I'll respond as soon as possible, usually within a day or two, many times, the same day!

Collections, Charge Off Required to Approve Short Sale - Part 1

If you are trying to sell  your home as a short sale and waiting for an approval from a lender, you may get a condition from at least one of them saying that they will approve the short sale but you agree that they will charge off the remaining balance and submit that amount to 3rd party collectors because you are still going to be held liable for what you didn't pay off.  Pretty crappy since the banks got multiple bailouts already.  They are so greedy. 

I have encountered this situation with 2 of my listings already and I'm expecting it with all the new short sale listings I put under contract.  This can be very frustrating for the seller and scary, because, there's already a hardship trying to pay that mortgage. So to be out of a house and still have to pay the dang thing is just ridiculous and unfair. 

I know there are a lot of folks out there that like to say that everyone is responsible to pay their debts.  I only half heartedly agree with that.  I agree when it comes to real services you've received, but I don't when it comes to credit cards and bank loans.

I've stated before in other posts that banks do not lend you their money. They are creating the money and credit out of thin air by monetizing your signature.  This is the first reason I don't agree with having to pay them back, because your signature funded the loan.

When it comes to credit cards, the second reason I don't agree to paying them back is because it is a unilateral contract which is null and void. This is according to the constitution. A unilateral contract means that only 1 party is at risk, and you can bet your last pair of underwear that it ain't the bank or finance company that has the risk. They didn't fund the credit, they have nothing to lose. Your signature did and your peace of mind, wallet and credit standing is at risk. In order to be a valid contract, all parties to the contract have to carry risk. Therefore, a unilateral contract is void and unenforceable.

So how does this relate to what banks are doing to short sellers?  Well, I said it's not fair because they got bailouts and should pass the good will on. Heck, we're funding their bailouts already. But, do you say fine, just foreclose then, because then you can't come after me with collections or do you sign that grimy piece of paper?

I have told my clients that they should go ahead and sign the paper. A short sale is much better on your credit than a foreclosure. Plus, that balance is going where you want it to - to a collection firm. Now, you should know by now that that collector is going to get a file for this account so they can use it against you, report to the bureaus against you and start with the harassing phone calls and letters. 

Why is this a good thing? Because the file they get does not have every thing they need to validate the account when you challenge it.  This means that you will be able to remove that collection account from your credit and get them off your back.  This means that you can start racking up violations against them and if you decide to play the game on your terms, you can make some money.

Collectors violate the law, that's a given. Use the FDCPA and FCRA to track the violations. Most are worth a thousand bucks each. When they rack up enough to satisfy you, you can either use it as a bartering chip or sue them and pocket the winnings. Either way, you will get it off your credit report.

See part 2 for how to beat them in their game!