ies, Asset Acceptance, LR Credit, Capital One Bank, Palisades Collections, LVNV Funding, Portfolio Recovery, American Express, Discover Card, HSBC, Eltman, Eltman & Cooper, Goldman & Warshaw, Discover Bank, Citibank, American Honda Finance, MBNA, Beneficial Finance, Chase are examples of the types of creditors, collection attorneys, debt buyers we"><META Name="Author" Content=" ">

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BEING SUED?

Find Lots of Helpful Answers & Information Right Here:

DID YOU GET THE LEGAL PAPERS ACCORDING TO THE LAW ? 

WHAT IS SERVICE OF PROCESS? 

The U.S. Constitution requires, in it's Fifth and Sixth amendments, that each party of any case be fully notified of any actions taken against them in a court of law. There are comparable provisions in every State Constitution as well. This means that no court can rule against you without you having been informed of the case and given a chance to defend yourself, regardless of whether or not you owe the money being claimed against you. The process of informing someone of a pending case against them is known as service of process and there are very specific requirements for accomplishing service of process imposed upon creditors and their attorneys.

HAVE I BEEN LEGALLY SERVED ?

Personal delivery of the summons to you; or Personal delivery to a person of "suitable age and discretion" at your home or business plus two follow-up mailings; or Nailing the summons to your door with follow-up mailing only if it is proved that the prior two methods cannot be made with due diligence plus two follow-up mailings.

Being legally "served" with a summons and complaint is a threshold requirement of every lawsuit. In fact, proper service of the first legal paper in the action is a basic constitutional right enjoyed by every defendant. And "Service" means the delivery of the first legal document, typically a summons but sometimes a notice of motion of notice of petition,  that notifies you of the lawsuit. In a credit card lawsuit, the typical first legal paper, after the barrage of collection letters, is a “summons”, which is the actual notice of the lawsuit.

In New York State, as in other states, the law provides for a very specific method for effectuating delivery of the first legal paper which will legally bring a defendant before the Courts of the State. Here is how service of the first legal paper is made in New York State:

If service is not made as described above, it is unlawful and any lawsuit initiated without lawful service must fail. Often, where the process server purposely fails to serve in accordance with the law and/or the collection attorneys conspire either with or without the process server to fail to legally server you is known as "sewer" service. "Sewer service" is the practice of deliberately failing to serve the summons in accordance with the law so as to get a default judgment against you or, on the part of the process server, to get paid without having rendered the service. 


CAN I GET THE CASE AGAINST ME DISMISSED IF I WAS NOT SERVED PROPERLY ?

 
THE SHORT ANSWER IS A RESOUNDING YES ! But, if you want to get a case dismissed for improper service in New York State, there are specific steps that you have to take as follows:

              First, you must raise the  defense of improper service in your answer the first time you appear in court.

               Then, you need to get a copy of the "Affidavit of Service" from your file in the courthouse.  The affidavit of service is a sworn statement by the process server that describes how you were served.  The plaintiff will rely on this document to claim you were served correctly.

               Next, you MUST ASK the court to dismiss the case for lack of jurisdiction within 60 days of filing your answer.   Sometimes this means that you will have to file special papers, called a "motion to dismiss," before your first court date is scheduled.

               And, if the Court grans your request, you must schedue and then attend a special hearing before the judge called a "traverse hearing."  At the traverse hearing, the judge will hear from both sides to determine whether you were properly served.  If the judge decides that you were improperly served, he or she will dismiss the case.

               You also need to gather evidence and witnesses to present at your traverse hearing.  This evidence could include witnesses or documents that support your claim of improper service.


Be forewarned, however, that if your case is dismissed for improper service, the plaintiff can sue you again if there is still time on the statute of limits.  Check your state's stateof limits here. You have to decide, based on the facts of your case and the strength of your other defenses, whether it is worth it to go through with a traverse hearing and the associated additional expense Discuss your options with your assigned attorney from the Credit Card Defense Center of New York.


    The "Stuff" The Bill Collectors Don't Want You to Know !

  • The Rules of the City of New York [(RYNY) § 2-191]  require debt collectors to notify consumers in writing if a debt has passed the statute of limitations. 

  • “Sewer service” – actually refers to process servers who throws the summons  documents “down the sewer” and then falsify the Affidavit of Service. See, e.g., United States v. Brand Jewelers, Inc., 318 F. Supp. 1293  (S.D.N.Y. 1970)

  • Typically, you can determine by the legality and sufficiency to the service by a close examination of the affidavit of service, which is the legal document prepared by a process server, under oath, swearing to the truthfulness of the facts alleging proper delivery of the papers to you. You can typically find this document in the court file on your case at the Courthouse.


    Credit bureaus may not retain negative information for more than seven years from the last payment made. The exceptions to this rule are that bankruptcies may be reported for 10 years after the bankruptcy discharge and tax liens can be reported for seven years from the time they are paid.

  • To obtain a default judgment under New York law, a debt buyer must provide "proof of the facts constituting the claim, the default and the amount due." This proof must be established by an affidavit from a party who has personal knowledge of the facts of the case. Under their business model, debt buyers cannot meet this standard. They have no connection to the original creditor, no access to the original creditor's books and records, and no personal knowledge of the facts to which they attest.NY CPLR § 3215(f); Joosten v. Gale, 514 N.Y.S.2d 729 (1st Dep't 1987)
  • The United States Bureau of Labor Statistics has projected that between now and 2016, the debt collection industry will experience a growth rate of 23%, significantly higher than the average for other industries. Demand for collection services is escpecially expected to increase within the medical (i.e., hospitals and doctors' offices) and government agencies such as the Internal Revenue Service.

  • It isn't hard for collection agencies to locate most debtors. Here are some of their common sources:

    Telephone Information Even if your phone number is unlisted, a collector always checks the address. If you have an unusual name, the collector calls all numbers with that name, looking for a relative. A favorite technique is to leave a message with a relative, asking you to call a number collect. If you call, the collector accepts the charges -- and contacts the operator to find out the number you called from. Credit Checks: To see whether a credit bureau -- and therefore a collection agency -- has information on where you work and bank, request a copy from TRW, Trans Union or Equifax. (But realize that when you tell the company where to mail your report, that address will make its way into your file.) The Post Office Using a post office box as your mailing address doesn't deter a collection agency. For a small fee, the post office will provide a box holder's street address if it's available. Neighbors & References Collectors may call persons you listed as references on a credit application and ask for your phone number. It's against the law for the collector to lie and say it's a friend calling. So a reference may be able to stop the calls by asking directly "Are you a bill collector?" Of course, some collectors simply break the law.

  • Under the Federal fair Credit Reporting Act, Credit Bureaus must investigate, change or remove any incorrect data from your credit report.

    Credit bureaus may not retain negative information for more than seven years from the last payment made. The exceptions to this rule are that bankruptcies may be reported for 10 years after the bankruptcy discharge and tax liens can be reported for seven years from the time they are paid.

    Credit reports can be issued only to those with a legitimate business reason. These include creditors, employers, landlords, insurers and government agencies, or anyone else for whom you request a report. 
    You must give your consent for a credit report to be issued to a potential employer or landlord.
     
    Credit bureaus are required to help you understand your credit report.
     



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MUST A SUMMONS BE DELIVERED TO ME IN HAND FOR SERVICE TO BE LEGAL? 

No. Personal delivery of legal papers is not required to subject you to the jurisdiction of the Court. Nor do you need to sign for any court documents received. Contact us and we can tell you if you’ve been legally served under New York State law.

New York City Civil Court Uniform Rules § 208.6 requires a new notice to be mailed by the court to each consumer debt defendant as a second notice mechanism, and default judgment may not be granted when notice is returned to court as undeliverable.


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WHY IS SERVICE OF PROCESS SO IMPORTANT ? 

Often, service of process can make or break a case and may, on occasion, be your very best defense. The bottom line is that under the United States Constitution and similar State constitution provisions, no court can rule on a case involving and allow the taking of property unless you were legally made aware of the lawsuit in the first instance. If you were not legally made aware of the lawsuit by proper service of process, the entire case can be thrown out of court. This is why it is extremely important to know the laws of your state regarding how regarding how service of process is legally accomplished because each state and jurisdiction has its own rules regarding the means of service.

Generally, a summons and related documents must be served upon the defendant personally, or in some cases, upon another person of suitable age and discretion  at the defendant's house or place of business. If a person receives as summons and does not show up for court, the court will rule against him automatically.  


 WHO IS SUPPOSED TO DELIVER THE FIRST LEGAL PAERS, 

KNOWN AS SERVICE OF PROCESS SERVICE OF PROCESS? 

Someone retained to serve process on someone is called a "process server.” Generally speaking, a process server must be of at least 18 years old and not a party to the action, which  means not personally involved in the action about which h process is being served. Note that in New York City and in other jurisdictions, County Sheriffs can also be employed to serve process.

WHAT IS A DEFAULT JUDGMENT? 

When service of process is effectuated upon you, , you must file an answer with the court, which includes your response to the claims and allegations made against you in the summons and/or complaint that has been served upon you. If you fail to so do within the time period stated in the summons, or if you fail to go to the Clerk’s Office at the Courthouse and put in an answer in court to answer the plaintiff's complaint, a judgment will be entered in favor of the plaintiff-creditor. And this judgment, entered against you without your input or objection and without a serous emanation of the merits of the claim itself, is known as a “default judgment”. 

CAN I DO ANYTHING IS A DEFAULT JUDGMENT HAS BEEN ENTERED AGSINT ME ?

 Yes, You can try to get it vacated by the Court. In order to have the default judgment vacated, or set aside, you must file a motion to vacate the judgment with the court. In filing your motion, you must generally cite one or ore of the following reasons for why you failed to answer the complaint in a timely manner in the first place:

  • 1.              mistake, inadvertence, surprise, or excusable default;
  • 2.              new evidence has been discovered;
  • 3.              fraud in obtaining the default judgment;
  • 4.              the judgment is technically void;
  • 5.              judgment was satisfied or discharged;
  • 6.              some other reasonable reason that would justify your failure to answer

The court will hold a hearing on your motion, and determine whether or not to vacate the judgment. Though the success rate of these motions will vary depending on the jurisdiction, they are usually liberally granted because Courts usually want to give each party the opportunity to argue their side of the case based on its merits, rather than allowing you to lose your property and assets by default. _Now, _it is important to remember that just because your motion to vacate is granted, you have not won the case yet. Getting the default vacated  merely sets aside the default judgment simply gives you the opportunity to file your answer to the original complaint made against you by the plaintiff and defend the action on the merits. 


WHAT MUST THE CREDITOR PLAINTIFF DO TO PROVE 

AND WIN A CREDIT CARD CASE AGAINST ME ?


Typically, the plaintiff (i.e., the party suing) must be able to prove the following:

1. That it legally holds the debt. Many times debts are sold to collection agencies, which then may turn around and sue the consumer. If you are being sued by a collection agency or a third party debt buyer rather than the original creditor, the collection agency must prove it owns this debt by submitting admissible evidence, usually in writing (such as an written "assignment"), of the debt from the original creditor to the agency. This usually has to be a written document in a form acceptable to the Court as evidence of the assignment or "ownership: of the debt in question.2. That the debt is actually yours. Usually, this involves the creditor's showing a contract with your signature, evidence that you made charges on the card, monthly balance statements, etc.3. Proof that the debt amount is correct. The plaintiff must be able to prove that amounts are right and that the fees and penalties with which your account has surely padded, are in fact authorized under the law and are consistent with the contract.

Challenging a debt-collector on these grounds can, if done correctly and adroitly, lead to a dismissal of the case or, at the very least, a reasonable and affordable settlement, which means a substantial reduction in the amount payable to the creditor in exchange for a dismissal of the lawsuit. In some cases, the debt collector can even end up owing money to the consumer.

If you are being sued on a debt and are looking for help call us now at the Credit Card Defense Center of New York 212-591-0400


                                                  STATUTE OF LIMITATIONS:

WHEN IS AN OLD DEBT TOO OLD FOR A COLLECTOR TO SUE?

Typically, state law determines how long the statute of limitations lasts. Usually, the clock starts ticking when you fail to make a payment; when it stops depends on two things: the type of debt and the law that applies either in the state where you live or the state specified in your credit contract. For example, the statute of limitations for credit card debt in a few states may be as long as 10 years, but most states impose a period of three to six years. To determine the statute of limitations on different kinds of debts under each state's law, check with usor your State Attorney General's Office.

WHAT SHOULD I DO IF A DEBT COLLECTOR CALLS ABOUT A TIME BARRED DEBT ?

Collectors are allowed to contact you about time-barred debts. They might tell you that the debt is time-barred and that they can't sue you if you don't pay.

If a collector doesn't tell you that a particular debt is time-barred — but you think that it might be — ask the collector if the debt is beyond the statute of limitations. If the collector answers your question, the law requires that his answer be truthful. Some collectors may decline to answer, however. Another question to ask a collector if you think that a debt might be time-barred is what their records show as the date of your last payment. This is important because it helps determine when the statute of limitations clock starts ticking. If a collector doesn't give you this information, send him a letter within 30 days of receiving a written notice of the debt. Explain that you are 'disputing' the debt and that you want to 'verify' it. The more information you give the collector about why you are disputing the debt, the better. Collectors must stop trying to collect until they give you verification. Keep a copy of your letter and the verification you receive.

DO I HAVE TO PAY A DEBT THAT'S CONSIDERED TIME-BARRED?

The decision to pay a time-barred debt is up to you. You have options, but each one has consequences. For example, whether you pay the debt and how much you pay will affect your credit rating. Consider talking to a lawyer before you choose an option.

   Pay nothing on the debt. Although the collector may not sue you to collect the debt, you still owe it. The collector can continue to contact you to try to collect, unless you send a letter to the collector demanding that communication stop. Not paying a debt may make it harder, or more expensive, to get credit, insurance, or other services because not paying may lower your credit rating.

   Make a partial payment on the debt. In some states, if you pay any amount on a time-barred debt or even promise to pay, the debt is 'revived.' This means the clock resets and a new statute of limitations period begins. It also often means the collector can sue you to collect the full amount of the debt, which may include additional interest and fees.

   Pay off the debt. Even though the collector may not be able to sue you, you may decide to pay off the debt. Some collectors may be willing to accept less than the amount you owe to settle the debt, either in one large payment or a series of small ones. Make sure you get a signed form or letter from the collector before you make any payment. This document should state that the entire debt is being settled and that the amount to be paid will release you from any further obligation. Without this document, the amount paid may be treated as a partial payment on the debt, instead of a complete payment. Keep a record of the
 payments you make to pay off the debt.


WHAT SHOULD I DO IF I'M SUED FOR A TIME-BARRED DEBT?

Call the Credit Card Defense Center for a no-fee consultation. Then, defend yourself in court. If you're sued to collect on a time-barred debt, pay attention, and respond and let the Court know  that the debt is time-barred and, as proof, provide a copy of the verification from the collector or any information you have that shows the date of your last payment. The lawsuit will be dismissed if the judge decides the debt is time-barred. In any case, don't ignore the lawsuit. If you do, the collector likely will get a court judgment against you, and possibly take money from your paycheck, bank account, or tax refund.

Assert your FDCPA rights. It's against the law for a collector to sue you or threaten to sue you on a time-barred debt. If you think a collector has broken the law, file a complaint with the FTC and your state Attorney General, and consider talking to an attorney about bringing your own private action against the collector for violating the FDCPA.

 I AM BEING SUED FOR REALLY OLD CREDIT CARD DEBT. WHAT IS MY BEST DEFENSE. ? IF I'M SUED FOR A TIME-BARRED DEBT?

The statute of limitations will save you. In New York, the Statute of Limits for this kind of debt is typically six years from the day of default and it could be shorter depending on where the creditor is located The Statute of Limits for a delinquent debt is the limited time frame within which a creditor like a credit card company must file a lawsuit against you. Generally, this period starts when you become delinquent on your account payments.

Now, just because the SOL has expired on a particular debt does not mean that you are totally immune from suit. You can in fact be sued. Then, you have to raise the Statue of LImits as a defense. if you are sued, the Statute of Limits can be used to defend the lawsuit. And it is a complete defense, which means that if you are correct in interposing this defense – and this can be tricky – especially when you a being sued for credit card debt -  the lawsuit will be dismissed against you forever.

Note that if there has already been a lawsuit resulting in a judgment, that judgment has a separate Statute Of Limitations, which in New York is twenty years.

If you would like us to do free evaluation of your circumstances to see if you can apply this defense contact us now and let us get creative on your behalf before your creditors cause more aggravation and pain to you and your family.

WHAT IS MY BEST DEFENSE AGAINST COLLECTION AGENCIES ?

In fact, the best, most complete and most absolute defense is the Statute of Limitations which is the time limit in which your creditor must file a lawsuit against you or lose the right to collect the money they claim you owe through the court system, although they may still attempt to get you to voluntarily pay after that deadline. And it is a drop-dead deadline. Find out what your state's is and whether the creditor is beyond that date. If it is, you can demand that the court to dismiss the suit.

STATUTES OF LIMITATIONS BY STATE:

Each state has its own statute of limitations on debt - the amount of time the court will force you to pay a debt. The statute of limitations varies depending on the type of debt you have - credit card or loan - and is usually between three and six years, but is as high as 10 or 15 years in some states. Before you respond to a debt collection find out the debt statute of limitations for your state.


STATUTE OF LIMITS PER STATE: CURRENT AS OF 1/1/14

STATEORALWRITTENPROMISSORYOPEN
ALABAMA6663
ALASKA6633
ARIZONA3663
ARKANSAS6633
CALIFORNIA2444
COLORADO6666
CONNECTICUT3663
DELAWARE3334
FLORIDA4554
GEORGIA4664
HAWAII6666
IDAHO4554
ILLINOIS510105
INDIANA610106
IOWA51055
KANSAS3653
KENTUCKY515155
LOUISIANA1010103
MAINE6666
MARYLAND3363
MASSACHUSETTS6666
MICHIGAN 6666
MINNESOTA6666
MISSISSIPPI3333
MISSOURI510105
MONTANA5885
NEBRASKA4554
NEVADA4634
NEW HAMPSHIRE3363
NEW JERSEY6666
NEW MEXICO4664
NEW YORK 6666
NORTH CAROLINA3353
NORTH DAKOTA6666
OHIO615156
OKLAHOMA3553
OREGON6666
PENNSYLVANIA4444
RHODE ISLAND15151010
SOUTH CAROLINA3333
SOUTH DAKOTA3666
TENNESSEE6666
TEXAS4444
UTAH4664
VERMONT6653
VIRGINIA3563
WASHINGTON3663
WEST VIRGINIA51065
WISCONSIN66106
WYOMING81010

CHARGED OFF DEBT:

Many issues and questions also exists around the relationship between charged-off debt, credit reports and credit scores. Obviously, the more delinquent you are on your obligations, the greater the negative effect on your credit standing will be. A charge-off causes the most damage because it represents the fact that the creditor has given up trying to get the money from you voluntarily. After charging-off on a loan or line of credit, the next step in damaging your credit and lowering your score is the looming lawsuit to collect on the so-called "charged off". 

Generally, a charge-off remains on your major credit reports for seven and a half years following the point of first delinquency. Some people believe (or are led to believe by debt collectors) that when they make a payment toward debt or debt changes hands between collection companies, this length of time resets. However, nothing can change the length of time negative information remains on a credit report, unless the information is listed in error.

FEDERAL LAWS DESIGNED TO PROTECT CONSUMERS 

FROM ILLEGAL CREDITOR ACTIONS INCLUDE:

            

Truth in Lending Act (TILA) – This federal consumer protections act, codified as 15 U.S.C. § 1601 et. seq., provides for the informed use of credit, and requires lenders to clearly and conspicuously provide borrowing terms and disclosures to consumers regarding consumer credit.

      


Fair Credit Billing Act (FCBA) – This federal act is a part of TILA that provides consumers with protections against billing errors. The FCBA only applies to “open-end credit,” which is typically credit card accounts or lines of credit, such as home equity lines of credit. There are a variety of billing errors covered under this act, and remedies for violations are also provided for in this act.

   


Fair Credit Reporting Act – 15 U.S.C. § 1681. This federal law regulates the collection of consumer information, including credit reporting information.

Fair Debt Collection Practices Act – 15 U.S.C. § 1692. This federal law regulates debt collectors and the manner in which consumers may be contacted and how debts may be collected.


Common Questions About Credit Reports

HOW OFTEN SHOULD YOU CHECK YOUR CREDIT REPORT?

Once a year.  And if you are planning any major purchases, like a house or car, it is a good idea to check your credit report very early in the process so you are not blindsided during the loan process or at the closing.

CREDIT BUREAU CONTACT INFORMATION

 

Here is the main address and telephone numbers for each of the three major credit bureaus:

Credit Bureau

Mailing Address

Phone Number

Experian

Experian / P.O. Box 9701 / Allen, TX 75013

1-888-397-3742

Equifax

Equifax Information Services, LLC / P.O. Box 740256 / Atlanta, GA 30374

1-800-685-1111

TransUnion

TransUnion, LLC / P.O. Box 2000 / Chester, PA 19022

1-800-916-8800

WHY ARE MY CREDIT REPORTS DIFFERENT?

Comparing your credit reports side-by-side, you may notice they're not the same. That is because not all businesses report to all three credit bureaus. Credit bureaus typically do not share information. This means that not all your account information makes it onto all three major credit reports.


WHAT DOES MY CREDIT REPORT HAVE TO DO WITH MY CREDIT SCORE?

Your credit report is a detailed history of your credit accounts including payment history, credit limit, highest balance ever charged, and age of the account. Your credit score is a numeric representation of your credit report.

WILL MY SPOUSE'S INFORMATION APPEAR ON MY CREDIT REPORT

Your credit report will contain only your credit and loan accounts. The exception is joint accounts shared between you and your spouse. Here, the account history will be reported on both your and your spouse's credit report. Similary, if one spouse is an authorized user on the other spouse's account or one spouse co-signs another's account, the account history will be reported on both credit reports.

HOW DO I KNOW IF I HAVE ANY LATE PAYMENTS ON ANY OF MY ACCOUNTS?

All three major credit bureaus use a little "square" with either 30, 60, 90, or 120 in it. And what you want to see is a "zero" underneath that symbol. You want to see "OK" in green shown, or under "status", the notation "never late".

WHAT DOES "CHARGED-OFF", "BAD DEBT", OR "PLACED FOR COLLECTIONS" MEAN?

This means that you failed to make a payment on the account for a time period longer than 120 to 180 days without a payment from you. At this point, the credit card company decided the debt was not going to be collected from you, and, thus, deter decided to write it off. The company took the IRS tax deduction and sold the debt to a debt collector. Many of the recent real estate "short sales" may end up as charge-offs on a consumer's credit report.

WHAT DOES "ACCOUNT CLOSED BY CREDIT GRANTOR" MEAN?

The credit card company was concerned that, given your financial circumstances, you might very well default on your debt obligation to that creditor and shut down your ability to access any more of your credit. This sometimes happens if you are defaulting on other cards - also referred to as universal default.


WHAT DOES "ACCOUNT BALANCE" MEAN ? 

This is the amount owed on the loan, whether it is a credit card balance or the balance of a home mortgage or installment loan.

WHAT DOES "HIGH BALANCE" MEAN ? 

This is the most you ever owed on the loan, whether it is a credit card balance or the
 balance of a home mortgage or installment loan.

WHAT IS "DATE OF LAST ACTIVITY" (DOLA)?

 

This will be itemized on the report as "last updated" or "last activity" and is, in general, the last date any account activity occurred, typically the last time you made a payment, which event usually starts the running of the statute of limitations applicable in your state.

CAN I GET A JUDGMENT REMOVED FROM MY CREDIT REPORT ?

Yes, often you can. But it depends on your particular circumstances. It depends on how you want to attack the problem. And it depends if the judgment was obtained against you by default or not. We have developed a quite effective method of removing judgments that have been entered against you in New York State by default. This does not mean we can correct your credit report insofar as other negatives are concerned. But we can eliminate the "judgments", which means that, by definition, your Credit Score must increase as a result. Contact us and ask us the details about removing judgments from your credit report.


Did you know ?

 

                There are two kinds of credit checks: Soft & Hard

                A "Soft" inquiry is when you check your own credit score for reasons other than extending your credit

                A "Hard" inquiry is made when you apply for new credit and a lender requests a copy of your credit report

                Inquiries can stay on your credit report for about two years

 



CAN I GET A JUDGMENT REMOVED FROM MY CREDIT REPORT ?

Yes, often you can. But it depends on your particular circumstances. It depends on how you want to attack the problem. And it depends if the judgment was obtained against you by default or not. We have developed a quite effective method of removing judgments that have been entered against you in New York State by default. This does not mean we can correct your credit report insofar as other negatives are concerned. But we can eliminate the "judgments", which means that, by definition, your Credit Score must increase as a result. Contact us and ask us the details about removing judgments from your credit report.

Does carrying a balance on my credit card hurt my credit score? 

It can, if the balance gets too high. You see, your credit score is influenced by how much available credit you have, and the balances you owe on both revolving and installment accounts. Revolving usually means an open line of credit that can be used as needed up to a certain limit, like a credit card, rather than an installment loan, that’s taken out all at once then paid back on a fixed schedule, say a mortgage, for instance. One advantage of a revolving account is convenience. Even if you pay it off, it stays open. So you can use it again if you want without applying for more credit. Revolving accounts are beneficial to have on credit reports because over time, they show a history of how well you manage credit. You’ll probably want some revolving accounts in addition to some installment accounts with fixed monthly payments, like a car loan or a mortgage, to round out your credit report and get a really good score. Different credit scores get calculated in different ways, but if the amount you owe on your revolving debt is more than 30% of your available credit, it may have a negative impact. Now on the other hand, having a bunch of inactive cards in your wallet isn’t ideal either. High, unused revolving credit limits can also hurt your score, because you can get into a lot of debt really quickly with the credit you already have. And carrying high revolving balances increases the chance that you could have trouble paying back any additional credit, and that can have a huge negative impact. But since you don’t need to carry a balance on your cards month to month to show that you’re using them, it’s usually beneficial to try and keep your revolving credit balance as low as possible. The best thing you can do for your credit score is to pay your bills on time, and pay more than the monthly minimum payment whenever you can. There are tools available online that can help you estimate how paying down your balances, closing a card, or opening a new one might impact your credit score. Look for a good credit score simulator online.

DID YOU KNOW THAT....

When credit grantors lower your credit limits, the amount of credit available to you is also reduced. That increases the percentage of credit that you are using compared with the credit now available due to the reduction in the credit limit. This can hurt your  FICO credit score because it increase the utilization ratio which is the amount of credit you are using compared to available credit. 

Credit scores typically rank individuals on a scale from 350 to 850. The higher the score, the less you are seen as a financial risk to creditors, employers and even landlords. myfico.com A score of 680 or higher would generally be considered good and the national average being 692. 

(See: MYFICO.COM)


DID YOU KNOW THAT....

At a time when you are already struggling to stay afloat, lower scores and higher card rates can surely aggravate an already precarious financial situation.
In fact, this can be a painful trap because if you do not realize your credit limit has been lowered you are likely to spend above your limit, thereby incurring over-the-limit fees and a higher rate, making it all the more difficult to handle the financial load, which can have a "snowball" effect.

 CHARGED OFF DEBT

WHAT IS CHARGED OFF DEBT ?  I THOUGHT I DID NOT HAVE TO PAY FOR “CHARGED OFF” DEBT!



"Charged off" is simply an accounting term which means, for you, the debtor, an account which is no longer active or useable. Simply put, it is an account that you quit paying some time ago and probably forgotten about. Then, six months or so after you stopped paying on the account, your non-performing credit account was “charged off”, or in other words, deleted and no longer listed as an asset on the books of the original credit provider. Now in the past, this debt, depending on the dollar amount, would probably have been simply counted as un-collectible by the credit grantor.

Now, however, all such debt is either referred to a standard collection agency to make attempts at recovery or, more often than not sold to a debt buyer. In the meantime, even though the obligation remains, debtors often mistakenly believe a charged off debt is no longer owed or no longer being collected upon. Not true. Nowadays, debt collectors are trying to collect on this kind of “charged off” debt even years after the original creditor has given up on collecting the debt. Therefore, if you are contacted regarding a charged off account, do not ignore it. Call us and we can deal with the collector and/or their attorneys. We know exactly what to do to defend you from these kinds of “charged offs”.

BUT MY DEBT IS CHARGED OFF !  

HOW CAN THEY SUE ME FOR CHARGED OFF DEBT ?
 

DO NOT BE FOOLED ! Collection attorneys can and do still collect on debt that you thought was “charged off” by a bank or credit card company because the institution took a credit for it on its tax return. This is baseless position. Just because the bank charged off your debt does not mean that nobody is going to come after than debt. After all, you still owe the money. The banks and credit card companies will sell the debt and you will get sued for the entire amount of the bill plus interest, costs as well attorneys' fees. Note that banks and credit card companies only charge off the debt because federal regulations do not allow banks to keep non-collectible debts on the books in the collectible column. But, again, when they “charge off”, you are not absolved of the debt.

To make money they sell the debt off to “debt buyers” including collection agencies and their lawyers for pennies on the dollar. Then, these collectors come after you.

 So, if you have recently been recently sued by a company you do not recognize, do not ignore the lawsuit. It is probably a debt buyer who is looking to seize your bank account, salary and any other assets to can find. In you are in this situation, call us now and we will gallop to your defense before things get worse. And we can do it at an unheard of fee for these types of defense cases, giving you every opportunity to at least defend yourself in these matters.

CHARGED OFF DEATH DOES NOT SIMPLY DISAPPEAR?

So, debt does not simply disappear when it is charged-off. Instead, it continues to be relevant to a bank’s taxes and is counted against the bank’s reserve funds as a loss. A charge-off is when a bank writes delinquent debt off its books. The term can be used in conjunction with various types of debt, such as that originating from a credit card, mortgage, auto loan, etc.
Banks are legally required to charge-off debt when it reaches a certain level of delinquency, which varies by the type of debt. 

For example, credit card debt must be charged-off when 180 days delinquent, while a personal loan must only be 120 days past due. Debt is also charged-off when the debt holder passes away or files for bankruptcy. And banks continue collection efforts past the time of debt being charged-off. Such debt collections efforts might be handled directly by the bank, but it’s more likely that a debt collection agency will buy the charged-off debt and attempt to collect on the amount owed itself.

Charged-off debt can cause because it is often passed between debt collection agencies, resulting in multiple organizations contacting you for payment. In addition, many consumers believe a greater difference to exist than is truly the case between charged-off debt and debt that is severely delinquent. As a result, they often assume that they’re no longer responsible for payment.

When a debt or any asset is charged off, it is taken off a balance sheet. A debt that has been charged off is typically more than 180 days past due. If no payment has been made in that amount of time, the accounting rule is that, because it is unlikely it will be paid in the near future, it can't be carried on the books as a current asset. Therefore, the debt is charged off. But the accounting move by the creditor to charge off the balance due in no way affects your responsibility to pay what is owed.

CHARGED OFF DEBY & YOUR CONTINUING LIABILITY

You remain legally liable to pay back the money that is "chrged  you owe does not change as a result of a charge-off. Whether debt is charged-off or not, you are liable for 3-15 years from the time of last payment. The exact length of time depends on your state’s statute of limitations for debt.

When debt is charged-off as a result of a relative dying, you are not automatically liable simply because you are related. Whether you are legally-bound to pay money owed by a deceased relative depends on your involvement with the account in question. If you were a co-signer, you’re liable. If you weren’t, debt collectors must wait until the estate is settled to receive payment directly from the estate. Should any leftover funds be insufficient to cover the entirety of the debt, whatever remains is then written-off and never collected because you cant sue a dead person.

CHARGED OFF DEBTS

Many issues and questions also exists around the relationship between charged-off debt, credit reports and credit scores. Obviously, the more delinquent you are on your obligations, the greater the negative effect on your credit standing will be. A charge-off causes the most damage because it represents the fact that the creditor has given up trying to get the money from you voluntarily. After charging-off on a loan or line of credit, the next step in damaging your credit and lowering your score is the looming lawsuit to collect on the so-called "charged off". 

What’s more, a charge-off remains on your major credit reports for seven and a half years following the point of first delinquency. Some people believe (or are led to believe by debt collectors) that when they make a payment toward debt or debt changes hands between collection companies, this length of time resets. However, nothing can change the length of time negative information remains on a credit report, unless the information is listed in error.

VALIDATION

SHOULD I REQUEST “VALIDATION”?



Yes, of course. Requesting validation does two things. First, it buys you some time. Under the FDCPA, all collection activity must cease until the attorney puts that verification in the mail to you. The verification is usually a simple statement signed by the creditor, and it will not take the collection attorney long to obtain it or mail it, but it does "stay" collection activities, including law suits, until answered. Secondly, it sends a signal to the collection attorney that you are not going to be a rollover debtor. He knows you will be active in the defense of the suit.

Note that a high percentage of collection suits simply proceed to default judgment without any response from the debtor. 

Default judgment is just what a collection attorney hopes for in every case.. Consumers who don't answer lawsuits make it far too easy for the collection attorneys.

 However, by filing a validation request, you send a very strong message to the collection attorney that you aren't going to give up. He might actually have to go to court himself and you may force him to prove the debt. By filing the validation request, you actually stay the collection proceedings. Thus, if a collection attorney cannot move forward against you in a collection suit, the chance of your having a default judgment against you is greatly diminished.

WHAT IS PROPER VALIDATION ?

Generally speaking, proper validation of a debt depends on the specific nature of the dispute. At a minimum, the debt collector is required to confirm with the creditor that the amount being claimed is correct and that the person he is attempting to collect tahe debt from is the person who owes it. The most basic response to a validation/verification request would be for the collector to provide the name of the original creditor and some simple statement regarding the alleged amount owed.

Under the Fair Debt Collection Practices Act, debt collectors must provide a notice with basic “validation” information to the consumer within five days after their first communication, to show that they have a legitimate basis for collecting the debt they claim to be owed.48 The notice must include five items: (1) the amount of the debt; (2) the name of the creditor; (3) a statement that the consumer must dispute the debt within 30 days or it will be presumed valid; (4) a statement that if the consumer disputes the debt within the 30-day period, the collector will provide verification of the debt; and (5) a statement that upon the consumer’s request during the 30-day period, the collector will provide the name of the original creditor if different from the current creditor. Retaining this information, as well as providing it to the debt buyer, becomes important once the original creditor sells the debt. It is also essential for ensuring accuracy once a collector notifies a consumer that a collection effort has begun. And if the matter must be settled in court, early and equal access by all parties to the same information is absolutely vital to ensuring a fair and just litigation process. See 15 U.S.C. §§ 1692g(a)(1-5)

HOW DO I FILE A VALIDATION NOTICE?

Demanding validation of a debt is very simple and the response required of a creditor is also, unfortunately, also very simple. The statute merely requires the collector to give the debtor the name and address of the original creditor. Some courts have also required the collector to give a simple accounting of the debt, i.e. the principal, interest, and other added fees such as attorney's fees. Again, I have seen a lot of "on-line" verification/validation form letters asking for information and documentation the FDCPA doesn't require the collection attorney to give you. Such far-reaching requests immediately tell the collection attorney you really have no idea what you are doing. The form letters also make threats which simply irritate the collection attorney.


For a complete review of the Fair Debt Collection Practices Act, visit: www.fair-debt-collection.com

REMEMBER: ALWAYS SEND LETTERS

TO COLLECTION AGENTS VIA CERTIFIED MAIL.

 CREDIT REPORTS & REPAIR

HOW DO CREDIT REPAIR COMPANIES WORK ?

Credit Repair programs and Debt Settlement companies offer to improve your credit score and eliminate your debt. Many times these companies' offers are too good to be true. And they certainly are. We even have seen some of the companies falsely claiming that they can eliminate 100% of your debt no matter the circumstances. Unfortunately, this is not the reality and not something you should realistically count on, no matter how good it sounds. So, be very careful, circumspect and skeptical before you start giving your money to one of these outfits. Do not believe unrealistic promises of quick and easy credit repair and debt settlement scams.

WILL MY CREDIT SCORES WILL IMPROVE IF I PAY OFF COLLECTION ACCOUNTS.

Unfortunately, this is not very unlikely and will not automatically happen. A collection account is negative, whether it is paid or unpaid. Sometimes you may see a little improvement from paying off one of these accounts, but that's not typical. And it’s not automatic. We at the Credit Card Defense Center of New York can and have gotten credit  reports improved and adjusted upon settlements of debts for our clients. Contact us today to find out how.

MUST A COLLECTION AGENCY REMOVE A COLLECTION ACCOUNT FROM MY CREDIT REPORT IF I PAY OFF A DEBT?

 This is simply not true. Collection accounts may be reported for the time period allowed by law, regardless of whether they are paid or not. In our consultations with you, we go into detail about what you can do if you have collection accounts on your credit reports. 

Here's a brief summary of the credit report repair wok that attorneys associated with The Credit Card Defense Center of New York can do for you and have done for clients in recent cases:  

  • Negotiate.Collectors aren’t obligated to remove an account just because you pay it. But if you have a legitimate dispute about the debt, you may want to push hard for this option.
  • Dispute the debt.If an item is inaccurate or incomplete, you have the right to dispute it. If the collection agency does not confirm it, it must be dropped. Warning: If you haven’t paid the debt, disputing it could revive the collector’s interest in the debt. Learn how to dispute credit report mistakes  


WHERE DO I DISPUTE ITEMS OMN MY CREDIT REPORT ?

TransUnion offers a downloadable form for you to fill and send out, in order to initiate an investigation with them.

The addresses set up to receive disputes should appear on your credit report or you may use the ones below. Alternatively, you could initiate the dispute online.

  • TransUnion Consumer Solutions

  • P.O. Box 2000

  • Chester, PA 19022-2000



  • Equifax Information Services LLC

  • P.O. Box 740256

  • Atlanta, GA 30374


  • Experian

  • National Consumer Assistance Center

  • P.O. Box 2002

Allen, TX 75013


What consumer protections do I have under the National “CARD Act” ?


In May, 2009, President Obama signed into law the Credit Accountability, Responsibility, and Disclosure (“CARD”) Act. Most provisions of the Card At of the CARD Act’s consumer protection provisions became effective on February 22, 2010, including provisions eliminating online payment fees, ending two-cycle or double billing, setting forth new requirements for when consumers must receive bills, and implementing rules for when consumers must be notified about changes to their credit card accounts. With these protections, consumers have a stronger shield against credit card abuses such as deceptive language and unjustified interest rate increases on existing balances. Further provisions became effective on August 22, 2010, including provisions that limit the amount of penalty fees for late payments, prohibit inactivity fees, require explanation of rate increases, and mandate review of recent rate increases.



For a brief overview of the changes now in effect and to find more information on the CARD Act, visit the Federal Reserve Bank’s pages on What You Need to Know: New Credit Card Rules.

You can also visit the Federal Reserve Bank’s website on Consumer Credit for credit card holders to find out more information on the CARD Act.

What new rules must my credit card comopnay follw now that the Card Act is la ?

First, your credit card company has to tell you When they plan to increase your rate or other fees. The credit card company must send you a notice 45 days before they can increase your interest rate;change certain fees (such as annual fees, cash advance fees, and late fees) that apply to your account; or make other significant changes to the terms of your card.

                  Secondly, if your credit card company is going to make changes to the terms of your card, it must give you the option to cancel the card before certain fee increases take effect. If you take that option, however, your credit card company may close your account and increase your monthly payment, subject to certain limitations. 
For example, they can require you to pay the balance off in five years, or they can double the percentage of your balance used to calculate your minimum payment (which will result in faster repayment than under the terms of your account). 


                   

                  The company does not have to send you a 45-day advance notice if: a) you have a variable interest rate tied to an index; if the index goes up, the company does not have to provide notice before your rate goes up; b) your introductory rate expires and reverts to the previously disclosed "go-to" rate; c) your rate increases because you are in a workout agreement and you haven’t made your payments as agreed.

                  As you proibabakly have seen with your mnthly dtatemewbts, credit card comonay must now tell you how long it will take to pay off your balance. Your monthly credit card bill now must include information on how long it will take you to pay off your balance if you only make minimum payments.

                  It will also tell you how much you would need to pay each month in order to pay off your balance in three years. 

. 



  • File a lawsuit.If the debt is too old to be reported, or if you have legitimately disputed it, and the collector continues to report it, you may have case for credit damage under the federal Fair Credit Reporting Act. In addition, the collector may have also violated the federal Fair Debt Collection Practices Act as well as state or federal consumer protection laws. At The Credit card defense Center of New York we can help you determine if you have a case against the collection agency. 


  • Work with attorneys for The Credit Card Defense Center.There are many valid warnings about the typical credit repair organizations. And in our experience there are very good reasons to be cautious. At the same time, some consumers find that they simply don’t have the time or energy to deal with credit report issues. In that case, hiring a professional may be useful.


WHAT IS THE CEDIT REPAIR ORGANIZATION ACT ?


The CREDIT REPAIR ORGANIZATION ACT, 15 U.S.C. § 1679, et. seq., prohibits a variety of false and misleading statements, as well as fraud by credit repair organizations (CROs). CROs may not receive payment before any promised service is "fully performed." Services must be under written contract, which must include a detailed description of the services and contract performance time. CROs must provide the consumer with a separate written disclosure statement describing the consumer's rights before entering into the contract. Consumers can sue to recover the greater of the amount paid or actual damages, punitive damages, costs, and attorney's fees for violations of the CROA. The states and the FTC may also enforce the CROA.

WHAT IS USURY

Usury is a common defense and it is almost always unavailable in credit card cases.  The National Bank Act pre-empts state law (usury is legislated at the state level) and permits national banks who issue credit cards to import the maximum interest rate from the state where they have their primary corporate offices to any other state where they do business.  This is why so many of them are organized and have their corporate offices in Delaware or South Dakota, which have no usury laws.

30 DAY DISPUTE PERIOD HAS PASSED SINCE I DISPUTED AN ERRONEOUS ENTRY. MUST THE CREDIT BUREAUS  DELETE THE ENTRIES ?

If you have written a dispute letter to a credit bureau disputing the accuracy of an account, they have 30 days to investigate the account and if they cannot verify the information within 30 days, they must delete the information.

WHY SHOULD I CHECK MY CREDIT REPORT ?

Periodically, it is a good idea to check your credit report for errors and to correct inaccuracies to get better interest rates and to protect yourself against identity theft. Dispute anything you think should not be there. The Fair Credit Reporting Act allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a reinvestigation of the disputed information results in a finding that your dispute has validity.

WHAT CAN I DO WHEN THE CREDIT BUREAUS WON"T CORRECT MY FILE

You can sue the three national credit bureaus; creditors, debt collectors and other companies that report incorrect, negative information to credit bureaus; and companies that misuse your credit information, for violations of the federal Fair Credit Reporting Act (FCRA). The FCRA regulates the collection, dissemination, and use of consumer credit information. Whenever a creditor, debt collector or credit bureau violates your rights under the FCRA, you can recover up to $1,000 PER VIOLATION or your Actual Damages (see below), plus PUNITIVE DAMAGES, attorney's fees and court costs.

WHAT IS THE DEFINITION OF A DEBT COLLECTOR

A “Debt Collector” is a person engaged in the collection of debts owed to another, with certain exceptions. Creditors collecting on their own debts generally are not “debt collectors” for purposes of the FDCPA. Debt buyers – persons who collect debt on their own behalf that they have purchased from creditors or debt collectors – are covered by the FDCPA if the accounts were in default at the time the debt buyers purchased them. FDCPA §§ 803(4), 803(6); 15 U.S.C. §§ 1692a(4), 1692a(6); see also Ruth v. Triumph P’ships, 557 F. 3d 790, 796-97 (7th Cir. 2009); FTC v. Check Investors, 502 F. 3d 159, 171-72 (3rd Cir. 2007). Section 5 of the FTC Act, 15 U.S.C. § 45(a), broadly prohibits unfair or deceptive acts or practices, including those of creditors.

 

LAWSUITS AGAINST CREDIT BUREAUS

Under the FCRA you may sue a credit bureau for violation of any of the following rules:

• A credit bureau must investigate, change or remove any incorrect data from your credit report.

• Credit bureaus may not retain negative information for more than seven years from the last payment made. The exceptions to this rule are that bankruptcies may be reported for 10 years after the bankruptcy discharge and tax liens can be reported for seven years from the time they are paid.

• Credit reports can be issued only to those with a legitimate business reason. These include creditors, employers, landlords, insurers and government agencies, or anyone else for whom you request a report.

• You must give your consent for a credit report to be issued to a potential employer or landlord.

• Credit bureaus are required to help you understand your credit report.

 

LAWSUITS AGAINST CREDITORS, DEBT COLLECTORS AND OTHERS WHO REPORT FALSE OR INCOMPLETE CREDIT INFORMATION TO CREDIT BUREAUS

A credit information furnisher is a company that provides information to credit bureaus. Information furnishers include creditors, debt collectors (collection agencies), credit card companies, auto finance companies, mortgage lenders, state and city courts, and employers. Under the FCRA you may sue a credit information furnisher for violation of any of the following rules:

• An information furnisher must provide complete and accurate information to the credit bureaus.

• If you dispute an entry on your credit report, the information furnisher must correct any error, or explain why the credit report is correct within 30 days of receipt of notice of a dispute.

• The information furnisher must correct inaccurate or incomplete information in your report.

• The information furnisher must notify all credit bureaus where they sent incorrect information of any error.

• An information furnisher must inform consumers about negative information which has been or is about to be placed on a consumer's credit report within 30 days.

LAWSUITS AGAINST USERS OF CREDIT INFORMATION OBTAINED FROM CREDIT BUREAUS

Under the FCRA you may sue a user of credit information for credit, insurance, or employment purposes (including background checks) for violation of any of the following rules:

• Users of credit information must notify the consumer when an adverse action is taken on the basis of such reports.
 

• Users of credit information must identify the company that provided the report, so that consumers may verify or dispute the information in the report.


 DAMAGES:

 

If someone violates your rights under the Fair Credit Reporting Act, you can recover the following damages:

 

1. UP TO $1,000 PER VIOLATION or your “Actual Damages” (see below)

 

2. PUNITIVE DAMAGES

 

3. Attorneys’ fees.

 

4. The costs of the lawsuit.

 

"ACTUAL DAMAGES" FOR VIOLATIONS OF THE FAIR CREDIT REPORTING ACT

 

The following is a list of "actual damages" that you may be able to recover when a creditor, debt collector, credit bureau, credit information furnisher or credit information user violates your rights under the Fair Credit Reporting Act. This is not a complete list of all possible damages recoverable under the FCRA. You may have suffered different or additional damages that are not on the list.

 

1. Monetary damages.

 

Inaccurate negative information on your credit report may cost you money due to loss of employment, loss of credit needed to conduct your business, higher insurance premiums or denial of coverage, fees paid to attorneys, debt settlement companies and others for assistance with credit issues prior to bringing suit, and other costs and expenses of being denied credit and attempting to correct incorrect negative credit information.

 

2. Damages for emotional distress may include stress-related injuries and conditions such as the following:

 

Heart attack, angina, chest constrictions; miscarriage; ulcers, diabetic flare-up; shock; loss of appetite; crying; nightmares; insomnia, night sweats; emotional paralysis; inability to think or function at work; headaches; shortness of breath; anxiety, nervousness; fear and worry; hypertension (elevation of blood pressure); stress to children; irritability; hysteria; embarrassment, humiliation; indignation, and pain and suffering.

 

If you suffer from one or more of the above conditions as a result of a creditor, debt collector, credit bureau, credit information furnisher or credit information user violating your legal rights, you may be entitled to a substantial monetary recovery, equivalent to the amount you could recover in a personal injury case involving similar injuries.

 

IS IT A GOOD IDEA TO TRANSFER MY BALANCE FROM HIGH-INTEREST CARDS 

TO LOWER-RATE CARDS WITH LOWER RATES?

Yes, if you can control yourself, by which we mean your spending habits. By transferring a balance onto a card with a low introductory rate, sometimes called “teaser rates”, you can potentially save money on interest if you simply stop charging new purchases on the low interest card and, instead, focus on paying off the balance before that introductory rate expires and the rate goes through the proverbial roof. But if you are tempted to continue to charge on the new card and, give into to that temptation, you will, in the final analysis, wind up with more debt that you initially transferred.. And, dangerously, new purchases may be charged at an altogether different and certainly higher interest rate than the beginning teaser rate. Therefore, only do the balance transfer if you can control your spending and refrain from continuing to charge on top of the balance you are already struggling to pay off, balance transfers won't get you out of debt and will most likely, engulf you in further debt.

WHAT MUST A CREDIT REPORTING AGENCY DO 

WHEN YOU DISPUTE A CREDIT REPORT ENTRY

When you dispute a credit report entry, the CRA's have 30 days to look into your complaint and act on it pursuant to the Fair Credit Reporting Act and must show in your report that an item is being disputed or is under investigation.

Recently had a credit card or loan application rejected? Here's Why:

Today, an individual does not make most credit decisions. The decision is made by a "credit scoring" system. This is a statistical method creditors use to assess your creditworthiness. The creditor gathers their statistics from your credit bureau file. 

Aspects such as your payment history, the amount you owe, who you owe, the length of your credit history, and any new credit accounts you have are assigned certain point values. If so, you have the right to know why your application was denied. There are many reasons why you may be turned down when you apply for a loan or credit card, so it is important that you understand the reasons why credit grantors may deny extending credit. For example, your FICO Score is calculated from data than can be grouped into the following five categories:

• 35% Payment history

• 30% Amount you owe

• 15% Length of credit history

• 10% New credit

• 10% Your credit mix (credit cards, store charge cards, loans, etc.)

The number of times you apply for credit and the frequency of these attempts to get credit are also taken into consideration. This is reflected in the "inquiries" showing up on your credit file. Six or more inquiries within a six month period of time will scare a lender. Applying for loans on the Internet or transferring balances on credit cards for better interest rates can have consequences for your credit score.

It is also possible that your credit report contains incorrect information. Whenever you are refused credit, you have the right to receive a free copy of your credit report within 30 days of the rejection, from the credit reporting agency that the creditor used. Take advantage of this opportunity to review your credit report and determine if there are any mistakes.

In addition to your credit report, a creditor may deny your loan request because you have not held your present job or lived at your present address long enough. Some creditors require you to have been at your job or address for a least three years.

When applying for a loan, some lenders are also interested in the reason you are requesting the loan. Sometimes, lenders do not believe your purpose for requesting the loan is reasonable. Other times, lenders may have restrictions that do not allow them to make the kind of loan you are requesting.

If you've recently been refused credit, wait awhile before applying again. Take some time to review your credit report and correct the problem that is keeping you from being credit worthy. The federal Fair Credit Reporting Act (FCRA) states derogatory information can remain on your credit bureau file for seven years from the date of the negative activity occurred. 

ARE THERE ANY EXEMPTIONS FROM DEBT COLLECTION? 

Yes, there are exemptions from debt collection? In fact, a New York State Law called the Exempt Income Protection Act (EIPA) protects your bank accounts that contain subsistence funds such as government benefits, pensions and even some earned income. This very helpful law prevents creditors and debt collectors from freezing these assets to pay certain debts like credit cards, bank loans and medical bills. This means that under state and federal law, certain kinds of income and property are classified as exempt from debt collection, and creditor or debt collector cannot force you to use exempt income or property to pay a debt.

The EIPA immunizes your bank account from being restrained if your balance is less than:

              $ 2,500 - if your account contains directly deposited exempt benefits, including Social Security, SSI, Veterans benefits, disability, pensions, child support, spousal maintenance, workers compensation, unemployment insurance, Public Assistance, Railroad Retirement benefits, and Black Lung benefits or;

               $ 1,740 - for all other bank accounts.

         Other types of benefits which are also exempt from debt collection:

              Public Assistance (PA)

               Supplemental Security Income (SSI)

               Social Security

               Social Security Disability (SSD)

               Veterans benefits (VA)

                Child Support

                Spousal Maintenance

                 Workers Compensation

                 Unemployment Insurance

                 Railroad Retirement benefits

                 Black Lung benefits

                 The following retirement funds are exempt from debt collection:

                 Public and private pensions

                 Retirement saving accounts like 401(k), 403(b), and IRA

                All of the principal and 90% of the payments from a private trust

Earned Income Exemption:

Additionally, earned income up to 30 times the minimum wage per week, after taxes, is exempt. The minimum wage is currently $7.25 an hour. In other words, if you are that rare person who takes home $217.50 per week or less, all of your earned income is exempt from debt collection. So, If you take home more than $217.50 per week, 90% of your gross income or 75% of your disposable income, whichever is greater, is exempt from debt collection.

The following kinds of personal property are exempt from debt collection and cannot be seized:

         Household goods, like furniture, clothing, and appliances

         One television

         Radio

         Personal items like wedding ring or watch

         If a computer or car is indispensable to your work, they can be exempt as "tools of trade." 


WHAT IS SO BAD ABOUT "PAYDAY LOANS" ?

If you are into payday loans, you are in dangerous territory, as you probably already know. But did you also know that people who take use payday loans are seven times more likely to file for bankruptcy than those who don’t. In fact, according to one study, approved first-time payday loan applicants experience a 90 percent increase in bankruptcy filing rates. “Do Payday Loans Cause Bankruptcy?”, Paige Marta Skib, Vanderbilt Law School & Jeremy Tobacman, UPenn.

How ChexSystems Works

U.S. banks and credit unions report incidents to ChexSystems to protect themselves and other banks in the future. You get reported to ChexSystems if your account is closed for "cause." What is "for cause?" Banks differ greatly between them as to what valid reasons are for closing an account. Here are some examples:

                The bank was unable to collect for an overdraft, ATM transaction, or automatic payment which they honored on insufficient funds.(Regardless of amount, and often without waiting more than a few days!)

                Multiple overdrafts.

                Savings account, debit card or ATM abuse.

                Fraud.

                Providing false information in opening account.

 

Each incident stays on your record with ChexSystems for FIVE full years from the date the incident was reported. You are entitled to see your Chexsystems Report once a year for FREE, just like you are entitled to a free credit report from Experian, Equifax and Transunion.

Getting an incident reported to ChexSystems is the Kiss Of Death for your financial future. Most banks now say: "Our bank policy is that we will not open a checking account for you if you have one or more incidents reported to ChexSystems." Scary.

Do Banks Open Accounts & Close Them Later?

"It seems more common amoung some banks than others. Some banks have online applications that will approve immediately. Then the bank will wait until the signature card is sent in to actually look at the Chexsystems report. At that point, they will send back the initial deposit and close the account.

"Then there are other banks that do "sweeps" on accounts. This is where a bank, generally the loss prevention department will do a random check on accounts with chexsystems. If they find that the customer has a chexsystems record, they then will determine that they person may be a risk and they will freeze account, and later close it.

For more details about this system and what to do if you get reported, check out these excellent resources:The following is a sample letter requesting ChexSystems to validate and remove a listing from their database. Make sure to edit this letter and fill in the appropriate information for your situation.

 

Non-ChexSystems Banks

Want to find a non-ChexSystems bank? Here are some free resources (yeah, they're REALLY free). However, bank policy changes ALL of the time, so you should call these banks first to see what their current policy is.

 

                www.chexsystemsvictims.com/AboutmyList

                Here's a good forum for people trying to find a good bank or learn how to get out of CheckSystems.

                Here is the discussion forum thread that keeps an updated list as well.

 

ChexSystems for Members

Banks and credit unions can call (800) 328-5120* or (800) 328-5122* to reach ChexSystems' Inquiry Department. At this number, your banker (but not you) can obtain the details in your record immediately.

                Tip #1 Your banker can call this number to get all the information in your files and according to FCRA Section 607 (c) regulations, ChexSystems cannot discourage your banker from relaying that information to you.

                Tip #2 ChexSystems now offers a customer service number, (800) 513-7125, for consumers to reach a human there. If the wait time on hold at that number is too long, and you REALLY want to speak to a human, sometimes you can ask for a supervisor at either of these 800 numbers and perhaps someone may be able to talk with you. You can also try to game the system by calling customer service, then press the # key, and enter random 3 digit extensions until you find someone on the inside at ChexSystems who will take your call. Either you will find someone this way, or after the third attempt, your call will get forwarded to a human.

                Tip #3 Or else, try 1-800-613-6743, (Office of the Controller of the Currency) to file a complaint.

                Tip #4 You can also try the customer service number posted on ChexSystem's website: 800.428.9623

There are 2 other major specialty companies that report on check writing history:

Shared Check Authorization Network (SCAN) maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 262-7771 (U.S., Guam, and Puerto Rico)
Fax: (800) 358-4506
Web: www.consumerdebit.com

TeleCheck Maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 209-8186.
Web: www.telecheck.com.

You are entitled to see your Chexsystems Report once a year for FREE online.

Why debt buyers have difficulty enforcing collection lawsuits.

A doctrine known as the Hearsay Evidence Rule disallows the admission of statements into evidence, whether oral or written, made by an out-of-court witness offered to prove the truth of the matters asserted. In credit card collection lawsuits, a credit card agreement and billing statements are written statements by out-of-court witnesses offered to prove the truth of the contents contained therein. In other words, if the collection attorneys want to preset evidence at trial that you owe a certain amount  of money as set forth in a written statement from the bank they represent, that evidence will not be allowed and, if the case is based entirely on this evidence, which is legally inadmissible against you, the case will be dismissed.

Instead, a witness from the original bank must authenticate the documents by what’s known as "laying a foundation" to show that:

1) the statements were created in the regular course of business;

2) it is in the bank's regular course of business to make these statements

 3) the creator of the documents had a business duty to create them;

4) the documents were created contemporaneously with the event, in other words, when the event occurred.

Debt buyers tend to lack access to those bank witnesses who possess first-hand knowledge of the original bank's record-keeping practices.


Does checking my own credit report affect my credit score?

 

No, requesting a copy of your own credit report has no impact on your credit score. In industry lingo, when you check your own score, it’s considered a soft inquiry. Basically, that means checking your credit report for purposes other than making a decision on extending your credit. Examples of other soft inquiries are when companies check your credit for pre-approved offers, or when you apply for a job and your potential employer runs a credit check. Soft inquiries generally do not affect your credit score. Hard inquiries, on the other hand, occur when you apply for new credit, and the lender requests a copy of your credit report to decide whether to approve you or not. Now, those inquiries stay on your credit report for about two years, and they can lower your credit score, especially if they’re numerous. Hard inquiries suggest you are actively seeking or have recently taken out more credit. The more of them there are, the bigger the red flag to future creditors. So it’s probably a bad idea to apply for a lot of credit cards at once. So checking your credit report isn’t going to hurt you. And it’s really a good way to stay on top of things to avoid any unpleasant surprises down the road. You can get to a free credit report from each of the three credit bureaus once a year, or you can also visit www.annualcreditreport.com to get a copy as well.

What happens when the company suing me claims that the debt was “assigned” to it ?

If the creditor suing you is not the original creditor with which you did business, the entity now sing you must prove that it has a legal assignment of the debt sought to be collected.

Most often third party debt buyers purchase such large portfolios of accounts from creditors then subdivide the portfolios into smaller segments and sell off those segments to different debt buyers. A debt buyer must show a continuous, unbroken chain of assignments.

               The assignment must identify the particular account at issue.

               The assignment must be signed by each party who sold the debt.

               The assignment must have been created for routine business activity, not for litigation.

Multiple transfers amongst debt buyers of a particular debt lower the likelihood that the current debt buyer will have a valid assignment in admissible form.


Should I Opt out from "Pre-approved" Credit Card Mailings

 

Probably you should. Good reasons to “Opt Out” permission (e.g. stop "pre-approved" credit card offers) include preventing companies from being able to access your credit without permission, avoiding the hassle and the temptation that comes along with "pre-approved" credit card offers filling up your mailbox and minimizing the risk of identity theft from credit card offers you receive in the mail. 

Also you can “Go Green” and help the environment with less paper waste. By stopping credit card offers and other prescreen mail, you'll help protect your identity from theft and fraud. And the average adult receives 41 pounds of junk mail each year, 44% of which goes to the landfill unopened. By reducing your junk mail for 5 years, you'll conserve 1.7 trees and 700 gallons of water, and prevent global warming emissions — and you'll gain about 350 hours of free time!

More than 100 million trees are destroyed each year to produce junk mail. 42% of timber harvested nationwide becomes pulpwood for paper. Use this link to "Opt Out".

 

You may send a dispute letter to each CRA from whom you have ordered, received, and reviewed, a copy of your report if you think there are errors or wrong information. The addresses for dispute letters to the big 3 CRA's are:

TransUnion LLC
Consumer Discosure Center


P.O. Box 2000 
Chester, PA 19022-2000
(800) 916-8800

Equifax Information Services, LLC
Complaint Department


P.O. Box 740256
Atlanta, GA 30374
(888) 873-5420

Experian
NCAC


701 Experian Parkway 
Allen, TX 75013
(800) 583-4080



DON'T LET THE CREDITORS DRIVE YOU NUTS TOO!

CALL US TODAY AND WE WILL PUT A STOP TO THE HARASSMENT TODAY!


 WHAT IS THE FAIR CREDIT REPORTING ACT?


The Fair Credit Reporting Act (FCRA) is the law passed by Congress defining your legal rights in regard to your Credit Report. Among other rights, the FCRA says:

    * You must be told if info in your Credit Report wasused against you.
    * You have the right to know what is in your Credit Report.
    * You have the right to dispute incomplete or inaccurate information.

For more information, visit the Federal Trade Commission's webpage about the FCRA. (http://www.ftc.gov/os/statutes/fcrajump.shtm)


 WHAT IS THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT ?

The Fair and Accurate Credit Transactions Act (FACTA) was signed into in 2003. FACTA was a revision to the Fair Credit Reporting Act (FCRA) and allows consumers to get one free Credit Report from each of the three national bureaus once a year from AnnualCreditReport.com.

For more information, visit the Federal Trade Commission's webpage about the FCRA. (http://www.ftc.gov/os/statutes/fcrajump.shtm)

Get a free copy of your credit report at AnnualCreditReport.com. You are entitled to a free report each year from each of the three bureaus at this Web site. If the accounts are not listed as paid in full, you should dispute the item with the credit bureau that is reporting it incorrectly. You can file a dispute online at all three major bureaus. Unfortunately, if the charge-offs are listed correctly as paid charge-offs, there is nothing else you can do. Correct negative information will stay on your credit report for seven years from the first date of delinquency that resulted in the charge-off and cannot be removed.

WHAT IS THE CREDIT REPAIR ORGANIZATIONS ACT ?

The Credit Repair Organizations Act (CROA) was signed into law in 1996 and governs the business and advertising practices of companies claming to offer "credit repair" services. Prior to CROA, there were some companies that took advantage of consumers and profited on advice that actually hurt consumers instead of helping them.

Be very careful when dealing with any company that offers to "fix" or "clean" your credit for money. Many of the services these agencies offer are things you can do for yourself at no cost, such as filing disputes with the credit bureaus.

For more information, visit the Federal Trade Commission's webpage about CROA. (http://www.ftc.gov/os/statutes/croa/croa.shtm)


FAIR DEBT COLLECTIONS PRACTICES ACT

What types of debts are covered by the Fair debt Collection Pracices Act ?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.


What types of debts are covered by the Fair Debt Collection Pracices Act ?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn't cover debts you incurred to run a business.


Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they're told (orally or in writing) that you're not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter - even if you don't think you owe the debt, can't repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don't want the collector to contact you again, tell the collector - in writing - to stop contacting you. Here's how to do that:


Make a copy of your letter. Send the original by certified mail, and pay for a "return receipt" so you'll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.


Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don't have an attorney, a collector may contact other people - but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

 

What does the debt collector have to tell me about the debt?

 

Every collector must send you a written "validation notice" telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don't think you owe the money.

 

Can a debt collector keep contacting me if I don't think I owe any money?

 

If you send the debt collector a letter stating that you don't owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

 

What practices are off limits for debt collectors?

 

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

 

    * use threats of violence or harm;

    * publish a list of names of people who refuse to pay their debts

    * use obscene or profane language; or

    * repeatedly use the phone to annoy someone.

 

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:


    * falsely claim that they are attorneys or government representatives;
    * falsely claim that you have committed a crime;
    * falsely represent that they operate or work for a credit reporting company;
    * misrepresent the amount you owe;
    * indicate that papers they send you are legal forms if they aren't; or
    * indicate that papers they send to you aren't legal forms if they are.

Debt collectors also are prohibited from saying that:

    * you will be arrested if you don't pay your debt;

    * they'll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so.

    * legal action will be taken against you, if doing so would be illegal or if they don't intend to take the action.

Debt collectors may not:

    * give false credit information about you to anyone, including a credit reporting company;
    * send you anything that looks like an official document from a court or government agency if it isn't; or
    * use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

    * try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt - or your state law - allows the charge;
    * deposit a post-dated check early;
    * take or threaten to take your property unless it can be done legally; or
    * contact you by postcard.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don't think you owe.
Can a debt collector garnish my bank account or my wages?

If you don't pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don't ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:

    * Social Security Benefits
    * Supplemental Security Income (SSI) Benefits
    * Veterans' Benefits
    * Civil Service and Federal Retirement and Disability Benefits
    * Service Members' Pay
    * Military Annuities and Survivors' Benefits
    * Student Assistance
    * Railroad Retirement Benefits
    * Merchant Seamen Wages
    * Longshoremen's and Harbor Workers' Death and Disability Benefits
    * Foreign Service Retirement and Disability Benefits
    * Compensation for Injury, Death of U.S. Contractors Outside the U.S.
    * Federal Emergency Management Agency Federal Disaster Assistance

But federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can't prove that you suffered actual damages. You also can be reimbursed for your


BUT I WAS NEVER SERVED WITH ANY LEGAL PAPERS !  CAN I USE THIS A S A DEFENSE IN COURT AGAINST THE CREDIT CARD COMPANY ?

The defense of improper service applies if (1) you never received the summons and complaint at all; or (2) you received the summons and complaint, but the manner of service was not correct.


Under New York law, a process server must try to make personal service or substitute service. Personal service occurs when the process server delivers the summons and complaint to you in person. Substitute service occurs when the process server leaves one copy of the summons at your home (or place of business) with a roommate, relative, or other responsible party (known as a "person of suitable age and discretion") AND mails a second copy of the summons to you at your last known address (or place of business).


If a process server makes three unsuccessful attempts at personal or substitute service service, he or she is allowed to use conspicuous service (otherwise known as nail-and-mail). Conspicuous service means slipping one copy of the summons under your door or attaching it to the door AND mailing a second copy of the summons to you at your last known address.


Here are some common examples of incorrect service:


* Leaving the summons with your neighbor, who lives in a different apartment.

* Sending the summons to an old address where you no longer live.

* Throwing the summons on the floor in the lobby of your apartment building.

* Sending the summons to you by mail only.


 

 

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Some of the creditors we deal with daily include: Mel S Harris, Forster & Garbus, Rubin & Rothman, Sharinn and Lipshie, Kirschenbaum & Phillips, P.C., Solomon and Solomon, P.C, Goldman & Warshaw, P.C., Eltman Eltman and Cooper, Eric M. Berman, P.C., Stephen Einstein & Associates, P.C., Fabiano and Associates, Jones Jones Larkin O’Connell, Panteris & Panteris, LLP, Zwicker and Associates, Relin, Goldstein & Crane, Woods Oviatt Gilman, Leschack & Grodesnky, Hayt Hayt & Landau, Pressler & Pressler, Jaffe & Asher, Mullen & Iannarone, Arnold A. Arpino & Associates, Houslanger & Associates, Mann Bracken, LLC, Smith Carroad Levy & Finkel, McNamee, Lochner Titus & Williams, Thomas Law Office, Fleck, Fleck & Fleck, Eric Ostrage Cullen and Dykman LLP, Winston & Winston, P.C., Cooper Erving & Savage, LLP, Robert P. Rothman, P.C, Gerald D. DeSantis, Greater Niagara Holdings, LLC, Rodney A. Giove, Advanced Litigation Services, LLC, and Jason L. Cafarella. Asset Acceptance, Sherman Acquisitions, Sherman Financial Group, Alegis, NCO Group, Portfolio Recovery Assoc., Asta Funding,  Encore Capital Group, Midland Credit, Allied National, Interstate Risk Management Alternatives, RMA, JBC & Associates, Arrow Fin. Svcs., RJM Acquisitions, CAMCO (Capital Acquisitions & Mgmt Co), Excalibur, Cavalry Portfolio Services, Unifund Group, Phoenix Asset Acceptance, First Select Corporation, Providian, Collins Financial Services, Oliphant Financial Corp., OSI Portfolio Services, Mel S Harris, Forster & Garbus, Rubin & Rothman, Or one of these guys: Sharinn and Lipshie, Goldman & Warshaw, P.C., Eltman Eltman and Cooper, Eric M. Berman, P.C., Stephen Einstein & Associates, P.C., Fabiano and Associates, Jones Jones Larkin O’Connell, ge & Panteris, LLP, Zwicker and Associates, Relin, Goldstein & Crane, Woods Oviatt Gilman, Leschack & Grodesnky, Hayt Hayt & Landau, Pressler & Pressler, Jaffe & Asher, Mullen & Iannarone, Arnold A. Arpino & Associates, Houslanger & Associates, Mann Bracken, LLC, Smith Carroad Levy & Finkel, McNamee, Lochner Titus & Williams, Thomas Law Office, Fleck, Fleck & Fleck, Eric Ostrage Cullen and Dykman LLP, Winston & Winston, P.C., Cooper Erving & Savage, LLP, Robert P. Rothman, P.C, Gerald D. DeSantis, Greater Niagara Holdings, LLC, Rodney A. Giove, Advanced Litigation Services, LLC, and Jason L. Cafarella. Cohen & Slamowitz, Rubin & Rothman, Mitchell Kay & Associates, Midland Funding, GE Money Bank, Household Finance, Forster & Garbus, Malen & Associates, Portfolio Recoveries, Asset Acceptance, LR Credit, L.R. Credit, Capital One Bank, Palisades Collections, Palisades Collections, Portfolio Recoveries, LVNV Funding, Wolpolf & Abramson, American Express, Discover Card, HSBC, Eltman, Eltman & Cooper, Household Bank, Discover Bank, Citibank, American Honda Finance, MBNA, Beneficial Finance, American Express, and Chase Manhattan Bank.









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What is a charge-off?
A charge-off is when a bank writes delinquent debt off its books. The term can be used in conjunction with various types of debt, such as that originating from a credit card, mortgage, auto loan, etc.

Banks are legally required to charge-off debt when it reaches a certain level of delinquency, which varies by the type of debt. For example, credit card debt must be charged-off when 180 days delinquent, while a personal loan must only be 120 days past due. Debt is also charged-off when the debt holder passes away or files for bankruptcy.

What happens to charged-off debt?

Debt does not simply disappear when it is charged-off, but rather continues to be relevant to a bank’s taxes and is counted against the bank’s reserve funds as a loss. What’s more, banks continue collection efforts past the time of debt being charged-off. Such debt collections efforts might be handled directly by the bank, but it’s more likely that a debt collection agency will buy the charged-off debt and attempt to collect on the amount owed itself.

Charged-off debt can cause confusion. Charged-off debt is often passed between debt collection agencies, resulting in multiple organizations contacting you for payment. In addition, many consumers believe a greater difference to exist than is truly the case between charged-off debt and debt that is severely delinquent. As a result, they often assume that they’re no longer responsible for payment.

Charged-off debt and liability

The fact that you are legally liable to pay back the money that you owe does not change as a result of a charge-off. Whether debt is charged-off or not, you are liable for 3-15 years from the time of last payment. The exact length of time depends on your state’s statute of limitations for debt.

When debt is charged-off as a result of a loved one passing away, you are not automatically liable simply because you are related either. Whether you are legally-bound to pay money owed by a deceased relative depends on your involvement with the account in question. If you were a co-signer, you’re liable. If you weren’t, debt collectors must wait until the estate is settled to receive payment. Should the leftover funds (if there are any) be insufficient to cover the entirety of the debt, whatever remains is then written-off.

Charged-off debt and credit reports

A great deal of uncertainty also exists around the relationship between charged-off debt and credit reports and scores. As you expect, the more delinquent you are on your obligations, the greater the negative effect on your credit standing will be. A charge-off causes the most damage because it represents the peak of delinquency. After charging-off on a loan or line of credit, no further damage can be done. There is only room for improvement. Improvement can occur in one of two ways: payment in full or partial payment that satisfies your debt collector (i.e. debt settlement).

What’s more, a charge-off remains on your major credit reports for seven and a half years following the point of first delinquency. Some people believe (or are led to believe by debt collectors) that when they make a payment toward debt or debt changes hands between collection companies, this length of time resets. However, nothing can change the length of time negative information remains on a credit report, unless the information is listed in error.


How long does negative information stay on your credit report?


We all know that credit report information reflecting late payments, delinquent or defaulted accounts, and other unfulfilled financial obligations can have a very detrimental effect on your overall credit standing as well as your wallet by extension. Fortunately, there are limits on the length of time such negative information can remain on your files with the major credit bureaus.

But what are these limits? And what can you do if you believe that negative information has overstayed its welcome on your credit reports?

These are very important considerations, as the answers can impact how you should approach your financial situation. There is also a lot of misinformation out there concerning how long negative information can remain on your credit reports as well as what your options are in dealing with it.

The following table will give you a general sense of the shelf life that different types of negative credit report information have. We will also discuss the issue in further detail – offering explanations, exceptions, and tips – below.

 

Type of Negative Information

Examples

Timeframe

Late Payments

Missing a credit card or loan payment

7 Years

Accounts Sent to Collections

Defaulting on a medical bill, phone bill, or loan

7 Years

Lawsuits & Unpaid Court Judgments (Public Records)

Child support & tax liens

7 Years

Bankruptcy

Chapter 7, 11, & 13

10 Years

Before we get into further specifics, it’s important to note that there is NOTHING you can do –from hiring a “credit repair” service to even paying off amounts owed – to decrease the length of time that negative information will remain on your credit reports.

Negative Information from Late Payments

Credit reports track your payment history on different types of credit-based financial accounts, including credit cards, car loans, mortgages, and lines of credit. While records of on-time payments can help bolster your credit standing, information about tardy or missed payments will have a negative effect for years.

The impact as well as the length of time that negative information concerning these credit accounts can remain on your credit reports depends on how far past due you are/were on payment.

                Late Payments: People often get concerned that a payment that is just a few days late will be reflected on their credit reports. That is not the case, however, as you must be at least 30 days late on a payment for it to show up on your credit report. Information about payments that are late by 30+ days will remain on your credit file for 7 years from the original missed due date.

                Charged-Off Account: When you are 120 days behind on a loan payment or 180 days late on a credit card, your lender will be required to write the debt off its books (this is known as a charge-off) and your account will be classified as “Not Paid as Agreed” on your credit reports. This information will remain on file for 7 years after you have charged-off.

Negative Information from Collection Accounts

Accounts that you do not pay as agreed – whether they are charged-off credit accounts or unpaid medical bills, for example – are often sold to collection agencies. These accounts are classified as “Collection Accounts” on your credit reports. Credit accounts sent to collections should be listed as a continuation of the charged-off trade lines that have been on your reports all along (i.e. not new entries), while medical bills generally only show up once they enter collections.

Collection accounts remain on your credit reports for a period of 7 years.

Negative Information from Public Records

Certain types of publically available information that reflects irresponsibility (usually financial, but not always) will also enjoy an extended stay on your credit reports. The exact timeframe can vary based on the particular type of public record reflected as well as, in certain situations, your payment status.

                Civil Judgments: When a court decrees that you owe money (e.g. for child support or as a result of a lawsuit), a record of this judgment generally remains on your credit reports for 7 years from the date it was filed. This will not change even if you pay amounts owed.

                Tax Liens: Unpaid tax liens can remain on your credit reports indefinitely. Paid tax liens generally remain for 7 years from the date of payment (known as the “release” date).

“Tax liens are a different beast,” says Jessica Gabel, associate professor of law at Georgia State University. “They can hang out on your credit report for the amount of time it takes to pay the assessment plus another 7 years. … Tax liens can stay on a credit report longer than any other negative event.But the IRS will formally withdraw a tax lien if the taxpayer remits a full payment or begins an installment plan that encompasses a full payment. It is up to the taxpayer to request that a withdrawal be filed. This only applies to federal taxes – not state tax liens. It also doesn’t apply to settlements with the IRS or to offers to compromise.”

Negative Information from Bankruptcies

The length of time that bankruptcy information can remain on your credit reports depends on the type of bankruptcy in question as well as whether or not you have upheld the terms of your filing.

                Chapter 7 & Chapter 11: Remain on your credit file for 10 years from the date filed.

                Chapter 13: A discharged chapter 13 bankruptcy generally remains on your credit file for 7 years from the date filed, while a non-discharged chapter 13 bankruptcy remains for 10 years.

“Interestingly, some people believe that if they file a Chapter 13 – or what they believe is a ‘medical bankruptcy’ (and legally, there is no such thing as a “medical bankruptcy”) – then their credit will be less affected. But that’s not the case,” says Dr. Deborah Thorne, an associate professor of finance at Ohio University. “Now, if folks file before they start to fall behind on their debts, then the overall damage to the credit score should be less because the only negative hit is the bankruptcy. If you don’t fall behind on your bills before you file, then those dings for late payments are not on your credit report.”

Unfortunately, there is no way to minimize the credit score damage that results from bankruptcy.  However, you can (and must) take the opportunity to right your financial ship, rather than reverting back to the mistakes that helped get you into trouble in the first place.  “Bankruptcy on a credit report isn’t great, but what is even more damaging is to go through a bankruptcy and then come out and get over-extended all over again,” says Mary Jo Wiggins, a professor of bankruptcy law and vice dean at the University of San Diego School of Law.  “This can happen fairly easily since a lot of credit issuers actually deluge people who have gone through bankruptcy with credit offers because they know that a significant portion of their personal debts may have been discharged.”

Exceptions Based On State of Residence

 

In some cases, state law will limit the length of time that certain types of negative information can remain on your credit reports. These exceptions apply only if you are a current resident of the state in question.

New York

                Satisfied Judgments: Remain on your credit file for 5 years from the date filed.

                Paid Collection Accounts: Remain on your credit file for 5 years from the date of last payment.

California

                Paid Tax Liens: Paid, or “released,” tax liens remain on your credit file for 7 years from the date released or 10 years from the date filed.

                Unpaid Tax Liens: Unpaid, or “unreleased,” tax liens will stay on your credit reports for 10 years from the filing date.

How to Minimize the Impact of Negative Information

When you consider just how important the information on your credit reports is to your overall credit standing as well as the fact that negative information can cost you a lot of money, it’s clear that you should not take the presence of such information in your files lightly.

There’s only so much you can do when records are listed and removed correctly, but that’s far from guaranteed. There are also many “credit repair” companies out there that will promise miracle fixes to your credit woes (for a fee, of course). You should therefore keep the following tips in mind:

                Review Your Credit Reports: In many cases, consumers aren’t even aware of negative information on their credit reports until a lender sends them a disclosure noting that their application was denied or they were given a higher interest rate because of its presence. What’s more, various studies have found that up to 30% of all credit reports contain errors serious enough to warrant a denial of credit. You don’t want to be punished undeservedly, so it’s best to take advantage of your right to a free copy of each of your major credit reports once every 12 months. By requesting one of your three major reports every few months, you’ll increase your chances of spotting inaccuracies as well as fraud before they can have serious consequences.

                Pay Extra Attention to How Collection Accounts are Classified: Debt collectors aren’t always the most ethical bunch, believe it or not, and they have been known to report information as a new trade line rather than a continuation of an existing charged-off account in order to intimidate you into paying them.

                Call If You Have a Question: People tend to hide from financial problems, but if you aren’t sure about something it definitely doesn’t hurt to call your creditor or a credit bureau for an explanation. You might find that an error has been made or the organization in question will be willing to work with you toward a mutually-beneficial solution.

                Regulators are There for You: Consumers have a new ally in the Consumer Financial Protection Bureau. You can take advantage of this watchdog’s regulatory power by reporting illegal debt collection activities or unresolvable situations that you might encounter with a given creditor/credit bureau.

                Don’t Forget About SOLs: While the length of time that negative information can remain on your credit reports tends to be capped, the timeframe in which you are legally liable for amounts owed can reset when you make a payment (or in certain other siutations). It’s important to be mindful of what can reset the Statute of Limitations (SOL) clock when dealing with negative information on your credit reports.