Your Rights as a Debtor

Did you know that the Federal government passed two Acts in 1977 to protect your rights as a debtor? The first one, is the Federal Fair Credit Reporting Act (FFCRA). The second one is the Federal Debt Collection Practices Act (FDCPA). The information on your credit reports is removed seven years after the last activity on the account. However, if you filed Chapter 7 bankruptcy, the information remains on your report for ten years. Do not fall for credit clean-up scams. There is only one wan that the information can legally be removed from your report and that’s inaccurate information.

The National Association of State Public Interest Research Groups found surveyed 200 adults in 30 states and found that 79% of those credit reports contained inaccurate information and 25% of the mistakes were serious enough to result in the denial of credit. Also, 30% of the reports had information on accounts that had been closed by the consumer and were inaccurately showing as open. Another 22% of them had the same mortgage listed twice! Remember to check your credit report annually. You can check it free annually. You could also check them three times a year by just ordering one report from each credit bureau each time.

The FFCRA requires that a credit bureau remove all inaccuracies within 30 days of notification of inaccuracies. If you want to clean your credit report of inaccurate information, you need to write a separate letter for each inaccurate item, staple a copy of your credit report to each letter, and circle the account number. You need to request that inquiries also be removed. The letters need to sent via certified mail with a return receipt requested. This proves that they received the letter. If the credit bureau does not prove the accuracy of the account information within 30 days, you need to request that they remove the entire account from your file. You will need to keep at them for the 30-day period. If you have any complaints, you need to lodge them with the Federal Trade Commission and your state’s Consumer Affairs Division.

The FDCPA’s function is to protect you from unfair collectors. The law technically only applies to collection agencies and not your creditor.  However, the court cases make most creditors abide by it as well. The Act states that harassment is illegal. Collectors must limit their calls to you between the hours of 8:00 a.m. and 9:00 p.m. (unless you give them  permission) in your timezone and not their timezone. For example, if you are in California and the collector is in NY, he or she cannot contact you at 8:00 a.m. his time because it would be 5:00 a.m. in your timezone. You can demand that a creditor cease calling you at work. Make sure you submit the request in writing via certified mail with a return receipt requested.

The Act allows you to insist that the creditor not contact you at all except for notification of a lawsuit. This is done via a cease-and-desist letter. CAUTION – do not use the cease-and-desist letter except in truly bad situations. The reason being that this causes all negotiations to stop and your hope of any resolution is gone. This will most likely result in you being sued and losing.

A creditor or collector cannot legally take a bank account or garnish your wages without proper and lengthy court action. Only the IRS and student loan debt holders can do this on delinquent accounts. Any other such threats are a bluff. Don’t fall for it.

When you deal with a creditor or a collector via the telephone make sure you record the calls.You can do this with an answering machine. Let them know at the beginning of the call that you are recording the call.  This way, if they violate the law, for example by calling you before 8:00 a.m. or after 9:00 p.m., let them know. If they continue with the call, you can usually win with their legal department and settle for less than you owe. They also do not have the right to discuss your account with anyone other than you. You can also ask them to contact you only every other week. There is no reason for them to call you daily. They cannot come to your home and work place and harass you there either. This is illegal.

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