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Most collectors are bullies. The amazing truth is that they are trained to behave in this manner. A credit repair expert shares offers some amazing insights and a few weapons you can use to win a battle against a collection bully.
The Backward Morality of Collectors
In a perverse way, collectors are backward therapists, intentionally attempting to evoke feelings of fear and guilt. If they can't make you feel afraid or guilty, they will even settle for making you mad – as long as they get a response and manage to keep you on the phone. I kid you not – the collection business is a unique American sub-culture trained in psychological warfare. Every turn of phrase is designed to put you off balance.
Dialing for Discomfort
That's right, their prime directive, along with evoking crippling emotion, is to keep you on the phone because they know that if they can keep you talking they will maximize the probability of success. And success means getting money out of you; not necessarily a righteous or just credit repair outcome.
Credit Repair Realities
There are a variety of credit repair weapons you can use to fend off attacks from these collection bulldogs, but first let me justify this rant. I happen to know a few things about a few things, and here is what I have to say about the reality of collections, credit repair, the law, and the extent of misinformation – that exists in the world of the average citizen.
Shocking Facts
Are you ready? Here you go. Seventy-five percent of collection accounts in the hands of professional collectors are past the statute of limitation for collectabilty, beyond the Fair Credit Reporting Act (FCRA) reporting period limit, already paid, or completely bogus (it was generated by a system failure or belongs to someone else).
Stand Up for Yourself
This fact is not the real problem. The real problem is that consumers - assumed debtors that is - continue to pay these bogus debts every day. Huh? That's right. How could this be? Like so many other things in life, including nonsensical credit repair info propagated on the web, we often just believe what we are told, having less confidence in ourselves than we have in others.
Don't Believe Your Eyes
There is a terrible and common misconception that if something is in writing it is automatically true. There is a mysterious power that the written word has over us. And in the world of credit repair this phenomena becomes even worse when the collection letter appears on the letterhead of an attorney! If we are inclined to believe our eyes, the added authority of an attorney puts our discrimination into a coma.
Hold on to Your Money
So, how can we tell if a collector is attempting to collect a questionable debt? Here is the fundamental credit repair rule you need embrace, especially when it comes to collections. Don't believe your eyes. The collection may seem familiar, or it may not. It does not matter. Money is a hard earned commodity and unless you want to throw yours away you need to question every attempt to collect that comes your way. Here is how.
Credit Repair Leverage
Collectors are ruled by legislation known as the Fair Debt Collection Practices Act (FDCPA). This is not the perfect consumer protection law that it was originally intended to be, as it provides more protection to the collector than it does to the consumer, but there is one really nice feature for those who wish to leverage their credit repair efforts.
Time is of the Essence
Collectors must make their original contact in writing, and you have thirty days to challenge the debt. During the thirty days a collector cannot report the presumed debt to the credit bureaus. And more to the point, there is a significant and specific burden placed on the collector during the thirty days. And you need to take advantage of it.
Debt Validation
When you get a collection letter you have thirty days to send a response to the collector requesting that they validate the debt. This debt validation period is the only time that there is any obligation on the part of the collector to prove to you that they have the legal right to collect the debt, and that the amount on question is accurate. You wouldn't want to give your hard earned money to someone who does not have the right to take it, would you? And, I'm sure you wouldn't want to pay more than the correct amount. So take advantage of this credit repair opportunity.
Flex Your Credit Repair Muscles
Write a letter back to the collector asking them to provide documentation of their legal right to collect, and also ask for a copy of your original account agreement and an accounting of the amount from the original collector. An internal printout from the collector of the debt is not sufficient. If the collect does not provide the documentation requested, write back, demand your rights, and this time mail a copy to the Federal Trade Commission. That will get their attention. Good luck with your credit repair efforts!
Copyright © 2008 Ian Webber. All Content. All Rights Reserved.
Credit repair can eliminate reporting errors, tidy up your report, and improve your credit scores, but the real potential of credit repair is best realized when combined with a lifestyle change. Now is the time to work towards genuine financial stability. You must make financial decisions in the context of a reasonable and well developed budget. You must also allow for regular, disciplined savings. This may seem like a tall order, but it can be done. Once you get started you will discover that the rewards are far greater than the costs involved.
Getting Organized
Getting a budget organized can be a stressful project. It can be difficult to examine the realities of one's financial life, but there is nothing more important, and once you take the big step you are bound to experience a newfound feeling of empowerment and personal control. Clear a couple of hours in your schedule, get a new pad of legal paper and a pen, clean off the kitchen table, and prepare to build a budget.
Gather Information
Write down every expense that you can think of. Start with the big items like housing and auto payments and work down to the daily incidental expenses like lunch and gas. Don't forget utilities, phone, cable, and all of those little monthly operating costs. Everything counts, and little items add up. Do you take an annual vacation? Estimate the amount of money you need and write it down. It's important to include annual and occasional expenses in your budget; estimate the amount and divide by twelve to arrive at the amount you must set aside each month.
Pay Yourself Too
There is one more category of expense that you need to add to your list. When it comes to credit repair, this is the one that counts the most. Add a monthly amount for you. This is the amount that you should put into a savings account each and every month. There is nothing as important as setting aside money. In the long run this habit will pay you back many times over; a savings account will give you a buffer in case of unexpected expenses, protect your hard won credit repair results, and be a first step in building solid personal wealth. You might consider ten percent of your income as an appropriate amount.
Evaluate the Results
Once you have listed your expenses (including the amount you decided to contribute to a savings account) it's time to add them up and calculate a monthly total. How does it compare with your after tax income? If you can cover all of your costs and still have elbow room you are in great shape. If this exercise has revealed the unfortunate reality that you are spending more money than you make, it's time to make some decisions. This is not always easy, but a little creative thinking might make the process more manageable than you think.
Cutting Costs
If you need to cut costs you should think outside of the box. Get a little creative. You might want to consider that everything is fair game. This can be a big step, but give it a try. Are you paying a lot in rent? The market has changed so much in the last few years that you might find a great new place for even less money. How about your car? Is your payment killing you? Car dealers are hungry and auto finance managers are brilliant at structuring deals; you might be able to trade in your big payment for a little one and still drive off the lot in a nice set of wheels.
Credit Repair Refinances
As your credit repair program starts to yield results you may find yourself in a position to refinance your higher rate debt and to reduce your payments on existing accounts. This is true of everything from mortgages, to auto loans, to credit cards. Over time credit repair will improve your credit scores and allow infinitely more flexibility than you had before. The key to success is to approach the project from all angles. Make your foundation strong and put careful thought into managing and preserving your financial health each and every day. You can succeed!
Copyright © 2009 James W. Kemish. All Content. All Rights Reserved.