They are later dully disappointed when they get their credit reports and find no entry for the accounts in question. That’s when they call me complaining that the credit bureaus are doing them wrong by not reporting those “good” accounts. I hate to break the news to them, there is nothing I can do.

Credit bureaus don’t have to report any specific accounts, even when a creditor sends them a consumer’s information. That is the word from Hammer v. Equifax Info. Servs., L.L.C., 974 F.3d 564 (5th Cir. 2020). I take Hammer, along with other generally well-established Fair Credit Reporting Act law, to stand for the proposition that credit bureaus have no duty to report, but if they do, the reporting must be accurate, complete and not misleading.

Sorry to be the bearer of this bad news, but it’s the law.

Many lenders will be willing to “work with you” to help you get over this hopefully temporary rough patch. They will give you a chance to delay your monthly payments. If you must, of course accept the help.

Depending on the nature of your debt, e.g., car, credit card or mortgage, lenders will likely offer you one of two general types of deals: deferment or forbearance. We don’t need to discuss here the difference between them (Google it if you must know).

However, we must discuss a point that could have serious implications for your future financial situation: Will your deal, and your adherence to it, be correctly reported to credit bureaus?

Say you are allowed to postpone payment on your credit card for three months without being deemed late by the bank. After those three months, you begin and continue to pay your bills faithfully. Will your credit report show that you were always current or will it show you were 90 days late?

No way to tell. As one of my colleagues mentioned, there could be a big disconnect between your customer service representatives on the telephone and the computer system in the cloud. It could be as simple as bank executives honestly wanting to help folk like you, but the computer programmers just dropped the ball. The result could be an ugly stain, that shouldn’t be, on your credit report. So you must protect yourself from your creditor.

Avoiding this potential problem should be easy. Get the terms of whatever deal the lender gives you in writing. This may be easy for me to say but difficult for you to do, since those nice customer service representatives who spoke with you on the phone may not have the ability to shoot you an email or letter putting the deal in black and white. If you can get that written confirmation, you are done. Stop reading this note.

If not, then there is something you can still do. Take detailed notes of your conversations. The day may come when you will have to testify, under oath, for example at a deposition or at trial, as to what was said between the bank’s representatives and you. Rely on your memory at your peril.

I suggest that you must be able to look lawyers, judges or jurors in the eye and say: “I made a deal with my lender. I wrote down the deal’s terms. Here they are.” Then hand over the notes of your calls. Sure, you may need to explain some of the words you used, but nobody will be able to second-guess your understanding.

At a minimum, memorialize the day, time and length of your calls. Write down the numbers you called. If you used your cell phone, do not erase the record of the calls from the phone’s log. Make sure you get the name of the people with whom you speak. Perhaps even get some friendly chit-chat information about them, like where they are located, what the weather is like, etc.; in other words, get information that will show that your notes correctly reflect your interaction.

When it comes to the nitty-gritty terms of the deal, write them down like a transcript. Then read back your text and have the representative confirm it is correct.

Don’t rely on your lender’s automated “this call may be recorded” greeting message. Your calls may be recorded; that’s the operative word. If they are, great, your notes will squarely match the conversations. But if the lender does not record or loses the recordings, you will be left with only your memory of the transactions.

In passing, note that I am not suggesting that you record the calls. I was referring to your phone records, which show call data like phone number, date, time and call length. Call recording is a tricky legal area we’ll address in another post in this blog.

One practical reason for taking good notes is that lawyers like me will be more likely to take your credit misreporting case against the lender or the credit bureaus if you have notes. If you don’t, so that it will only be “your word” against the lender, we may pass. Not that we don’t believe you. It’s a matter of proof. We want the weight of the evidence to be on your side. Inked paper is heavier than human memory.

Keep your notes with your other account documents. Should there ever be a misreporting of your deferment/forbearance agreement to the credit bureaus, you will be in a much better position to challenge the inaccuracy, fix the problem, and restore your credit reputation.

Come on Leo, you say, I have bought cars in the past and paid a “premium” to buy the “insurance coverage” that protected me in the event of a total loss where the fair market value of the car is less than what I owed the bank. You thought you were buying insurance, but as a matter of Florida statutory law, you were not. Take a look at the applicable statute (the three asterisks, “***”, mean that I omitted some irrelevant subsections, 1 through 6; I added the red highlighting):

The 2018 Florida Statutes
Title XXXIII
REGULATION OF TRADE, COMMERCE, INVESTMENTS, AND SOLICITATIONS
Chapter 520
RETAIL INSTALLMENT SALES
520.02 Definitions.—In this act, unless the context or subject matter otherwise requires:
* * *
 (7) “Guaranteed asset protection product” means a loan, lease, or retail installment contract term, or modification or addendum to a loan, lease, or retail installment contract, under which a creditor agrees to waive a customer’s liability for payment of some or all of the amount by which the debt exceeds the value of the collateral. Such a product is not insurance for purposes of the Florida Insurance Code. This subsection also applies to all guaranteed asset protection products issued before October 1, 2008.

First, notice the play on words. We usually think of “gap” insurance as filling-in, what else, the gap between your loan balance and your car’s value. But note the acronym: GAP, as in “Guaranteed Asset Protection”. Clever, huh? Back to business.

So what does that statutory legal mumbo-jumbo mean? It means that Florida’s car dealer lobby convinced the Florida Legislature and the Governor to pass a law saying that a product that is obviously insurance, is not insurance. It looks like a duck, it walks like a duck, it quacks like a duck, but Florida’s lawmakers say it’s a turkey. And it is turkey for several reasons.

First, because it is not insurance, gap products are not regulated by the Florida Office of Insurance Regulation (FOIR), the state agency tasked with policing insurance companies. So, for example, if GAP were insurance, FOIR would have to approve the language of the product, just as it does for insurance policies sold in our state. Needless to say, GAP text is one-sided contractual language.

Second, dealer GAP “coverage” is usually sold as an addendum to the car financing document. Those papers will contain an arbitration clause. This means that if you get shafted by the GAP company, you will not be able to challenge it in court. You will have to go to an arbitrator . . . selected by the dealer!

Third, unlike an insurance company, if you win your GAP claim in arbitration, you will not get your attorney’s fees paid. This means that lawyers like me, who represent people on a purely contingent basis, that is, where we expect only to get paid by the other side, will not take your case.

So what can you do to get gap protection?  The answer is remarkably simple: buy real “gap insurance” from your insurance company. Never, ever, ever buy the bullsh*t GAP product dealers sell.

The first is the classic Indian IRS scam. I have been one of their intended victims more than once. Luckily I readily spotted the scam and just played along with the aggressive-sounding “IRS agents” who called me. I guess I have a perverse sense of fun. The scam worked (and I bet it will be revived in the future) something like this: You get a phone call from a purported Internal Revenue Service agent claiming that you are behind in your taxes and that if you don’t pay immediately you will be arrested. Yes, they accuse you of a crime and threaten you with prison. They ask for a fairly modest amount, say $1,500, in exchange for their not sending the cops to your house. Please don’t fall for that trick.  As a CNN Money article indicates, one of the lead players in that scam was arrested in India, along with several accomplices in the US.

Closer to home, The Daily News reported the federal arrest of a ring of collectors who succeeded in stealing millions of dollars from US citizens by, among other misdeeds, falsely claiming the debtors would be arrested if they did not pay. These scams are a little trickier to spot. As the article indicates, the ringleader bought debts for pennies-on-the-dollar. It’s easy for you to fall for this type of scam because the debt in question may be or may have been legitimate, i.e., it was a debt that you did have. The tell-tale sign of the scam was the threat of arrest. Don’t fall for this. Debt collectors cannot send the cops to your house to arrest you.

Remember that even if you owe a debt, you have rights. Hey, this is America! With respect to consumer debts, the federal Fair Debt Collection Practices Act (and many other states’ laws, e.g., the Florida Consumer Collection Practices Act) protect you from collectors and creditors. Collectors and creditors have the right to collect money you owe; that goes without saying. However, they, like the rest of us, have to follow the law.

Here is the professionally self-serving part of this blog entry: If you are getting phone calls, letters, texts or e-mails from anyone claiming you owe them money, contact a consumer lawyer. He/she can evaluate the collection attempts and inform you of your rights in your specific situation.

I digress a bit. The FCRA’s title is a misnomer. Instead of calling it the Fair Credit Reporting Act, Congress should have called it the Fair Consumer Reporting Act. Too late now; we are stuck with the clearly inadequate title.

These other “consumer reporting” agencies keep lots of information about you. They typically focus on specific niches, for example employment, rental, insurance, banking, utilities, driving and criminal records. Wrong information in one of these entities’ databases can hurt you badly; these companies may be the reason why you did not get a job, were denied an apartment, or kept you from opening a bank account.

The FCRA treats these background check companies generally no differently from the way it treats the “Big 3” credit bureaus. If you have been the subject of any of those companies’ reporting, you have the right to know what information they keep about you and to make sure that the information is accurate, complete and not misleading. Below is a partial list of background check companies that provide free annual credit reports.

If you are planning to get a job, buy insurance, open a bank account, get utility service or rent an apartment, I suggest you request your report from the company that the prospective employer, landlord, insurer, utility or bank will “pull” your information: call and ask for the name of the background check company. Then contact the company and get your report.

Better to find out before you get the bad news. As indicated above, this will give you the opportunity to correct the information so you will not be denied the job or service–and you will not get the bad news.

Say Mr. Jones has two negative entries in his credit report: (1) A $94 late medical account resulting from his forgetting to send a pathology lab his insurance co-payment and (2) a delinquency on his mortgage, resulting from the bank mistakenly reporting he was seriously late.

Obviously, the mortgage delinquency is a big stain which should not appear in his credit report because it was not his fault.

Mr. Jones wants to refinance his mortgage, but the misreported delinquency prevents him from doing so, at least at a reasonable interest rate. Being the helpful lawyer you are, you send Mr. Jones to a friendly CRO.

Mr. Jones goes to the CRO and pays it an up-front fee of several hundred dollars purportedly for “consulting” on his credit or for “opening a file” for him (note that CRO’s can’t lawfully charge money up front but they use these sorts of ruses).

The CRO sends letters to the credit bureaus “disputing” both accounts. The credit bureaus don’t correct the entries. The CRO sends another set of letters, perhaps varying the reason for the disputes. Note that the letters will come from Mr. Jones, not the CRO. This dispute cycle goes on for a while until the credit bureaus deem the disputes to be frivolous and stop responding to them—or until Mr. Jones gets tired of shelling out money every month for the worthless service. Ultimately, the CRO is unable to “fix” the problems.

Mr. Jones calls you back for help. You now suggest that he go see a consumer lawyer that handles Fair Credit Reporting Act (“FCRA”) cases; you suggest he see me. Sorry, I will likely not take Mr. Jones’ case. Why? Because the CRO tainted his legitimate mortgage misreporting claim.

Remember those letters the CRO sent purporting to come from Mr. Jones fraudulently disputing the $94 medical account? In my opinion (which is subject to disagreement by fellow practitioners) the letters destroyed his credibility as a plaintiff in what would otherwise be an excellent FCRA case about his mortgage.

If Mr. Jones files suit on the misreported mortgage debt, he will be shown to be, or at least appear to be, a liar: because he repeatedly disputed the undisputable, i.e., the correctly reported $94 debt. Other consumer lawyers may have a different criterion, but I don’t want to deal with a case in which my client coming in is looking like a liar.

Yes there is a way to remedy the situation, but it will take time. Mr. Brown needs to write to the credit bureaus and explain that he hired a CRO who sent the bogus letters lying about the $94 debt, but that the disputes about the mortgage were indeed valid. If he does come clean with the bureaus and the bureaus don’t correct the misreporting, I will reconsider taking his case.

For additional info, take a quick look at the FTC’s Credit Repair: How to Help Yourself. Better yet, send the link to Mr. Jones!

Credit repair is at best a dirty business. It is a game where in exchange for money folk try to trick credit bureaus and creditors into deleting or changing accurate information in credit reports.

Contrast what I do: I represent people with inaccurate, incomplete or misleading information in their credit reports.

Say one of your clients ran into financial problems, could not keep up his car loan payments with ABC Bank, and the bank repossessed the car. His credit report will show, unremarkably, that he was late and that his car was repossessed. This is a nasty mark on his credit report which he wants to “clean” because now, even though his finances are great, he cannot refinance his mortgage at a lower rate—because of the repossession.

So the guy goes to a credit repair outfit which will send bogus letters to the credit bureaus, for example “questioning” the ABC Bank entry or possibly even saying that the ABC Bank account does not belong to him. Those letters will be at best dishonest and at worst flat out fraudulent.

I do not handle such a case: The guy did not pay; the car got repossessed; and, his credit report correctly shows that he did not pay and that his car was repossessed.

Contrast the situation, for example, where the ABC Bank entry really belonged to the client’ son, who perhaps shares the father’s name. The negative information in the father’s credit report is thus inaccurate. I will handle that case for the father (but not for the son) and because the Fair Credit Reporting Act has a fee-shifting provision, I will not charge him any money.

Please consider having your clients who have legitimate credit reporting problems take a look at Why Pay a Credit Repair Company to Do What a Consumer Lawyer Will Do for Free?

If you are reading this article you are likely a savvy debtor who searched the Internet to attempt to ascertain your rights against debt collectors who are calling or sending you letters attempting to collect on an old debt.

First question, what is an old debt? It depends on what the meaning of the word old is? (OK, you can snicker; I just had to get that Clintonian allusion in there.) We are obviously talking here about the statute of limitations.

The Statute Of Limitations

The general proposition is simple: if a debt is beyond the statute of limitations, collectors, debt buyers (sometimes also deservedly known as scum-sucking bottom-feeders) or creditors should not be able to sue you to collect them. They have a limited number of years—according to the applicable statute of limitations—beyond which they cannot sue you to collect the debt. After that time, your unpaid debts are considered “time-barred.” So, you cannot be sued for not paying a debt that’s time-barred. Let’s be technically accurate: you can be sued, but you will have an ironclad defense (a defense which you can give up if you don’t raise when sued).

That begs the question (begs the question is a legal buzz phrase we lawyers like to use to sound cool): how many years is the statute of limitations that applies to my debt? The answer is . . . it depends. Come on, if legal matters were simple I would not have a job.

Typically, the statute of limitations that applies is prescribed by your state law. For example, in Florida, if your debt is more than 5 years old (or sometimes 4), you are in good shape. Life is not that simple though.

Let’s look at credit card debts, again as an example—and a good one, given that the bulk of consumer collection activities revolve around credit cards (most of which, in turn, are “revolving” lines of credit—I just could not resist the pun).

Your credit cards are likely controlled by the laws of states other than yours. If you don’t believe me, pull out a “Cardholder Agreement” from one of your current cards (oops, I know, you probably threw it away, so go look it up online). Locate the section titled (usually in bold) something like “Applicable Law”. The text will likely say something like “This card is subject to the laws of the stat of X and Federal laws.” There may be, but in Florida, I have never seen a credit card subject to Florida law.

The good news is that the controlling law may prescribe a shorter statute of limitations than your state’s statue, perhaps only 3 years. Without looking at the credit card agreement, it is not possible to determine the length of the limitations period applicable to your credit card debt.

To make matters more complicated, the statute of limitations varies not only from state to state, but it differs for different kinds of debts. That is a subject for another time or for you to discuss with your consumer lawyer.

Plus, there may be a little trap waiting for you: under certain circumstances, the clock can be reset, and the time period can be started fresh. So be very weary when a debt collector asks you to send a token payment of “good faith”, say $5. That may be a trick to restart the limitations period. If your debt is time-barred, it’s best to let it be so.

A related question: when does the limitations period start to run? Usually, the clock starts ticking when you fail to make a payment. Interestingly, some collection lawyers claim that the clock starts to tick when the creditor says so. I have seen them argue this in court with a straight face. They will say something like: “Well, the bank did not consider the debtor to be in default until such and such a date”, which of course just happens to be a date within the limitations period.

Collectors Can Try To Collect On Your Time-Barred Debt

If your debt is fairly old, chances are you will be collected on by a debt buyer or a collection agency (I refer to both here simply as a “collector”). The original creditor (for example, the bank that issued your credit card) will likely be long gone from the picture.

Other than not having the money, nothing prevents you from paying old debts. Some folk, strictly out of a moral sense of duty, want and will pay old debts when their finances improve. Collectors know this. Collectors also know that many people don’t know they have the right to refuse to pay old debts.

Contrary to popular belief, collectors are allowed to contact you about time-barred debts. They just can’t violate the collection laws when they do. S0, what should you do if a debt collector calls or sends you letters trying to collect a time-barred debt?

The letters? You can ignore them (but see the discussion on the following section on a possible downside of not paying the debt). Better yet, take those letters to your consumer lawyer to make sure they comply with the law. Among other possible violations, for example, it is against the law for a collector to threaten to sue you on a time-barred debt. You may be entitled to some money, as much as $1,000 to $2,000 in “statutory damages”.

The calls? The collectors should 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 may be, ask the collector if the debt is beyond the statute of limitations.

If the collector answers your questions, the law requires that the answers be truthful. If the collector acknowledges that your debt is time-barred, then you are all set; you know you don’t have to pay. Read the next section of this article, though.

However, the collectors may decline to answer your question. If so, send the collector written notice within 30 days of receiving a call or letter about the debt, telling the collector that you are disputing the debt and that you are refuse to pay the debt. I suggest you send the letter certified, return receipt requested. Keep a copy of the letter!

The collector should then either send you documentation verifying the debt or stop collecting the debt.

What’s The Down Side Of Not Paying A Time-Barred Debt?

The decision to pay a time-barred debt is, obviously, strictly yours. 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. You can stop further contacts by sending the collector a letter demanding that communication stop. Don’t forget, send it return receipt requested and keep a copy of your letter.

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. Even though a debt may be beyond the statute of limitations, collectors can still report it to credit bureaus for roughly 7 years. So, there may be some negative consequences to your not paying an old debt.

By the way, if you decide to pay an old debt, negotiate its deletion from the credit bureaus. I have some suggestion in another blog post.

I am not qualified to comment on the effect on your credit score of your deciding to pay or not pay a debt. You should consult a finance professional. For example, if you anticipate buying or refinancing your home, consult with a mortgage broker to determine whether you should or should not pay old debts.

What To Do If You Get Sued On A Time-Barred Debt?

I know the answer to that question: call a friendly consumer lawyer! Hey, did you really expect me to suggest you call a cardiologist?

When you dispute inaccurate, incomplete or misleading information in your credit report with a consumer reporting agency (that is, a credit bureau in normal people-speak), the best known of which are Equifax, Experian and TransUnion, the bureau must conduct a reasonable investigation to determine whether the disputed information is inaccurate. By the way, the Fair Credit Reporting Act calls this not an investigation, but a reinvestigation—even though there never was a prior investigation! Hey, I don’t make this stuff up; Congress does.

As part of this reinvestigation, the bureau is required to tell the person or entity that sent it your information (we know that entity in the business as a “furnisher”), that you are disputing the information. Upon receipt of this notice, the furnisher must do three things: (1) conduct an investigation with respect to the disputed information; (2) review all relevant information provided by the bureau in connection with your dispute; and (3) report the results of the investigation to the  bureau.

Should the investigation determine that your disputed information is inaccurate or incomplete or cannot be verified, the furnisher must, based on the results of its investigation: promptly modify, delete permanently , or block the reporting of that information to the bureaus.

The problem is that the process does not always work. Maybe, just maybe, the furnishers and bureaus don’t really much care about your rights. Face it, as Bob Seger suggested, you are just a number to these organizations. So what do you do when the process breaks down and your legitimate dispute goes unresolved?

Funny you should ask a lawyer: you have the right to sue both the furnisher and the bureau for screwing you. You can do it yourself, but I suggest you contact a friendly consumer lawyer to handle the matter. And, as I explain in a prior post, the consumer lawyer will not charge you any money to do this work. Is this a great country or what!

P.S.: The Seger tune I allude to is Feel Like a Number in the album Stranger in Town. It’s an excellent tune in an excellent album.

Let’s use the hypothetical scenario described in the prior article, that is, where ABC Bank misreported information about your mortgage to Equifax. The approach is the same for any other false or incomplete information that appears in a credit report.

Letter and copy

Write a letter to the credit bureau, in plain and simple English, explaining the problem and how it should be fixed. Include in the letter a copy of the page of the report showing the misreported information and attach other applicable documents, for example, a copy of a statement from ABC Bank showing that you paid-off the mortgage ahead of schedule. Be 100% truthful. Let me say it again, be 100% truthful.

Remember that your dispute will likely be processed by a credit bureau employee that does nothing but handle disputes, tons and tons of them. Tell him/her in that letter clearly what the problem is. Give him/her proof that you are right and the bank is wrong. Write that dispute so that any idiot who reads it can readily see that you are right and the bank is wrong.

I call that the “any idiot standard”. In the event it is necessary for you to file a lawsuit to fix the misreporting, your lawyer will be able to argue something like this: “Your Honor, any idiot who read my client’s dispute letter and attached documents should have seen that ABC Bank reported false information about the mortgage to Equifax.”

Number the pages to show they are part of a document. So, for example, if you send a one-page letter and two attached pages, label them at the bottom of each page “1 of 3”, “2 of 3” and “3 of 3” so there won’t be any question that you sent 3 pages. Send your dispute to the credit bureau certified return receipt requested.

Send a carbon-copy (yes, I know, today it is called a photocopy) of the Equifax dispute to ABC Bank, also certified return receipt requested, at the address shown on the Equifax credit report. Keep a copy of your dispute (all pages). I suggest that you also make a copy of the front and back of both envelopes (the one to the credit bureau and the one to the bank), with the return green cards already attached, before you take them to the U.S. Post Office. Should either the bank or the bureau deny receipt of your dispute, you will have essentially irrefutable proof that you sent it.

By the way, you may be wondering why you need to send a copy of the dispute to the bank, given the explanation that the Fair Credit Reporting Act requires you to dispute with the credit bureau. Just do it. If you really want to know why, call me and I will explain it.

Needless to say, if ABC Bank also misreported the information to Experian and TransUnion, you need to dispute with them too (and send the carbon-copies to the addresses shown in the respective credit reports). Thus, you will have to send 3 disputes and 3 carbon copies. Don’t forget to keep copies of everything you mail.

What not to do

In passing, please note what I suggest you not do. There are three possible channels to assert your dispute with the credit bureau: (1) mail; (2) phone; (3) internet. Please only dispute by mail (certified, return receipt requested). Do not use the phone or the internet. Do not use the phone or the internet. Do not use the phone or the internet. That was not an editing error; I wanted to drive the point home by repeating it three times.

Here is why. If you lodge your dispute by phone, who knows how the Equifax employee will characterize it. A mischaracterization of your dispute may result in ABC Bank not fixing the inaccurate reporting when it should have if it were properly notified of the nature of your dispute. For example, the Equifax employee may tell ABC Bank that you contend that the debt in question (the mortgage in our example) is not yours, instead of correctly indicating that you had paid the mortgage. Plus, you will have no way to attach documents–documents which may clearly show why your dispute is meritorious so that the reported information must to be corrected.

If you file your dispute online, you will get a nice confirmation email, but you will not get a copy of what you wrote. If you need to hire a lawyer, he/she will want to evaluate the quality of your dispute, in other words, whether you adequately told the credit bureau why the information reported about your mortgage was inaccurate. Not being able to see what you told the credit bureau, the lawyer will tell you to do your dispute again . . . this time by mail, certified return receipt requested.

Results of your dispute

In a few days, you will get a response from Equifax. If the misreporting is fixed, congratulations. You did what the FCRA required you to do: dispute with the credit bureau. The bank and the credit bureau did what the FCRA required them to do: correct the error. If the credit bureau did not fix the problem, you now have the right to go to court to get it fixed. However, depending on your personal situation, you may want to try again.