DON'T BLINDLY ACCEPT A CREDITOR OR COLLECTOR'S CLAIM OF VERIFICATION

 Have you been disputing with your creditors and collection agencies to correct their records and information they furnish to the credit reporting agencies only to receive a response that they have verified their records and the information will remain the same, with the bonus of a dispute comment being added?

Did they validate or prove their claim? In order to do that, they need to send the documentation to substantiate the correctness of the information they hold on you. Did they send that? Probably not. The most you usually get will be several months, possibly years of billing statements. Maybe part of a contract. Well, you won't get that from 3rd party collectors in most cases because they have no contract with you.  They may some portion of a contract from the alleged original creditor but not any with them.

So what do billing statements prove? Not a contract, nor a valid contract. They don't represent a full accounting. They don't represent anything you should be asking them to provide. Sometimes in my letters I specifically tell them NOT to send any billing statements because they don't prove anything I need to support their claim. They either don't read or don't give a rip because that's the most common thing I get other than a letter with a hearsay statement that their info is right.

So, they really don't prove their claim at all.  How about Verification. Do they actually verify their claim or just say they did because they are so used to lying? What they send you is "hearsay." I'll touch again on that in a moment but let's explore "Verification." 

I'm going to start with Black's Law Dictionary for a legal definition of Verification. Then I'll show you what the Federal Code defines Verification as being.

 Verification: Black's Law Dictionary "... averment that the party pleading is ready to establish the truth of what he has set forth." "The examination of a writing for the purpose of ascertaining its truth; or a certificate or affidavit that it is true."

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.

It is swearing under oath that you can prove your claims.  When in court, who can testify as a witness?  The answer is, a person with FIRST HAND KNOWLEDGE! 

Now let's see what the Federal Code says is needed for Verification:

28 USC 1746 – UNSWORN VERIFICATION

Wherever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn declaration, verification, certificate, statement, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may, with like force and effect, be supported, evidenced, established, or proved by the unsworn declaration, certificate, verification, or statement, in writing of such person which is subscribed by him, as true under penalty of perjury, and dated, in substantially the following form:

(1)

If executed without the United States: “I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date).

(Signature)”.

(2)

If executed within the United States, its territories, possessions, or commonwealths: “I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on (date).

(Signature)”.

So, I would bet at least 99% of those reading this post that have ever received a response letter from a creditor, collector, or credit bureau claiming the information is verified has received a true verification. They don't dare state anything under Penalty of Perjury. That to me means they know they are lying to you and don't want that verification to be used against them in court.

Now back to hearsay. According to Black's Law Dictionary, verification is sworn testimony. Testimony must be based on one's first hand knowledge. Testimony must be supported by documentation. If you don't provide the documentation, then there's no supported testimony. If you have documentation but no sworn testimony, how do you know if the documents are accurate?  To avoid "hearsay," you need both the documentation AND the testimony.

Here's case law that clearly shows you that what you are receiving from these credit thugs is hearsay, unproven, not validated, and not verified:

“Testimony, whether live or in the form of an affidavit, to the effect that the witness has reviewed a loan file and that the loan file shows that the debtor is in default is hearsay and incompetent; rather, the records must be introduced after a proper foundation is provided.” New England Savings Bank v. Bedford Realty Corp., 238 Conn. 745, 680 A.2d 301, 308-09 (1996), later opinion, 246 Conn. 594, 717 A.2d 713 (1998); Cole Taylor Bank v. Corrigan, supra, 230 Ill.App.3d 122, 595 N.E.2d 177, 181 (2d Dist. 1992).

“It is the business records that constitute the evidence, not the testimony of the witness referring to them.” (In re A.B., 308 Ill.App. 3d 227, 719 N.E.2d 348 (2d Dist. 1999)

I like to tell these credit and collection companies that they forgot to provide the verification and forgot to provide the documentation they claim is accurate with their response, and therefore they haven't proven diddly squat. 

What you can take from this post is that they don't prove their claims, They don't validate, they don't verify. They lie, they slander you on your credit reports and you need to reject their claim until they provide the documented proof you are entitled to receive along with the sworn or unsworn verification, signed and dated under Penalty of Perjury. That's what the law says they need to do. That's what the courts have upheld that they need to do. You need to be stubborn on this. Keep all your records and be diligent. Hold your ground and refuse to accept their lies.

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Why Charge Offs Shouldn't Be Paid

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

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

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

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

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

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

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

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

Concord Bank v. Hawkins 174 U.S. 364

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

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

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

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

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

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

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

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

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How To Make Original Creditors Validate An Alleged Debt

Anyone who has studied the art of credit repair for any length of time knows that when you get attacked by a collection company, you fight back by hitting them with a demand for validation.  But that's for 3rd party collectors, not original creditors. In fact, if you send a letter to an original creditor demanding validation, sometimes you'll get a response from them proclaiming they don't have to validate but as a courtesy, they investigated and they are accurately furnishing information.  They do this to make you give up and go away.

However, there is a way to get them to "validate" without calling it validation and they are required to produce it for you.  Remember a while back, for those of you who have read through my blog posts at least a bit, I explained and defined validation and verification. Validation is the PROOF, the documentation that goes hand in hand with verification.  

So, to be able to have the right to demand the proof that they are accurately reporting, first you must dispute the alleged debt or the account with the credit reporting agencies (CRA's).  This is also compliant with FCRA section 623.  Once you have disputed with the CRA's, they have 30 days to investigate and send you the results of their investigation.  They will send you the results of their investigation and usually at least a partially updated credit report showing that the items disputed have been updated, remains, deleted or verified.

If the results are anything other than deleted, (including "updated" but the problem is still there) this is your open door to make them validate the alleged debt.  Now you can write a letter directly to the creditor saying something similar to the following:

Dear whoever,

I have some concerns about this account and the way you are furnishing the information to the credit bureaus. I don't think the information is accurate. (I'm going to give several different things here that might be an issue you'd bring up).  You say this is charged off but then you claim a balance is still owed to you when we both know that charging off an account puts a $0 balance in your books. The lates you are reporting are not correct.  The history you are reporting is so wack there's no way that it is accurate.  There are all sorts of blank fields on my credit report where you should have reported information. That means the information you have furnished is inaccurate and incomplete and the FCRA says you are required to correct the information or delete it.

When I saw how you were reporting information to the credit bureaus I disputed the accuracy.  Now I have the results of their investigation and it shows that you claim to have verified this account. Since you claim to have verified this account (or updated it for the mere act of putting an "in dispute" comment), I now have the right to have you prove you are furnishing accurate information to my credit reports.

Here is what I am now demanding from you:

Please provide copies of the actual documentation you used to "verify" this account with the credit bureaus.  Here is a list of items I need from you.

Then you start listing items like you would with validation demands from collectors except you don't need proof of assignment or bill of sale from the collection agency. Demand the usual stuff like a certified copy of the original contract, full accounting from origination to present, copies of cancelled checks proving late dates, etc.  Here's some fun stuff to ask them to send you: proof they lent you actual money and where did they get that money from since its against the law to lend money from their assets or their depositors' assets, and its definitely against the law to lend credit. 

Oh, oh, how about insurance?  Now you all know that investors always insure against loss of their assets. Creditors are really just investors.  They are allowed to file a claim against asset loss at 90 days of the customer defaulting on their alleged debt. Yes, that insurance claim results in them receiving a check to cover the balance of the alleged debt they claim is owed. That means that the debt has been paid in full. Let's not forget about tax credits, Oh yes, they file a "profit and loss" claim with the IRS because supposedly they lost money when you defaulted.

How convenient of them to quickly forget that they got paid by insurance on that alleged debt which they never really lent any money or credit for. You funded your own line of credit. I know its hard for a lot of people to comprehend AND accept this because its just not something that they ever teach you. Its something that they don't want you to know.  They don't want you to realize that they are the fraudsters that never lend anything, are never really creditors but merely servicers, insurance fraudsters, tax fraudsters, and lying thieves.

Enough of my ramblings about the enemy. The point is that you can demand that they prove you owe that charged off amount. You can demand that they are accurately reporting late payments and that the history showing on your credit reports is correct. You can demand that they delete the information from the credit reports should they not be able to send you the documentation.  If they don't, well they are violating the FCRA.

I wish I could tell you that you can enforce their compliance, but then I'd be a liar. You can try to enforce it, and you can rat them out to the CFPB and the FTC, and the BBB and your Attorney General, and even sue them. But it all comes down to whether they back down and obey the law or just continue being stubborn, arrogant, and outside of the law. I suggest never giving up. Keep going at them, wear them down, keep calling them out, and yes report them to all of the above agencies.  The squeaky wheel does get the grease and whoever gives up first, loses.  Don't give up! Hang in there and win! 

If you are tired and feeling like giving up or you have collections and charge offs on your credit report and would rather have some help instead of doing it yourself, I understand and would love to help you. Feel free to contact me at the email address listed above, just a little below my picture.

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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.

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What Is A Validation Demand Letter?

If you are going to work on repairing your credit, you really need to know what a validation letter is, what is requested/demanded, who it goes to and why you can use this.  Many credit repair companies, and people who work on repairing their credit themselves, don't use the validation letter, and so, are not as successful at improving their credit report.

The law that gives you the right to demand validation is the Fair Debt Collection Practices Act (FDCPA).  It is a federal law.  The exact section of the law that requires them to validate when you request it is 15 USC 1692g Sec.809(b).  This law says:  "If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, 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. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor." 

You will notice that the law uses the word "Verification" but it actually tells them that they have to send you the copy of that Verification - the PROOF, which is the Validation, of the alleged debt.  Now, I know it says the 30 day period in there.  But this is when they obey the law and notify you within the first 5 days of initiating collection activity, that they are going to be trying to squeeze money out of you that doesn't belong to them and you have the right to dispute it.  You will also see that it says "verification of the debt."  You will notice that they don't want to send you the proof of the alleged debt, they only want to verify the name, address, original creditor info and amount, to you.  They don't like you to require them to send proof of the alleged debt because they can't.  They don't have a valid contract with you. 

Now, this law applies to all 3rd party collectors.  It does not apply to original creditors. For original creditors, many states have fair debt collection laws that mirror the FDCPA but also include original creditors.  I just love when my clients are in one of those states.  (I did another post sometime back about disputing with original creditors.  Look for it on my list of posts on the right side bar if you need help with them).  Now, at the end of this post, I'll touch more on this law above and clarify a bit more on it. 

You have the right to demand validation from your alleged collectors.  Most of the time you will know who they are because they report negative credit against you on your credit report.  Occasionally you will just get phone calls and letters in the mail from some obnoxious collection company that you don't see on your credit report.  I should warn you, though they might not be on one of the big 3, TransUnion, Experian, and Equifax, they might be reporting against you on Innovis, another big credit bureau that enjoys a lot of activity from collection agencies, and who hardly ever gets made aware of to unsuspecting consumers like you and me, so they can secretly destroy your credit without too much notice.

Validation is NOT Verification, though many collection companies love to mix the two up.  They do this for their convenience.  Its their little scapegoat method of avoiding the production of validation, which they cannot fully do.  You know when they're pulling this little scam, trying to convince you that they're right, you're not, you have to pay them.  Their response letters to your specific demand for validation will say something to the effect of, "We contacted the original creditor and they verified that the name, address, account number and amount we are reporting is correct." I didn't see the word "Validation" in that statement, did you?

Validation is the production of PROOF! Physical, paper, PROOF! Sometimes its an audio recording, you know, the crap that they insist on doing for "Quality Assurance?'  Validation is producing a contract between you and them.  You should want to see both sides of it, front and back, to prove there were no alterations rendering it void, after you signed it.  An alteration can be any markings, any staple marks, something that changed the piece of paper in any minute way after it was signed.  But, if they are a 3rd party collector, you don't have a contract with them.  They can't produce one because they buy alleged bad debts, they don't originate them.  

3rd party collectors should also prove that they have the right to collect on the alleged debt.  They should show the proof that they purchased it or were assigned it.  There are a number of states that require them to be licensed or bonded or both, to do any collection business there.  In fact, in Illinois, not only do they have to be licensed in the state, they have to be licensed in Chicago for any alleged debts they want to extort, um, attempt to collect on for Chicago residents.

Collectors also should provide validation in the form of a complete transaction history.  Every charge, every payment, every interest charge or other charges and fees for the entire life of the alleged debt.  There are case laws backing this up.  Another big thing that is required for validation is whether or not the alleged debt is Time-Barred.  This means it is outside the Statute of Limitations for your state.  This is a number of years that varies from state to state. It can be as little as 3 years to as long as 15 - which is absolutely ridiculous, I have to add.  This is a great way to make them go away.

I include a lot of things in my letters demanding validation. I tell them I want to see a contract between me and them. I want to see the front and back of it.  I want to see the full accounting and I put case law in there.  I want to see the documentation giving them the right to collect on the alleged debt. If the client is in a state that requires licensing/bonding, I tell them I want to see that. (I actually look them up every time for this, so that I can throw it in their faces if I see they are not, or they have been spanked by that state already).  I tell them I want them to prove that everything they are reporting on the credit reports is 100% accurate. I want them to prove the alleged debt is not outside the statute of limitations for my state.  (When I've checked and it is, I throw that at them too)!

Now, I actually get more intense on my letters.  I tell them they need to prove that they have a valid contract (at least the 4 basic elements) and that the original creditor had a valid contract, (at least the 4 basic elements), and I want to see that original contract, front and back.  I want them to prove there was no fraud committed.  I want them to provide the source of the funds that the original creditor used to actually lend the money that funded the credit.  (Oh, wait!  They don't lend money do they? They lend what is called "Credit Money" and that's illegal!  They create it out of thin air).

Towards the end of the letter I add a "Limited Cease and Desist" and a call to action.  The call to action is to prove it or remove it immediately. Prove it by providing me everything I requested, in writing, and not some cheapo, dummied up computer print out or hearsay typed onto the letter saying "we investigated and yep, we're doing everything accurately and you owe us".  The real deal.  The actual original or copies of the original documentation. 

You should be including most of these things in your letters to the 3rd party collectors. At the very least, they should be providing the contract between you and them, the contract between you and the original creditor, the full accounting, the proof they have the right to collect, proof they are accurately reporting to the bureaus, and proof the alleged debt is within your state's Statute of Limitations.   There are only 2-3 things in this list that they can lawfully provide that they can send you.  They can make claims that they validated fully, but that's a lie.  The only things they can really produce is the original contract (which is not a valid contract because the original creditors ALL commit fraud), their proof that they have the right to collect (which is paper proof for the game of collection but according to 73 AmJur 2nd Ed. Sect. 90, they have no right to collect anyway if they were not on the original valid contract), and whether or not the alleged debt is Time-Barred.

Now back to the FDCPA 15 USC 1692g Sect 809 (b).  This law mentions the 30 day period.  But, what if you are demanding validation after that original 30 day period, does it apply?  Yep, it sure does.  The 30 day period applies to you when they send you the original "Dunning Letter" within 5 days of starting to collect on the alleged account.  But, if you demand validation after that point, the law still applies.  They are required by law to produce the validation or cease collection activity.  Do they have to produce the validation?  Nope, but then, they also cannot resume collection activity until they do.  This law protects you!

Now, when you send out your demand for validation, you need to send it Certified Mail with Return Receipt. Costs a little over $6 for each letter but it is worth it, oh man, is it worth it.  If you get sued and they didn't validate, and you have the proof you demanded it, you can beat them in court.  That is proof of their violation of Federal Law!  Many times you will get a response back saying they will be removing it from all the credit bureaus. Love those!  Sometimes they give other stupid responses letting you know that they would rather continue to violate the law than obey it, because extorting money from people is their game and they don't stop without a fight.

To find out how to respond to them, look at the previous posts I wrote about a month or two ago I think, that tells how to fight back in your follow up letter.  Oh, one more thing, as soon as you get the green card back that proves they received your demand for validation, dispute with the bureaus.  It is against the law for them to verify (its considered collection activity) without first validating.  Many will come off by using this procedure - demand validation first, hit the bureaus with disputes second.  If they verify, they've just broken another law!

If you don't want to have to write all the letters yourself and would like me to help, please email or call me.  I love the game. I love helping you beat them! My email and phone number are up at the top, on the right hand side.  I answer emails and answer my phones.  I write letters for people in all 50 states.  The letters I write are not the junky stuff you find on the internet and they are not the form crap that the biggie credit law firms use to drag out the process (costing you more), and that don't work effectively all the time.  (See my post on credit law firms!)  I write great letters that get results! I'd love to write some for you too!

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!

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