Tuesday, November 28, 2006
Reader mail: what to do about many old chargeoffs and collections
.... Both Jobs require background/credit checks and I am afraid our bad history..even though we have good credit with our other bills, will effect their decision. I was thinking of using Lexington until I saw your website. I am just wondering where can I find some “dumb person” instructions on how to go about getting things removed from my report. There is nothing necessarily wrong on there..just the charge offs show as negative..and are all charged off and old..why do they need to be there...and as for the collections accounts..is there anything that can be done about those? I would love to settle..but I cannot even do that as we are barely scraping by..thus the reason for trying to get a new job. I assume I cant remove them since they are “current” and would probably be re-reported again..but I don’t see how these just keep staying current if they are collections and are old...what can I do about those? Pay them then try to have the “pay-offs” removed?
Any advise would help..I looked over your sites but it was just all so overwhelming to me because I am not very good with this sort of thing. Anything you can help me with would be appreciated, and if not, thank you for your time at least in reading this.
Unfortunately, there’s really nothing I can do to help. I have bills to pay, my litigation is getting very time consuming and expensive and I simply can’t work 20 or 30 hours free of charge.
For a couple with these types of reports, it usually takes at least 5 hours EACH for the initial Credit Analysis and in this case I’d have to prepare the actual disputes, add another 2 to 3 hours EACH. Then I have to review the results, and MOST LIKELY it’ll take at least another 3 hours each for the review and 2nd disputes. And THEN the million dollar question is whether all CRAs will finally report ACCURATELY and whether the collectors complied with the FCRA and FDCPA.
When couples have identical accounts on their reports, it actually takes more than twice the time to analyze the accounts. As there are more reports to review, the time required increases exponentially. Of course it depends also on the client how much time it takes. Some people are highly organized, concise, read the reference links I provide and don’t ask many irrelevant questions. Others take 2 or 3 times longer because they won’t provide answers, don’t read anything and expect me to have a crystal ball.
“I looked over your sites but it was just all so overwhelming to me because I am not very good with this sort of thing.”
If it wasn’t for this statement, I would recommend subscribing to CreditFactors. But if you’re not good with “this sort of thing”, you’re wasting your time and money.
I realize that most people don’t have the time and aptitude to gain a thorough understanding of credit reporting. If these OLD charge-offs and collections are reported CORRECTLY and credit was re-established and reported, the scores could well be in the 700s and a prospective employer might not care about the OLD collections.
If the statute of limitations has NOT yet expired, disputes could result in increased collection efforts and creditors/collectors even filing suit.
If you don’t have the money to settle you need to be VERY careful.
Receiving disputes and having derogs deleted obviously tells creditors that your credit is important to you and it’s worth their while to go after you. COLLECTION scores indicate how likely it is that you will make a payment. Mortgage inquiries can result in the notification of creditors/collectors.
I recently got an email from someone who settled with all other creditors and inquired about hiring me to settle with Capital One. She was quite frustrated that Capital One refused to accept her settlement offer and even threatened to sue her unless the account was paid by a certain date.
2 days before the Capital One ultimatum expired, she contacted me.
What are these people THINKING?
Of course she should NOT have settled any of the accounts until ALL creditors agreed to settlements. When I settle accounts for clients, I usually get offers from all creditors and then my client gets to decide whether there is enough cash to settle all accounts and if so or we are close, we’ll decide to accept or to submit counter offers. Sometimes creditors are firm, sometimes they’ll go a little lower, it all depends on the creditors’ current policies, the individual account and the client’s credit report. And of course it depends on whether we have any FCRA or FDCPA violations and whether the client is willing to sue.
I also had another reader email, bitterly complaining about a creditor refusing his settlement offer and he also seemed to think that they HAD to accept his offer.
Apparently more and more people find themselves in a rut after sending moronic letters with absurd demands to creditors and collectors
There’s a lot of HORRIBLE advice at the various credit repair forums on the web. Many of the posted sample letters contain bizarre legal threats and indicate to the collectors that you are a clueless idiot. They have already seen the letter or a variation umpteen times. Most likely none of those consumers successfully sued.
So many people think that THE LEGAL THREATS in their dispute letter got them a deletion and then they go post it at forums and they think they’re so clever. In fact, the collectors are not shaking in fear of a consumer’s lawsuit. They either comply with the FDCPA and FCRA or they don’t. And if they don’t, a moronic letter with legal threats makes you look like a moron to consumer attorneys, judges and juries and it makes it much harder to prevail.
So if you sent these letters and you’re being sued or about to be sued, remember that there is NO law requiring a creditor to accept less than the full balance to settle accounts. And while I’ve worked with people who were being sued, I obviously can’t represent you in court since I’m not an attorney.
It is odd that I rarely get settlement offers for more than 60%, often less and when a creditor wants the full balance, it’s probably your own fault.
If you are obnoxious and unreasonable, you may well end up paying a lot more and/or get sued.
I also had a CreditFactors subscriber post that AmEx faxed a settlement offer for 70% and claimed that was the best any account can get. I know that to be false, as I’ve settled AmEx accounts for about 50%. Do they have special rules for consumers who contact them directly?
I’ve had clients ready to spend $50,000 on settlements and it cost them $250 for my Analysis and they had 700+ scores after the initial disputes because everything was corrected or deleted. They didn’t have to settle anything. Unfortunately, that’s NOT the norm. Anything can happen and you MUST be prepared for the worst case scenario.
So back to today’s email:
“I am just wondering where can I find some “dumb person” instructions on how to go about getting things removed from my report.”
There are no “dumb person” instructions for credit repair, just like there are no “dumb person” instructions on rebuilding your car’s engine or performing brain surgery.
The FTC deliberately misleads consumers with their entirely false statements that there is nothing a professional can do to assist consumers to improve their credit rating.
And now we’re back to the big picture - the conspiracy to ensure that people like this reader continue to have bad credit and LOWER credit scores than they deserve. If these old accounts are CORRECTLY reported, the scores should be ok and prospective employers could see that they are OLD accounts.
The regulators condone the fraud by scummy credit repair companies like Lexington to ensure that people with bad credit continue to have the lowest possible scores due to INCORRECT reporting and deletion of accounts that actually INCREASE the scores despite the derogatory status. See AFTER deletion of the chargeoff: score went DOWN 18 points!
The FTC and other regulators choose to ignore my allegations, posted with the public comments at the FTC website.
“I would love to settle..but I cannot even do that as we are barely scraping by..thus the reason for trying to get a new job. I assume I cant remove them since they are “current” and would probably be re-reported again..but I don’t see how these just keep staying current if they are collections and are old...what can I do about those? Pay them then try to have the “pay-offs” removed?”
This doesn’t make any sense at all.
There’s NO cash to settle, put you have the cash to pay in full?
Of course many collections are deleted after the appropriate disputes, but there’s a good chance that they will sell or reassign the accounts. Often the new collector contacts you PRIOR to reporting on the credit. So if you want to settle, that’s the time to do so.
However, if you do NOT have the cash to settle, you may well end up with a NEW collection, probably lowering your credit scores much more as scores rate collections by the DATE ASSIGNED. While you may be able to the collection off the report again, especially if they can’t document the account and they comply with the FDCPA, you definitely ruin your scores in the meantime and a prospective employer sees the brand new collection account.
Since the credit reporting concepts are difficult to understand for this reader, he definitely should NOT sue for any violations.
Regarding employment and credit:
Obviously employers look for stable people and they don’t want their employees to be hounded by debt collectors and risk embezzlement or theft. Most people get very stressed when subjected to collection efforts, making them undesirable employees, likely to be distracted, absent, ill, etc. Employers don’t want to have to deal with garnishments.
But it all depends on each employer’s policy and you might as well ASK what their credit requirements are BEFORE you apply. HONESTY goes a long way. Since all the collections are old, you may be ok, especially if the SOL expired.
The last thing you want to do is PAY collections reported as such—when reported as tradeline you need to analyze your score factors.
The scores will NOT increase after payment of a collection and you lose your rights under the FDCPA.
Once a collection is paid it becomes very unlikely that it can be deleted, unless you negotiated deletion and you got it in writing.
I really wish there was a “dumb person’s manual” and it has been suggested that I write the “Credit Repair for Dummies” book. Through my extensive experience with clients and CreditFactors subscribers, I know better than to think that it can be done. Too many people end up damaging their credit through their disputes and especially if the SOL hasn’t expired yet, it’s best to do NOTHING.
Of course consumers should NOT have to dispute anything.
The CDIA Manual requires that collectors DELETE accounts that were returned to the original creditor or sold. Yet, few collectors comply and I often see 3 or more collectors reporting the IDENTICAL collection. Many collectors report improperly as tradelines with current delinquent amounts (LVNV).
Unfortunately, very few people care about more than their own immediate problems and that’s why credit reporting is how it is. Many people with credit problems are struggling to get by and have neither the time nor the skill to actively work on changing credit reporting practices and enforcement. And I’m not superwoman and I can’t MAKE regulators enforce the FCRA by myself.
Credit - Collection - Economic News • (14) Comments • Permalink
