How to Challenge Items on Your Credit Reports

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How to Challenge Items on Your Credit Reports

Debt that is not legitimately owed by you or is misreported on your credit report must be disputed. You can file the dispute with the creditor, debt collector and the credit bureau. Here are sample letters to use. Download these and use them to dispute erroneous debts.

How to File Dispute Letter with Debt Collectors

The dispute letter should include your personal identifying information; verification of the amount of debt owed; the name of the creditor for the debt; and a request that the debt not be reported to credit reporting agencies until the matter is resolved or have it removed from the report, if it already has been reported.

A second dispute letter should be sent to the credit reporting agencies with much the same information so they too are aware that the debt is in dispute.

Often, however, the matter is not resolved until the information already has appeared on your credit report and thus become a negative factor that on your credit score. If it does make it on to your credit report, yet another form of dispute letter should be sent to the credit reporting agency, disputing the accuracy of the information and asking that it be removed or corrected.

Unfortunately, this is when the situation can become very complicated.

The problems consumers have had disputing information on credit reports has been the subject of several lawsuits and investigative journalism pieces, including one by 60 Minutes, the CBS news magazine. The situation got so hot that the three major credit reporting bureaus – Experian, TransUnion and Equifax – reached an agreement in 2015 with the New York State Attorney General to reform the process for correcting errors.

The reforms are supposed to promote fairness in the process for resolving credit reporting errors, including notifying the other credit bureaus when a dispute has been settled in favor of the consumer.

Best to Check Credit Reports Regularly

However, it is unclear yet whether that process is working so there still could be problems with the information on your credit reports. Each time your debt is sold, if the buyer fails to collect, he could send the information under his company’s name to a reporting agency. Thus, the same debt could be listed under several company names at all three reporting agencies.

You should check your credit report from each agency every year. If you find an error, send the reporting agency a dispute letter right away.

Still, collection agencies do not give up easily. Consumers can be sued by a debt collector, and then fail to show up for the court date and thus have a judgment go against them. Some consumers try to represent themselves with predictable results.

If the debt collectors do win a court judgment, they can attempt to recoup their money, depending on what state the judgment was entered. If you try to appeal the case, it is wise to find a consumer advocate attorney to represent you. If you can’t afford it, go to the local Legal Aid Society and try to get legal representation.

Ignoring the court date is the worst possible thing you can do. The standard of proof is minimal in most cases so you can bet your life that whether you owed the debt or not, (debt collectors) will get a judgment against you if you don’t show up.

If a judgment goes against you, find a lawyer. If you do so within 30 days and your lawyer files a motion to reconsider, you have a chance to get it overturned. The crucial thing is to make sure the debt collector has the information necessary to bring the case to court. A lot of times, he is working off a line of data that says the amount owed, but with no real proof that you are the one who owes the debt.

The first thing consumers should do is verify that the debt even exists. In addition to the “validation notice” that debt collectors must send, there is a “statute of limitations” on most debts. The statute of limitations varies from state-to-state, from as little as three years to as many as 15. Most states fall in the range of 4-to-6 years.

If the statute of limitations on your debt has passed, it means the collection agency can’t get a court judgment against you. It does not mean they can’t still try to collect, though if you refuse to pay, they have no legal recourse against you.

Many of the problems start with the fact that debt collection agencies often buy debts from several sources and either collect the money or sell the debt a second, third, maybe even fourth time. Along the way, the original contract gets lost and specifics of how much was originally borrowed, at what interest rate, what late payment penalties are involved and how much is still owed, are lost with it.

Consumers need to keep accurate records of all transactions involved with their debt, especially the original contract, record of payments and any receipts. That information is used when filing   a dispute letter with the collection agency.

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