Fighting Collections - They Are All Fraudulent!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Have You Just Been Served By A Debt Collector?

Have you just been served a summons notifying you that a 3^rd party collector is suing you?  You need to act fast.

Most states' courts give you 20 – 30 days to file a response with the court. After that time has passed with no answer from you, the debt collector can motion for a default judgment – and be granted that default judgment!     

     

Fight Back!  You don’t owe a 3^rd party debt collector squat! You have no contract with them but if you don’t take action, they can, by your silence, have that court order a contract with you by way of a default judgment.  “Silence equals Agreement!” Don’t remain silent!

I can help you fight back.  You can’t beat them if you do nothing.  I know it’s scary, intimidating, and stressful. Sometimes you feel like you don’t know what to do or say, and you feel defeated.  That’s what they want you to think and feel.  If you fight back, you can win!  I want to help you win!

Contact me today. I fight better than most any lawyer will fight for you and I’m much cheaper too. I’m not interested in telling you to settle with them or file bankruptcy.  I fight to win! I have a 100% success rate. The law doesn’t allow anyone, including an attorney, to guarantee you will win, and I'm not guaranteeing that either, but I have a track record. I fight with laws and affirmative defenses and powerful discovery requests that so far, have yielded dismissals for my clients.

Don’t let these collectors win without even putting up a smidgen of a fight. Don’t let them smear your credit, get in a position to garnish your wages or put a lien on your bank account or other property. Contact me today.  Let’s beat them together!

Email me at futurefico@gmail.com or call me at 951-801-2828

Disclosure:  I am not an attorney.  I don't think that slow or stoop that low. I have however gone up against many debt collection attorneys and my paperwork prevails while they stand by, whine, stomp their feet and wail because they did not win. 

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. 

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.

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.

Removing Default Judgments From Credit Reports & Public Records

Have you ever gone and applied for credit or pulled your credit to qualify to buy a car or house and the finance manager or loan officer tells you that you  have to take care of a judgment in order to qualify and you say, "What judgment?"  I hear it quite a bit. This usually happens because you got sued and never were properly served. I see this happening a lot to people who have been sued by 3rd party debt collectors.

If you've read much of my blog, you know that I absolutely loathe debt collectors. These companies are the scum of the earth.  They have no business meddling in your life. They play dirty, violate the law, and should never get a dime from any consumer.  What is really rotten is when they sue you.  They file a lot of lawsuits because they know that most consumers will not fight back and they get default judgments.  If they think you might be a fighter, or they just don't want to take the chance of that, many times they will improperly serve you a summons and complaint or not even serve you at all. If you don't know about the lawsuit, you won't fight it and they'll win by default.

Courts do NOT furnish these judgments, or any judgments for that matter, to your credit reports. They don't verify them with the credit bureaus either when you dispute them.  These are furnished to the bureaus by data diggers. They scour the public records to find new public records and I believe they are paid to furnish them to the credit bureaus.  These data diggers are considered "Vendors" by or to the credit bureaus and they are the ones who both furnish and verify the disputes with the credit bureaus.

This really pisses me off because they are not qualified to do either of these things and when you demand that the bureaus give you the contact information for the person who verified, they lie and give you the court's address and contact info and never expose the true furnisher of the information nor who claims to have verified the information.  I say that they are not qualified because in order to verify something, you have to have first hand knowledge and the full documentation to back it up. They have neither.

But let's talk about how you remove them. Before I explain the following process, let me state that paying off a judgment does not make it come off your credit report. When you are repairing your credit, you will dispute the judgment with the credit bureaus.  You need to give a specific error.  You can say things like, I have never had a valid judgment for $xxx.  Or, I didn't lose any lawsuit on 1/1/01 or whatever date they are reporting.  You need to spin it if it looks sort of accurate.  You can challenge the court location, dates, amounts, plaintiff, missing information, inaccurate information, even the age being obsolete if its too old to even be on a credit report. You must be VERY CAREFUL not to admit anything about the judgment.  Use "I don't recall..." if you have to but don't even hint at admitting to it.

At the same time you are disputing with the bureaus, send a letter off to the court requesting their method of furnishing information and verifying information with the credit bureaus.  Do not get specific. Do not include your social security number. Do not include any case numbers. Do not reference ANY specific case.  You are only inquiring about whether or not they furnish information and verify information with the credit bureaus.  Make sure you include a self addressed stamped envelope so that they can send you a response quickly.

You should have the response from the court back before you even get your bureau responses back. This is most of the time.  Sometimes courts fail to respond.  When this happens, I think that there's a clerk or court employee that is intentionally trying to make it difficult for you to remove your public record items because they believe you deserve it.  I'm just very suspicious of them like that. I like to see the good in people but I've seen so much that I just have a hard time giving them the benefit of the doubt.  Anyhow, hopefully they will answer your inquiry properly so that you will have some good ammunition for your next round of bureau disputes.

Hopefully your bureau disputes will come back showing that the judgment has been deleted.  But if it comes back as "Verified", you will need to do another round.  This time, your dispute will be, you told me to contact the court regarding the verification of this item. Please see the attached letter I received from the court when I did as you told me to do. They had nothing to do with this information and they certainly didn't verify it.  Please either give me the contact information of the liars who claimed to have verified this or delete it.  Make sure you have attached a copy of the letter from the court and you can also include an FTC staff opinion letter that I use and highlight, that states bureaus are allowing inaccurate public record information on credit reports.

This time, your bureau responses should come back showing the judgment deleted.  But, sometimes they do, sometimes they don't. Bureaus will occasionally claim they can't use the supporting documentation that you sent with your dispute and its still verified.  Even though the correct and lawful response would be that it has been deleted, unfortunately, bureaus are big lawbreakers too.

We are moving on now to the next section. Whether or not you removed your judgment from the credit report it will still be in the public records.  If you are buying or selling property, when they do a Title search, they will find this judgment and underwriting for your mortgage may require that you pay it off as will escrow for sellers to be able to close.  Credit repair does NOT remove the judgments from public records.  But, getting the judgment vacated with the court sure does!

Now, this is good for everyone who hasn't been able to get it off the credit reports.  I also want to reiterate that this is ONLY FOR DEFAULT JUDGMENTS!  Removing a judgment from a public record should cause your next dispute to the bureaus to finally delete it off your credit reports.

DISCLAIMER:  THIS IS NOT LEGAL ADVISE!! THIS IS "HOW TO" INFORMATION BASED ON MY OPINIONS, MY EXPERIENCES, RESULTS FROM PUTTING IT INTO PRACTICE AND MY KNOWLEDGE GAINED FROM RESEARCH AND PRACTICAL APPLICATION RESULTING IN CONSISTENT SUCCESSES ONLY. I AM NOT CLAIMING TO BE A BAR ATTORNEY. (I refuse to stoop to that level or be insulted to that degree).

You will need to get the judgment vacated at the court level. This means you will need to file a Motion to Vacate and Set Aside the judgment, and Motion to Stay the Execution of the judgment. You will also need an Answer to the lawsuit which will be entered as an attachment to your Motion to Vacate.

Court rules vary from state to state and county to county. Sometimes courts have rules specific to that court.  There are 2 arguments that can be raised to get a judgment vacated.  The first one is the one most often used and pretty much the only one that an attorney would use. It is a Motion to Vacate for Lack of or Improper Service.  What this means is that you weren't served at all or they didn't serve you properly.  They may have served the wrong address. But for whatever reason, you were not timely and properly notified that you were being sued.  There is also an argument to be made that you were in the hospital at that time or out of the state/country, and didn't get served properly.  They may have done what is called "Substituted Service" because they weren't able to serve you personally.

You will need to pull the full case file and buy a copy of everything in that file. You will want to see the Summons and Complaint (sometimes called a Warrant of Debt), the proof of service, any affidavits that were included, and anything else in that file.  You will be using these items and the information they contain, especially in their Complaint, which has "Causes of Action" to form your defense for both your motions and your Answer.

Remember I talked about court rules?  Well, its very common to see a deadline to file a Motion to Vacate within 6 months of discovering that you had a judgment.  So, when you find out about it and you want to use this defense, you will usually need to get your motion filed into the court and served upon that plaintiff within 6 months.

Now the 2nd argument that can be raised to be granted a Motion to Vacate, and again, this is ONLY for DEFAULT judgments, is the court's lack of Jurisdiction. A default judgment is considered a "Void" judgment and it can be challenged AT ANY TIME - There is NO Statute of Limitations to challenge a default judgment.  The court lacks jurisdiction because there are 4 requires items for every case.  A Plaintiff; A Defendant (Whoops, that was missing); Subject Matter; and A Competent Witness.  

When the court grants a default judgment, there was No Defendant. That means the court lacked Personal Jurisdiction.  If when you pull the file you find that the Plaintiff didn't include an affidavit from a "Competent Witness" (one who has first hand knowledge and is qualified to testify - not hearsay!), then the court also had no Subject Matter Jurisdiction.  Also, subject matter jurisdiction can be challenged at any time and the case cannot move forward until the PLAINTIFF establishes, proves it.

Here is the beauty of vacating default judgments, especially when using the argument of the court's lack of jurisdiction. As I stated, default judgments are Void judgments and can be challenged at any time with NO statute of limitations.  What this means is that if you look at the Date of Last Activity for the original account, and had there not been a judgment it would now be outside that Statute of Limitations for debt, once that judgment is vacated, that debt is now considered Time-Barred and they can't come back and sue you again!  While a judgment is active, they can pursue payment until the statute of limitations for judgments expires.

So keep in mind these Statutes of Limitations:

State statute of limitations on debt is based on the Date of Last Activity (when you last made a payment.

State statute of limitations for judgments - based off the date of judgment and runs for usually at least 10 years but it varies by state.

Statute of Limitations for vacating a Default Judgment - ABSOLUTELY NONE!

So the moral of the story here is, be excited for default judgments. If you get sued, even served properly, but are not prepared to fight and doubt you could win (you probably could if you knew how to fight it properly), don't be afraid to get that default judgment.  You have the ability to reopen the case when you are ready. vacate it, and if you can hold off the vultures trying to collect on that judgment until the debt statute of limitations has passed, you can totally get rid of it from the public records as well as your credit reports.  

Oh, PS.  It is much more wise to vacate a judgment than to file a bankruptcy to get out of paying off a judgment.  Filing a BK will add 10 more years of crap credit to your credit reports and they are a pain in the butt to remove. Save those BK filings for emergencies such as one of your strategies for avoiding foreclosure. By the way, if you are facing foreclosure and want to fight, you can contact me for a referral to a friend of mine who is massively successful, its what he does for a living, and just so you know that he knows what he's doing, he's been in his house now without making a payment for over 11 years. 

If you would like someone to help you remove your judgments from your credit reports, I can help you with that. Though it is illegal to guarantee results, my partner and I do use an escalated and proprietary process that generally removes them in approximately 30 days and we have a 100% success rate.  I would love to help you remove your judgments, your tax liens, your collections, etc. and help you raise your scores so you can have that fresh start you so deserve! You can find my contact information on the top right of this blog. Both my email and phone number are there for you to reach out to me.

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.

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.

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.

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