Building Credit Answers - Questions and Answers

Let’s face it, there are many things you should know about establishing credit from the ground up and after a damaged file. In this article, I will address the most common questions posed to me daily. 

Building Credit Question - What is PRBC and how do I use this company to establish credit?

PRBC is a non-traditional reporting agency. They track the way you pay your rent, utilities, cable and cell phone bills. From there, they compile a payment history report that can be used as supplemental information along side with your bureau report when lenders are trying to decide on whether to issue credit to you. FICO has partnered up with PRBC to provide Expansion scores based on your payment history with PRBC. These Expansion scores are only issued to the lenders upon request. In addition, all lenders do not use PRBC to consider your credit worthiness, so you must ask them to pull your PRBC report when applying for credit. In order to get started with PRBC, you can sign up with them and start reporting your good payment history from your rent, cable bills, utilities, and cell phone. PRBC will then charge you a small fee to verify your payment history and include it in your file. The good thing about PRBC is that your  report with them is free, and you can get a copy at anytime. This method is best if you don't have any payment history or a thin file. 

I just got rejected for retail store card, so what does a thin file mean?

It means that you do not have enough trade lines in your report to calculate a score or for a lender to evaluate your credit worthiness. People who are divorced, teenagers just turning 18, and immigrants all fall into the category of having thin files. FICO created a new way for consumer with a thin file to produce a score. It’s called Expansion score, and it uses information from nontraditional sources to calculate a score. The program use payday lenders, check monitoring companies, rent to own stores, utility information, and public records to help calculate a score. 

Building Credit Question - What do creditors like to see on my reports? 

Make sure your report has your present employer, previous employment, residence, and phone number, since creditors like to see this information when you are applying for a loan. They are checking for stability like how long you have been at your job and your home.

Building Credit Question - How long does it take to establish credit?

It can take from one to two years to establish good credit if you pay your bills on time. You need to display at least one year of on time payments before major bankcards like American Express and Visa take you seriously. 

Building Credit Question - How will paying with cash help me establish credit?

Start getting into the habit of paying cash or paying with your debit card. Paying with cash helps you manage your budget, and it restricts you to the amount of things you can buy. If you can't afford it, don't buy it. In the long run, this will help you with management skills when it comes to paying down on your bank cards and personal debt. Use your debit card on emergency bases only. Debit cards can cost you with over the limit fees and insufficient fund fees if you don't track your spending.

Concluding, review the article again and use whatever information you need for your own situation. Now that you are empowered with more information, go out there, and take action. 

   

Finances and Divorce - 5 Questions and Answers

From time to time, I receive questions on how to deal with money during a separation from your spouse. In this article, I’m going to disclose the most common questions I receive about money during a divorce. 

Finances and Divorce 

What if I have a divorce decree?

Before you go to court, try to decide who is going to pay what. If your spouse is going to live in the home, then he or she should pay. This applies to your car as well. After the court case, send a copy of the divorce decree to all lenders. If your spouse violates the decree, talk with a divorce attorney about your options. Even if you have a decree stating one spouse should be required to pay certain bills, you are still responsible for paying that bill back to the bank because you and your spouse’s names are both on the original contract.

What if my spouse files for bankruptcy?

Your spouse can file bankruptcy on his or her portion of the debt, and leave you hanging with the entire amount. To counter his or her actions talk with your bankruptcy lawyer about the Bankruptcy Reform Act of 1994. This law has made it hard for a spouse to eliminate debt owed under a property settlement agreement.  If you feel that your spouse can pay their part, have your bankruptcy lawyer file an exception to the bankruptcy proceedings.

Finances and Divorce

What is the Innocent Spouse Rule?

This happens when a spouse signs the tax returns not knowing what it contains, then they get divorced. The spouse can be held liable for any back taxes that are generated from that tax return. The innocent spouse relief law was enacted to fight this and to assist the spouse that had no idea of what was in the tax return. For more information, see IRS publication 971 

What if I live in a community state?

If you live in a community state, you and your spouse automatically become joint owners when a credit card is open. Here is a list of those states.

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin
• Alaska

Finances and Divorce

What if my spouse passed away?

If your state is not a community state, the creditor will want a copy of the death certificate along with monetary funds from your spouse’s estate to pay the bad debt. Make sure you send a copy of the death certificate to the credit bureau to avoid your spouse's identity from being stolen. Most of the time, the Social Security Administration will notify the credit bureau of your spouse's death, and they will flag his or her account. 

I hoped this article was helpful to your situation.  Now that you are empowered with more information, go out there, and take action.

Collection Agency Answers - Discover 7 more Questions and Answers You Should Know

Have you ever imaged the answers to the following questions: how to respond to a collection letter when the debt is not yours, will a debt follow me if I moved to another state, what happens if I signed for a certified mail receipt coming from a collection agency, what happens if I send a post dated check to the collector, does it matter if the collection agency owns the debt, why were little bills in the $50 dollar range placed on my credit report, and what happens if the collection agency tries to sue me when the statute of limitation on the debt has expired. Well, in this article, I will provide you with the answers to all the above questions.

Answers and Questions

The debt they said that I owe is not mine. What Can I do?

Send the creditor and the collection agency a validation letter within 30 days of receiving their notice. At the same time, pull a copy of your credit report to see whether the debt has been reported. If the negative item has not been reported, wait for your validation letter, which should prove that you do not owe the debt. 

If the item is being reported on your credit report, send a second letter to the credit bureau and collection agency disputing it and stating that they are in violation of the FCPA and the FDCPA. State that they must delete the item now, or you will file a lawsuit. If you do hear back from the credit bureau and collector stating that the debt is yours, then file a complaint with the FTC and the attorney general's office. In addition, talk with an attorney about seeking damages and an injunctive relief in small claims court.  

Answers and Questions

Can the collection agency come after me if I move to another state?

No, the creditor cannot assign your debt to a collector in the new state you live in. They must try to collect only in the state that the debt was created in, unless you are sued and they get a judgment. If this happens, they can transfer the judgment to you in your new state. 

Answers and Questions

Should I sign for certified mail from the collectors?

No, because it gives the collection agency proof that you received their demand letter, and they can use it against you in court.

Answers and Questions

Should I send the collection agency a postdated check?

No, never send a post dated check because they will simply break the law and cash it before the cash date. This will put your checking account into the negative if you don't have the money to cover the check. Don't give out your account number when setting up a payment arrangement because they will debit what they want until the debt is satisfied. Just send them a money order from the post office or a cashier’s check from a bank that you do not belong to. 

Answers and Questions

Why do I care if the debt is assigned or bought?

With assigned accounts, the collection agency does not own the debt, and therefore you don’t owe them any money unless you have a clause in your original contract stating that you are responsible for paying back the money to your creditor or whom they assign. 

Answers and Questions

Why did the collection agency place little debts on my credit report?

They placed the small outstanding debts on your credit reports hoping that once you needed a credit card, you would call them up and pay the bill. 

Answers and Questions

What if they try to sue me over an expired debt?

Go to court and argue that the state statute of limitation of the debt has expired, and then file a counter claim claiming violation of the FDCPA for trying to collect on an outdated account. 

As you can see, there are many things you must know about collection agencies.  The question and answers above are just a few things you need to know to better prepare you for the big bad agencies.  Now that you are empowered with more information, go out there, and take action.  

Collection Agency - 6 Questions and Answers You Should Know

It’s unbelievable how many questions on a daily basis I receive about collection agencies.  In this article, I will share with you some of the common questions I receive about collection agencies.    

What is a collection agency?

Answer:

Collection agencies are third party companies that use aggressive tactics to collect outstanding debts from consumers. Old debts are either assigned or sold to the collector by a creditor. If the debt is assigned, once the collector obtains the money, a percentage of it is kept by the agency, and the remaining goes to the creditor. If the collector buys debts for 10 cents on the dollar, they own it, and they will want 100% from you.  

Why was my account turned over to a collection agency?

Answer:

• The bank could not locate you or contact you
• Your debt is over 120 days late
• You moved out of state and they still can't reach you

Those are the primary reasons why a lender or a credit card company would assign or sell your debt to a collection agency.

What if they did not respond to my validation letter?

Answer:

Pull your credit report to see whether the collection agency has reported the outstanding debt. If the bill is there, send the collector a certified letter with a return receipt stating that they have violated the FDCPA by collecting and reporting negative information on to your credit report without validating it. 

In your letter, demand that they delete the information immediately, and include copies of the first certified return receipt mailing and your letter you sent. Give them 16 days to respond to your demand. In the meantime, write a letter to the credit bureau asking them to delete the damaging item because the collection agency was not able to verify the debt.

During this time, if the collection agency has not responded or has not deleted the incorrect item, file a complaint with the FTC and your local attorney general's office. Wait for the credit bureau to respond to you. If they respond saying that the negative item was verified by the collection agency, then it may be time to take legal action. With enough grounds, you can sue them for Defamation and violation of the FDCPA.  

They responded to my validation letter with a summons. What should I do?

Answer:

Write back to them stating that they cannot sue you if they have not validated the debt. If the debt goes to court, argue that the collection agency did not validate the debt according to the law.

I don't have the money to pay, what can I do?

Answer:

Send the debt validation letter. If comes back validated, set up a payment plan right away to avoid the debt from damaging your credit report using the negotiation strategies in chapter four.

How did the collector find me?

Answer:

They use an investigative technique called skip tracing. The agency uses computer databases that give them access to your credit report, current and past addresses, voter registration card, DMV records, and other sources with your information on it.

As you can see that there were many questions and answers listed above.  I hoped this information will give you a better understanding of dealing with a collection agency.  Now that you are empowered with new information, go out there, and take action.

How to Deal With a Collections Agency

Collection agencies are at the bottom of the barrel when it comes down to business. The only thing they care about is cold, hard cash. They don't care if you’ve just lost your job, your spouse, or your health. Their job is to bleed you of money, whichever way they can. However, you can stop them in their tracks by applying your newfound knowledge and the law. There are several tactics you can use in standing up to a collection agency, including saying the right words, sending a detail letter, or quoting the law. Listed below are some of strategies collection agencies will use against you.  I have also provided you with ways to counter their abusive tactics. 

What are some of the collection agency phone tactics?

• They will use various tactics to try to get you to pay your debt.
• Once they get a judgment against you, they will keep calling you to try to get personal information to assist with their enforcement.
• They will threaten to criminally prosecute you for writing bad checks. 
• A collector may threaten to take your home if the debt is not paid.  
• They will also assemble information on you looking for a weakness. 
• They will say that you have to deal with them and not the creditor. 

How to Deal With a Collections Agency - How can I respond to them?

• You can respond by sending them a cease and desist letter.
• Ask them whether you can tape the call, which will force them to be courteous.
• Let them know that you will be contacting the original creditor about their abusive tactics.
• Let them know that you will consider legal action if they keep violating the law.
• Let them know that you know your rights, and if they violate them you will sue.
• If they are trying to collect for a professional, like a doctor or a CPA, threaten to file a complaint against the professional.
• Let them know you will complain to the FTC, attorney general's office, state licensing boards, and their collection organizations.
• If the state statue of limitation has expired and the collector tries to collect, let them know that they are in violation of the FDCPA.

How to Deal With a Collections Agency - What if it’s a collection attorney?

The in-house collection agencies are not subject to the Fair Debt Credit Practicing Act, so if you send them a Cease and desist letter it has no weight. The Federal Trade Commission Act prohibits an unfair or deceptive trade practices. If you feel that the creditor's collection agency violated the FTC Act, you can seek sanctions.  Example of a violation, the collector calling your job when you can't have personal phone calls. You can also file a complaint with your local attorney general’s office and that should stop the in-house collectors. Now, some state subject the in-house collectors to the FDCPA so check with your state laws. 

As you can see there are many ways, you can deal with an abusive collection agency. Whenever a collector calls or writes you and tries to use the strategies listed below, counter them with your now-found knowledge. I guarantee that if you employ the techniques taught in this article. You will get the collectors to back down. Now that you are empowered with new information, go out there, and take action.  

How to write a convincing debt negotiation letter

Let me ask you a question. Are you searching for a way to reduce your bills through some form of settlement? If so, you may have an understanding of what a debt settlement letter is, and how it could help you financially. You can also look at these letters as a powerful debt negotiation tool. 

These letters are very straight to the point and persuading. They could be used in court if either party broke their agreement. These letters are very important if you expect handling debt negotiations yourself and not employ a third party company. In the planning stage of negotiations, you must understand how to craft a convincing letter that gets results. Understand that a convincing letter is one of your secret weapons to reducing your debt load in a big way. Keep in mind that you must convince the lender that it is in their best interest to settle with you. This in returns lowers your debt. 

Right before send out your first letter to the lenders or collectors, make sure that you have a basic knowledge on how the game works. You have to know the ends and out of debt settlement because the creditors and collectors are masters in this area. Here are a few tip you can use when crafting your convincing debt settlement letter.

1.Because the debt settlement letter could be used in court, have an attorney review it to make sure all terms are accurate.

2.You can also seek the advice of a friend who has successfully negotiated debt with these types of letters. 

3.Make sure you understand the terms and conditions that you are asking for in the letter.

4.Include what you want eliminated like, fees, taxes, and interest rates.

5.Include the total amount you can pay in the settlement.

6.Let the creditor know that in exchange for the payment, you want the negative item deleted from your credit report.

7.Creditor's know most of the strategies used by consumers and debt settlement companies, so do not try to trick them with words like if you do not accept my payment, I will file bankruptcy. Instead, say that this is all the money I have, and I am are currently unemployed.

Here a sample debt settlement letter that you can use as a model to write your first letter.

Your name:

Your address:

Address of the creditor or the collection agency:

Date:

Reference account number:

Dear creditor or collection agency,

In the last six months, I have been facing hard times with a lost of my job, my mother passing away and my brother going to jail. I sincerely apologize for falling behind on my debts, but I assure you my neglectfulness was circumstantial. Now that I have a job, I'm ready to settle my outstanding debt, and I would like to offer you 20 cents on the dollar (put a dollar amount here) for a deletion of all negative information from my credit report and no further collection activities. Currently, I'm in negotiations with other creditors on a similar deal, and I would like to close my account with you fast. If I receive a signed agreement from you, I will gladly send payment out overnight.

Sincerely,

Your signature here.

In summary, know what you owe and then compare it to what you have in your bank account. By doing this, you will know where to start with your negotiations. In addition, some creditors will ask for 80% of the balance but this is just a starting point of the settlement. You do not have to have that amount to settle with as it is just the start of negotiations. Your letter must be accurate due to its legal nature, and always double - check the terms and conditions of the letter before sending it out. Now that you are empowered with more information, go out there, and take action. 

Settlement negotiations-How to Settle your debt

Winning a debt settlement negotiation is about knowledge and skill. If you know what to say and how to say it, you can get any creditor or collection agency to cut your delinquent bill or bills in half.  Before you contact the creditor, know how you want to negotiate your credit rating, what should be in the agreement, how you should pay them, what happens if you default on the agreement, how to stop the lender if they try to collect the difference, and how is the IRS involved. 

Settlement negotiations - How do I negotiate my credit rating?

For exchange of your payment, ask the creditor to delete the negative item on your report. If you can't get a deletion, go for a paid as agreed, current account or unrated status. Avoid negative listings like account closed, paid, paid charge off, settled or repossession. In addition, you want paid in full with no further collection on this account indicated in your agreement. If the creditor does not agree with any of your requests, don't pay them.

Settlement negotiations - What should I include in the agreement?

First, have a lawyer review your agreement, and make sure all of your terms are in the agreement before sending any money. You can draw up the settlement or wait for the creditor to send it to you. Send your agreement out and wait for the lender or collection agency to sign it before sending it back. Ask the financial institution to send the agreement by fax followed by a letter.

Settlement negotiations - What about paying them?

Once the lender signs the agreement, you can send the payment with a copy of the settlement agreement by a wire transfer, quick collect, overnight mail or Fed Ex. Please do not use a check because the creditor will obtain your checking information and start taking out payments. Instead, use a cashier's check, money order, or a prepaid credit card with the exact amount. Make sure you keep and store your receipts in a safe place. 

Settlement negotiations - What if I don't keep my agreement? What can happen?

If you don't meet your obligation, the creditor will reinstate your original terms and add late fees and over the limit fees. In addition, your interest rates will go up and you can possibly even be sued.

Settlement negotiations - What if they try to collect the difference in my settlement?

In some states, these actions are illegal, and you will have to write the creditor and let them know that. Other states allow collectors to come after you for the difference. If this is the case, you will find that the creditor has written or stamped the words “under protest” or “without prejudice” on your check.  

Settlement negotiations - How is the IRS involved in the debt settlement?

When a creditor settles a debt for less than what's owed, they have forgiven the difference on what you owed. The creditor must report any monies forgiven over $600 to the IRS for tax purposes. The creditor will also send you a 1099-c indicating the amount you saved in the settlement. Because you got a deal, the IRS considers the money as a gain to you and therefore, income. By law, you are required to pay taxes on this gain.

Concluding, always stay in control when it comes to negotiations, so that you can achieve your ultimate goal, which is protecting your credit rating and saving money. Now that you are empowered with more information, go out there, and take action. 

Legitimate Debt Relief Advice

Debt settlement is a good way for you to save thousands or hundreds of dollars, stop the creditors, collection agents, and attorney’s from harassing you, and cleaning up your credit reports. Nevertheless, before you enter this game, there are five tips/questions you should ask yourself before the start of negotiations.

Debt settlement advice tip - Question 1 - Can I record the conversation with the creditor?

Yes, and no; it depends on your state laws. If your state is a one party state, then you do not need the creditor's permission to record the conversation because you need only one person’s authorization, and that is yours. In a two party state, you do need the creditor's permission to record the conversation. See your state laws on recording conversations over the phone. 

Debt settlement advice tip - Question 2 - Should I document my contact with the creditor?

Yes, always document and keep correspondences between yourself, the creditor, and the collection agency. Furthermore, keep all letters and envelopes from the creditor as the envelopes show the dates they were sent. Documentation is needed in case you have to go to court and prove to the judge that you tried to settle the debt. 

Debt settlement advice tip - Question 3 - How many creditors or collection agencies should I deal with at one time? 

Settle with each creditor or collection agency one at a time. For example, find out how much you owe on the first debt, then call them up or send a settlement letter.  Once you have negotiated a deal, start with the second creditor. If you call up multiple creditors at one time, you may run out of money to settle your debts.

Debt settlement advice tip - Question 4 - Should I write or call?

When dealing with the original creditor, you should call them because they are not as cold as the collection agencies. Moreover, send all settlement letters via certified mail with return receipt to collection agencies as they have a habit of not honoring their agreements.

Debt settlement advice tip - Question 5 - What should I say?

Contact the creditor by phone and ask them for the customer service department. Don’t admit that the debt is yours, or you can restart the state statute of limitation. Politely provide them with your account number and inquire whether their company offers settlements. Keep your conversation short and straight to the point. 

In summary, remember the following key points: recording the conversation if you state allows it, documentation is crucial as it servers as proof of your contract, always deal with one old debt at a time, start negotiations off with a call or in writing, and know what to say over the phone. Now that you are empowered with more information, go out there, and take action.