Widespread medical debts

Another survey conducted by UPI found out that most of the U.S. citizens are aware of at least a single person struggling with medical debts. Approximately one in seven people has someone living in the house with medical debt. The number of people having distant relatives with debts is likely to be significantly higher. These long-term medical debts can be mostly found in people that earn less than $40,000 every year. Around 28% of these households carry medical debt in comparison with 6% of households earning $1, 00,000 every year.

Fewer resources for covering the emergency

Various respondents to the survey lacked confidence in their capability to cover for medical emergencies. More than 25% of people admitted that they will be forced to borrow from someone to pay a medical bill of $500 and above. Others said that they will pay for medical expenses by using a credit card and carry the debts. Florida residents must develop an emergency fund just because of these reasons. Several people having insurance carry massive deductibles in the excess of $5000 in several cases. Therefore people need a lot of resources to cover for medical emergencies without getting a loan.

Nothing to fear in medical bankruptcy

When you have medical bills that cannot be paid there is only one option that the hospitals will tell you about and that is medical bankruptcy. You will need to file for chapter 7 protection that can eliminate all the medical debts. But, keep in mind that you can file for chapter 7 just once every 8 years. It means that you must not file for chapter 7 until you are finished with the necessary medical treatment. Most fears about medical emergencies are mostly overblown as found out by several people. Rebuilding your credit may take a lot of time but it is something many people have achieved. With the years rolling by the negative effects of medical bankruptcy start to reduce and it becomes to get car loans or other kinds of loans. Many such people have received offers for personal loans and credit cards immediately after filing for a medical emergency.

Implications of COVID-19 pandemic

With a sharp rise in healthcare costs in the U.S., the problems faced by Americans before the COVID-19 pandemic has only become compounded as newer challenges are being presented by the pandemic. During recent months 14% of U.S. citizens having COVID-19 symptoms have reported that they are avoiding the necessary health care due to the costs involved. More than 80% of the people expressed concern about rising drug costs because of the coronavirus pandemic.

The bankruptcy attorneys working at the Weller Legal Group have helped many clients in the Clearwater, FL area to eliminate debt and take charge of their lives. You can also confidentially discuss your problem. Call them now to schedule a consultation regarding medical bankruptcy.

Picture Credit: Pexels

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Flying strong in the credit risk assessment industry with competitors like TransUnion and Experian, in mid-late 2017, Equifax ran into a bit of turbulence when it was hacked and exploited by an unknown party, exposing approximately one-hundred fifty million Americans’ sensitive data, including things like social security numbers, full names and drivers license information. To this day, it remains unknown where the data went, as of 2019 there are only speculations in light of the fact none of the information has since surfaced for sale on the dark web, a segment of the internet usually only accessible by special modified browsers through virtual private networks where nefarious trading with varying illegality is known to and often takes place. Some experts speculate it could have been a foreign government, as the methods used to extract the information and the tools used were quite sophisticated. It took the unknown party several days to gain access, and they extracted information for the next seventy-six days before Equifax discovered the exploit.

Occurring in July 2017, Equifax notified the public of the breach in September later that year, where one software engineer working for Equifax was soon after being charged with insider trading for selling stock prior to the breach being disclosed to the public. When Equifax did notify the public, many consumers scrambled to check if they were indeed affected and the resulting internet traffic caused Equifax’ website to become intermittently unresponsive as a result of being choked with congestion. In 2017, the same year the data breach occurred, a man named Christian Haigh won a case against Equifax in Small Claims Court which garnered him $8,000 from the credit bureau giant, in lieu of the data breaches that affected millions of Americans. The judge ruled in Mr. Haigh’s favor for the costs of credit monitoring, ongoing emotional stress, for Equifax’ willful non-compliance with regard to the requirements of the Fair Credit Reporting Act, and court costs in January 2018. As recently as January 2019, a chief judge of the U.S. District Court in Georgia ruled that class-action lawsuits against Equifax for the breaches had legal precedent and would be able to move forward, stating the breach was unprecedented, commenting that Equifax’ security systems still aren’t adequate and another breech he considered an imminent affair. Equifax contended in this legal case that no real harm resulted in the breach, merely only speculative harm in the future. The judge looked into an eighty page order from claims of almost a hundred consumers who were affected by the breach.

In light of all of this, some legislators have been keen on introducing bills that would strongly urge credit reporting companies to take a much higher responsibility for their vigilance over personal data they have access to, and Equifax did issue free credit freezes, preventing someone from opening any new accounts in your name in an attempt to steal your identity, which expired in June 2017. In an ever increasing technology oriented world, these types of security and data breaches happen at an alarmingly common frequency, making it ever more important to be in charge of your credit score, and if you must, having it managed by professionals with your best interest and safety of information in mind. It’s even possible for phishing websites, with a clever enough disguise, to prompt you to enter in legitimate information in hopes to rob you of that valuable data, to later impersonate you and decimate your credit score, all the while looking to most casual users as a true mirror of the original website. Despite the advances in the technological world that affect how this industry grows and behaves, there are still things to look out for when looking for legitimate credit repair. There are many more companies, if you could call them that, that aren’t a legitimate business but are instead a clever scam.

One of the main red flags to look out for are ads from companies that promise you a brand new identity, a completely new start with your credit, often asking you to do questionable things like demanding compensation before any work is done for you, encouraging you to give wrong or false information on applications, instructs you to give blatantly false information when you know it is correct, or perhaps they aren’t explaining your rights legally when pitching what can be done for you. Often, these shady companies will assign you a number that looks very similar to a social security number, and direct you to use it on your applications moving forward. What they aren’t telling you, is many of these social security numbers are stolen, and you are likely paying them to be complicit in their identity theft scheme, not something anyone wants to get involved in on a path to repairing their credit. There are many resources available to attempt credit repair yourself, but should you require a little more piece of mind, that your personal information being handled by professionals with helping you in mind. For over 25 years, Super Credit Repair & Julian Credit Management has been professionally serving the Bay Area in most matters dealing with debt obligation, credit repair being one of the many facets they can tackle. When embarking into the world of credit repair, it goes without saying, be careful who you trust with your personal information.

Picture Credit: Oleg Magni

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Caveat Emptor –  noun
the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Caveat Emptor – in language that even a layman should be able to understand, the principle of “let the buyer beware” is a sensible watchword regarding any purchase – substantial or otherwise – that a consumer may contemplate making.

When it comes to selecting a “credit repair” service or agency, the warming may be particularly apt. In the area of credit “repair”, the offerings are widespread and not always to be trusted without thoroughly vetting both the providers and the “services” that they offer.

In many, if not most instances, the “do it yourself” approach may be a consumers best bet when attempting to improve their credit and credit worthiness.

Today, a consumer who is in financial straits will see advertisements in newspapers, on Television, and, very frequently, as “pop-up ads” on the internet. Consumers get phone calls, flyers in the mail, and email messages (mostly in the “spam” category), all pushing some sort of “magic” that will result in “clean credit” or “greatly improved credit scores”.

Caveat Emptor!

All of these seem to make the same claims that are enticing and not to be believed (in many cases).

You may hear or read differing versions of the following:

• We can totally erase your bad credit – 100% Guaranteed!
• Create an entirely new “Credit Identity” – LEGALLY!
• Credit Problems? NO Problem!
• Let us remove bankruptcies, judgements, liens, and bad loans from your credit record forever!

An aware credit repair-shopper will be wise to be aware and wary when enticed by such claims as these. Mostly likely, they are credit repair scams or “swindles” and not legitimate ways to repair credit and get a clean financial start with an improved credit score.

The claims noted above, according to lawyers for the Federal Trade Commission (FTC), one of the nation’s consumer protection agencies, are not being made by legitimate credit repair operations. Those same lawyers caution that there is NO “quick fix” solutions to improve credit, credit scores, or credit worthiness. One FTC lawyer stated: “Concerned credit consumers can improve a credit report legitimately, but it takes time, a conscientious effort, and sticking to a personal debt repayment or improvement plan”.

Consumer advocacy groups offer the following tips for consumers concerned with bad credit and self-help steps they might take to improve it: know your rights, eschew “credit repair” “experts” for a DIY approach, always report inaccurate information on a credit report, and report credit repair fraud.

Knowing Your Rights

Many credit consumers are unaware of some basic rights available to them for protecting their credit, credit reputation, and financial status.

Anyone can ask a credit reporting agency (such as one of the Big-3 in the United States, Equifax, Experian, and Transunion) to undertake an investigation of any item in a personal credit report that they believe is inaccurate. Credit reporting agencies are required by law to undertake such a requested investigation unless it is deemed to be “frivolous”.

An “adverse action” by a company – such as denial of credit, rejection for insurance, or a non-hire decision – entitles the person so negatively affected to a FREE copy of his or her credit report upon request. A consumer has sixty (60) days from the date of receipt of notice of the adverse action to request the free credit report.

Likewise, unemployed people planning to seek employment within sixty (60) days, people receiving government assistance (“welfare”), and those who have inaccurate information in their credit report due to fraud or identity theft are all entitled to one free credit report per year.

When requested, each of the major credit reporting agencies is required by law to provide consumers with one free credit report every twelve (12) months. Requests to the three agencies can be made at the same time, or the requests can be made periodically throughout the year until all free copies are received.

Finally, disputing mistakes or inaccurate information in a credit report costs the consumer nothing but time and the cost of postage (make all requests in writing via certified mail).

DIY (Doing it Yourself)

A self-aware and proactive consumer can do everything that a hired company might do to effect credit “repairs” and at little or no cost to the consumer. A consumer who believes their credit report(s) may include mistakes or inaccurate information doesn’t need a company picked from the internet or one that solicited him or her to make changes that will eventually result in improved credit and credit scores.

The steps are few (communicating with credit reporting agencies and/or data furnishers to point out mistakes and inaccurate information, requesting an investigation, then follow-up) and only require time, attention, persistence, and thoroughness.

The Credit Repair Organization Act (CROA)

The CROA, enforced by the Federal Trade Commission, makes it illegal for credit repair companies to 1) lie about what they can do for a consumer, and 2) charge the consumer in advance of performing contracted-for services. The Act requires credit repair companies to explain: consumers’ legal rights in a written contract that outlines all services to be performed; the consumers’ three-day right to cancel; the length of time to obtain results; the total cost of the contract; and, all guarantees stated in the contract.

A credit repair company that doesn’t live up to the full extent of its contract may be sued in federal court for breach of contract. Since a failure on the part of the company would not only be a breach of contract, but also a violation of law, punitive damages to punish the company for the law violation (not the breach of contract) may be available to a suing consumer. In cases where others have been violated in the same manner by a single company, consider filing a Class Action lawsuit where attorney fees are likely to be awarded.

Conclusion

Let’s end here as we began – Caveat Emptor!

Be wary of solicitations from credit repair companies that may seem to be “too good to be true” – they probably are not good and not true. Know your rights as a consumer. And, do your homework and research and don’t be reticent about doing it yourself to protect your credit and improve your credit rating, score, and worthiness.

Picture Credit: https://www.flickr.com/photos/stevenmillstein/27818283577/in/photolist-JocYwV-9kthfP-gHE8UD-RC2jtJ-2bPRgW6-2bKxcNs-2bKxesu-gHDhqv-qti5SX-2bKEYoW-5BH419-XNA79U-oCaJFP-cDWvay-7JUaVy-cmLEVu-fkqcKf-afB9ep-bcu2xz-UHFCCa-bNRUUX-pJbtSZ-r3AdUj-hEbrCU-9TX459-2a7ZnEE-8xfxVa-iEsZsq-TekLL5-25mwKWG-RNn3JT-224CAcE-79E1TP-NMjTkQ-29Cf754-bNZRLB-SYzb8E-gimwSy-9nPg9V-GVD5Lr-W79p2y-28qBEve-aWkLyT-gwFX57-9nSiEN-VAXnPe-TsHCUi-eGTi48-dJ5cdt-qRKg3W Steven Millstein

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“To file, or not to file? … THAT is

That is a question that thousands of debt-burdened debtors ask on an annual basis: “Should I file for Chapter 7 bankruptcy?”

Another question often asked is: “What are the alternatives to filing for bankruptcy?” And: “If any”?

This writer is of the belief that low cost, non-profit-based credit repair and counseling can be a viable alternative to taking the bankruptcy route – not exclusively, but as a first-choice alternative. What’s to lose by at least exploring the alternatives of “repairing one’s credit”, improving one’s credit score significantly, and using restored credit wisely and beneficially to support one’s “credit worthiness”?

If a consumer gives credit repair or “credit restoration” a try, the least he or she may lose is time. If credit repair doesn’t work for an individual after a reasonable length of time, the bankruptcy alternative still exists. “Nothing gained…” does not necessarily have to mean a “loss” all the way around.

Not long ago, being declared a “bankrupt” (yes, that was the term applied to those opting to file for and go through bankruptcy) was a social and economic stigma on the filer. People went to great lengths to hide the fact that they “went bankrupt” – even though, taking advantage of the bankruptcy laws is both legal and legitimate.

With the foregoing in mind, let’s take a brief look at both alternatives – bankruptcy and credit repair – to see if there are advantages and disadvantages with those options. We’ll start with the basics of Chapter 7 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy – commonly referred to as “liquidation bankruptcy – is the simplest and most common form of bankruptcy. In Chapter 7, if a debtor has assets that are not protected by an exemption, a Court-appointed bankruptcy Trustee may sell the assets and distribute the net proceeds to the debtor’s creditors according to priorities set forth in the United States Bankruptcy Code.

In exchange for accepting those terms, at the end of the bankruptcy case the debtor is granted a discharge by the bankruptcy court. In a discharge, most of the debtor’s liability for personal debt is wiped out or forgiven. Statistics show that in almost 99% of all individual Chapter 7 cases, the Trustee closes the case at discharge without having sold any of the debtor’s assets that might have been liquidated to pay debts.

Prior to 2005, obtaining a Chapter 7 discharge was quite a bit easier than since “reforms” were adopted in that year. Today, a debtor’s eligibility to file for Chapter 7 protection is governed, in large measure, by the means test. Some high earners may not be eligible to file for Chapter 7 bankruptcy if their debts are primarily consumer in nature. Those who are ineligible to file under Chapter 7 because they did not meet the standards of the means test, are eligible to file under Chapter 13 of the code.

A Chapter 13 filing is known as “reorganization” or “repayment” bankruptcy – a debtor must come up with a repayment plan that lasts over a 3 to 5-year period. Each eligible debt is included in a repayment schedule that is worked down monthly by regular payments. At the end of the plan’s period, remaining unpaid scheduled debts are forgiven in a discharge.

Briefly, Chapter 7 works as follows:

• Exempt property (an inexpensive automobile, household furnishings, equity in a primary residence, etc.) is retained by the debtor seeking a “fresh financial start”
• Non-exempt property is sold by the bankruptcy Trustee and the proceeds paid to creditors per formulae in the Bankruptcy Code
• At the end of the case, a discharge (release of personal liability) of all qualifying debt is granted

For some debtors, filing for Chapter 7 bankruptcy (or being re-directed to Chapter 13) does not make financial sense. For those with certain characteristics and status, filing for bankruptcy makes the most sense. The following are some of the factors that “make sense” as reasons for filing for Chapter 7 bankruptcy:

Debtor’s income meets discharge qualifications – If a debtor’s income is below their residency state’s household median income he or she is putatively eligible to file for Chapter 7. The determining factor re: qualifying is the aforementioned “means test” – a test that analyzes debtor income after allowing the subtraction of certain deductions. Income that is below the states median household income qualifies a debtor to file under Chapter 7

Debtor is “broke” after paying monthly household living expenses – Debtors who pass the means test may still not qualify to file under Chapter 7 if they have money left over (disposable income) at the end of the month. There is a presumption that debtors who have “disposable income” can pay creditors. In such a case, the Chapter 7 filing would be converted to a Chapter 13 filing or dismissed for failure to qualify

Debtor doesn’t own much property – In Chapter 7 bankruptcy, a debtor can keep (“exempt”) property that is needed to maintain a modest home and employment. Bankruptcy property exemptions are controlled by the laws of a debtor’s state of residence – debtors need to check their own state’s laws to determine which and how much of their property is exempt

Home mortgages and car payments – in most cases, home mortgage and automobile payments qualify for exemptions in Chapter 7. If a debtor is current on such debts, and can keep up with payments going forward, the bankruptcy automatic stay provisions will prevent the foreclosure on real property and the repossession of an automobile. The debtor remains personally liable for the debts and may face foreclosure or repossession in the event of a default

Some debt is non-dischargeable – income tax liabilities, court-ordered child and spousal support obligations, and most student loans are not dischargeable in bankruptcy. If a debtor’s obligations are mainly of this nature, Chapter 7 may not be the right course; rather, Chapter 13 bankruptcy may be a viable alternative.

On the other hand, if most debt is collection accounts, outstanding credit card balances, medical bills, personal loans, unsecured judgements, or overdue utility bills, it may make more sense for the debtor to undertake a Chapter 7 filing

“Self-Help Credit Repair” – a Viable Alternative

The effects of “credit damage” can be far reaching. As many a debtor has learned, it doesn’t take much to end up with bad credit. As one pundit noted, “You can ruin your credit score before you realize you even have one, or before you realize how vital it is – in this day and age – to have a good or excellent credit score”.

Amen!

There exists an actual credit score scale that ranges on the low side from 300 to 850 on the high end. Consider a credit score of 600 – somewhere in the high-middle on the above-noted scale. If a consumer has a credit score of 600, things could be worse – but – credit scores of 630 and lower are “poor”. Someone with a score below 630 will likely be denied for credit cards and loans. Such a score also likely means higher interest rates on the credit one with such a “poor” score does manage to obtain.

Having a low credit score or a poor credit history (i.e. “bad credit”) can seriously impact a consumer negatively in the financial sense. A low credit score indicates to lenders – and to potential landlords and employers as well – that a person is a “high-risk borrower”, tenant, or employee. The result of a low credit score can mean the denial of credit, being turned down for rental housing, or a lost employment opportunity.

Some of the damaging side effects of having “bad credit” (and the following list is by no means all-inclusive or complete) are:

• Being subject to higher insurance premiums
• Being subject to higher interest rates on loans, credit cards, etc.
• Being subject to having loan and credit applications denied
• Difficulty finding or changing employment
• Challenges in starting a business
• Denial of application for rental housing

Some may wonder, “whose fault is bad credit?” – and the universal answer is probably the debtor with bad credit.

A consumer’s credit score reflects how he or she has handled their financial obligations. Credit scores are based upon information that’s been reported to the credit bureaus by companies associated with credit card issues and lenders.

Consumers who pay on time and never miss payments when due will have good credit. Those who are chronically late in making payments, or don’t pay some bills at all, are the ones who are carried on the books as “poor credit risks”. They are the same consumers with “poor” credit scores.

People with “poor” credit scores and reputations are more likely to take the bankruptcy route and not consider the alternative of attempting to improve their overall credit situation (i.e. work to improve a poor credit score, make an honest effort to “catch up and stay caught up”, not apply for new credit in any form, etc.).

There are many “credit repair” companies that promise to “restore credit” or “improve your credit score dramatically. Some are for-profits companies, and others are non-profit organizations. Consumers should know and consider the following: anyone can do all the same things a credit repair company can do by taking the DIY route to credit repair.

Those with bad credit AND a different mindset may want to undertake a “do-it-yourself” (“DIY”) approach to the task at hand. For those, the steps are fairly few and simple enough to almost assure success for all if diligently worked. Some of those steps are:

• Start with the Credit Report – First, obtain up-to-date and current copies of the consumer’s credit reports from the three credit reporting agencies, Experian, Transunion, and Equifax… by law, a copy of each report of the three agencies is available to every debtor on an annual basis (see annualcreditreport.com), once the reports are in hand, study them carefully for errors and inaccuracies
• Pay attention to “identity” errors – errors regarding debtor names, social security numbers, addresses, account numbers, etc. can have an adverse impact on credit scores, credit reputations, and credit worthiness
• Learn / know how to read a Credit Report – all credit reports contain personal identifying information, detailed history of all associated credit accounts, public records (bankruptcy, tax liens, judgments, etc.), and inquiries from companies that have “pulled” a consumer’s credit report
• Determine what needs to be repaired – the following is the type of information that needs to be repaired:

• Incorrect information, including accounts that do not belong to the consumer, payments that have been incorrectly reported as late, missing information, etc.
• Past due accounts that are late, “charged off”, or sent to “collections”
• Maxed out accounts that are over the credit limits

• Dispute credit report errors – always initiate a dispute and request for action with the appropriate credit reporting agency; all communications should be written and sent via certified mail, return receipt service (using certified mail gives the consumer a “proof of mailing” and keeps track of the response of the credit agency that typically have 30 – 45 days to respond to disputes and requests)
• Take care of “past-due” accounts – “payment history” is 35 percent of a credit score. A negative payment history record impacts a credit score more than any other factor. A credit report status of “current” or “paid” is a move toward improving one’s credit score. The only thing worse that a “poor payment history” is the “charge off”. A “charge off” occurs once an account is 180 days “past due”. “Charge offs” are the worst account status a debtor can have.
• Resolving Collection Accounts are a High Priority (while taking care of “past due” accounts at the same time)
• Limit, as much as possible, credit inquiries – “credit inquiries” are added to a credit report each time a company “pulls” a consumer’s credit report. Too many credit inquiries hurt a credit score and the ability to get approved for new credit

The foregoing, briefly, is a suggested manner to accomplish “DIY Credit Repair”. The listing of the foregoing steps and suggestions is not all inclusive or the only steps to take. The foregoing gives interested consumers a look at one alternative to filing for bankruptcy when “the end of the financial road” has been reached. Keep in mind – DIY repair costs little more than a consumer’s time and initiative.

Bankruptcy, on the other hand, can come at a much higher out-of-pocket cost and still, today, the potential “social cost” of stigma.

“To file, or not to file? – has the question been answered?” Answered “sufficiently”?

Picture Credit: Melinda Gimpel

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One way of protecting your credit history and reputation is to know and understand some basics of credit reporting, credit monitoring, and disputing errors in a credit report. Consumers need to be especially careful to not undermine their own consumer rights when dealing with the major credit reporting agencies (Experian, Equifax, and TransUnion) and those entities that supply financial information to reporting agencies.

Credit reporting agencies are required by the Fair Credit Reporting Act (FCRA) to investigate every “credit dispute” presented by consumers – so, likewise, are the companies that provide financial information to the reporting agencies. The following list includes some of the most common errors made by consumers when disputing information in their credit records, as well as information being submitted for inclusion therein:

A Credit Dispute STARTS with a Report to Credit Reporting Agencies

While a consumer has the right to request an investigation of a challenged charge directly with the initiator of the disputed charge (the “furnisher” or “data furnisher”), the FCRA requires that the dispute first be sent to the credit reporting agency or agencies.

The investigative process is triggered by the filing of the dispute with a credit reporting agency. Practically speaking, such a filing is a protection for the consumer. If the lender or other credit data furnisher insists that their records are correct, the consumer can’t sue them for failing to investigate the mistake unless a dispute has been initiated first with a credit reporting agency.

As one commentator noted, “Most people do not realize that it is not illegal to report inaccurate information… A claim arises only if the credit bureau or data furnisher fails to properly investigate a dispute.

General Rule: Always begin the process of disputing a charge or erroneous entry by first seeking an investigation of the dispute with a credit reporting agency.

Lawsuit Against Credit Reporting Agency

What happens when a consumer sends complaint after complaint to a credit reporting agency and nothing happens? Experts in this area of the law say, surprisingly, that a consumers’ best bet is to sue for failing to timely investigate a prima facie claim for some sort of relief.

The key to having an odds-on-even chance of prevailing is to be diligent in keeping records and evidence of all efforts to resolve the dispute in question. The consumer must be pro-active in working to protect his or her rights. To show “proof of harm”, keep all letters denying credit, a loan, or the like. Take notes of phone calls and note the date and time of any calls (most agencies these days tell a consumer/caller, “this call is being recorded”).

The Consumer Financial Protection Bureau, the result of recent legislation, also offers protections and advice when consumers are faced with predatory collection efforts or sour-dealings with a lender or a credit reporting agency.

Report Credit Disputes the “old-fashioned” Way

As with any legal dispute, “evidence” (letters, denials, emails, notes, etc.) is most often the decider, or the primary factor in whether a consumer will prevail.

A consumer involved in a credit dispute should retain all evidence pertaining to the claim. Evidence is necessary as part of making and proving the claim at the first stage. In court, after the filing of a lawsuit, it is vital.

A claim made to the credit reporting agency should be:

• Done in a letter that is typed or neatly handwritten and mailed via Certified Mail
• Evidence referred to in the claim should be clearly marked and identified and attached to the letter/claim in chronological order
• Follow Up should be by the same methods and protocols
• Never file a dispute or request for an investigation on the credit bureau’s website or using their online forms. This could harm you at a later stage when you’ve missed your opportunity to back up your claim with forensic evidence

Beware of the “Arbitration Trap”

A consumer involved in a credit dispute wants to preserve his or her rights to the maximum degree; that includes preserving a right to sue if a negotiated settlement with a reporting agency or lender cannot be reached.

Most of the credit reporting bureaus include “arbitration clauses” in many of their documents, such as when a consumer agrees to receive a “FREE” Credit Report. The “fine print” fully discuses the arbitration and other issues, but, really, who reads the fine print? In this case, agreeing to receive a free credit report means the unwary consumer agreed to a lot more, much of it not “friendly” to him.

If faced with an arbitration situation, a consumer may bring a lawsuit when negotiations break down thinking that a court of law may be the best place to win his case. Not to be. With an arbitration clause, the consumer is estopped from bringing a suit and is forced to fight it out in arbitration.

Arbitration is not, generally, all that consumer-friendly. For that reason – and because preserving a right to sue and be heard in a court of law is something of value – consumers should be wary and ever vigilant, read fine print, and don’t get caught in an “arbitration trap”

“Re-Aging of Debt” – Beware (Again)

Debt claims do not last into perpetuity. By law or by terms of an agreement, the right to sue for or collect on a debt is time-limited in some manner. As the Director of Privacy & Advocacy at the Privacy Rights Clearinghouse once noted:

The legal expiration date on the debt should give a consumer a bullet-proof

defense of any lawsuit that’s filed after the statute of limitations has run.

The strategy only works, however, if the consumer doesn’t accidentally or

inadvertently re-age the debt …

A consumer who allows for the “re-aging” of his or her debt has effectively foreclosed a legal defense that should have been available to sue and perhaps win in a court of law. Re-aging of a debt can happen in any number of ways. A more common way is, in talking with a debt collector the consumer may agree to make a partial payment on an expired debt – this could result in the resetting of the clock on the collectability of such debt.

Conclusion

• Always begin the dispute process by contacting a credit reporting agency to file the first report/request
• When you get the run-around by a credit reporting agency and you have damages from a failure to investigate, consider bringing a lawsuit for relief
• Make contact and reports – especially claims or requests for relief – in writing, by certified mail, and not via the credit bureaus’ websites
• Don’t fall into the “Arbitration Trap”
• Don’t inadvertently or by accident “re-age” an uncollectable debt

Image credit: energepic

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Such is the case with California based Prime Marketing Holdings, which the CFPB had already been watching closely. Prime Marketing Holdings came to the attention of the CFPB as a direct result of the sanctioned actions of several businesses with which they are associated.

The allegations against the company included:

• Charging illegal advance fees
  • This included hundreds of dollars in “Set-up fees”
• Misleading consumers regarding benefits of credit repair services they offered
  • Misrepresentations including:
    • How much negative information could legitimately be removed from the credit report
    • How much of an increase in their score could be reasonably expected – often claiming 100 points or more with no way to substantiate the claim.
• Misrepresentation of the cost of the services they offered
  • Including not informing potential clients that there was a monthly fee involved for the services
• Failure to disclose terms and conditions of “money back guarantee”
  • Omitting from the discussion of the “money back guarantee” that a client would have to pay for services for at least six months before being eligible to claim against the guarantee.
• Other false or misleading claims
  • At times claiming they were a “mortgage affiliate”
  • At times representing that they could help a client obtain a mortgage

Dating from October 1, 2014 and continuing through at the least June 30, 2017, the company billed more than $20 million dollars for credit repair. This money was billed to approximately 50,000 clients of their credit repair services.

The CFPB has a proposed settlement – if approved by the U.S. District Court for the Central District of California – that seeks to ban Prime Marketing Holdings permanently from transacting further business in the consumer credit repair industry.

Additionally, the settlement requires Prime Marketing Holding to pay $150,000 in civil penalties.

Prime Marketing Holdings operated under several aliases, Park View Credit, National Credit Advisors, and Credit Experts to name a few.

CFPB is responsible for protecting consumers against the unscrupulous acts of the financial industry. Credit repair agencies are not immune to their policing as many credit repair agencies look for loopholes or simply disregard the law. Credit reporting agencies are not immune to the CFPB’s investigations either, although it is more common that their interaction is about an individual line item on a consumer’s credit report.

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The Alabama Attorney General’s office complaint alleges that Scott’s Credit Repair falsely advertised that they could help consumers buy expensive homes and cars. In addition, the complaint and consent to judgment – which the defendant signed – alleges other violations of the Credit Repair Organizations Act such as payment for services not yet rendered. In one case, Mr. Scott used the excuse that he had already done work for the client as to why she could not cancel the contract with them in the legally permitted three days. Additionally, they promised to get their clients scores in excess of 700 despite not being able to guarantee such a result – again something that is not permitted under the laws governing credit repair.

Scott’s Credit Repair also, according to the complaint, regularly engaged in the practice of “jamming” – where all negative information on the credit report is disputed all at once in hopes that some, if not most, will come off because they didn’t get investigated by the consumer reporting agency before the 30-day deadline. This practice will give a false increase to the credit score as often times negative items that are legitimate but were removed by this method will be rereported by the creditor.

The fees paid by Scott’s Credit Repair clients were not always the ones that had been advertised, according to the complaint. Several clients were charged more than the original quoted amount without an explanation of additional fees. Additionally, the Scotts paid a customer to write a positive review for them on social media and they disseminated it knowing it was false.

Despite having signed the complaint and consent to judgment, Mr. Scott, when he was contacted by the Montgomery, Alabama NBC affiliate, denied all charges. He also stated that they were not doing anything wrong and plans to fight the action in court.

Credit repair companies are not allowed, by law, to engage in unfair and deceptive business practices. Additionally, they are not able to guarantee a specific credit score – they may however give a range that credit scores may increase while working with their clients. The practice of “jamming” is also prohibited – credit repair organizations should communicate with their clients on a regular basis to ensure they are only disputing invalid, inaccurate, or out of date information. Finally, credit repair organizations may not charge up front for services and should let the consumer know what the fees are – this is where many credit repair organizations get in trouble.

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