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Frequently Asked Questions

We recommend that you pay off any debt you legitimately incur, but there is a downside to doing this. For instance, when attempting to purchase a home. People are such in a hurry to close on their mortgage, ignoring the fact that paying a simple collection item can totally torpedo their mortgage loan.

Here Is The Problem:

For instance, a mortgage customer learns that there is a collection item on his credit report and most of the time have no idea what it is. Sometimes, it’s the product of identity theft. The customer thinks that the path of least resistance is to pay the collection and it will come off the credit report. The opposite happens almost every time.

When you pay a collection item, two things happen;
1. The collection item is frequently reclassified as a “paid” collection item; its not removed.
2. You are admitting that it’s your debt. Hence, any chance of getting a credit repair company, credit bureau, or court, to remove that item off of your credit report goes down the drain.

So what should you do?

If the collection item is the product of identity theft

Go get a police report. Its simple and painless. Take your credit report to the police station, show the detective the item that is not yours and get a report. We will send a dispute letter for you and attach the police report. We can usually get that item removed within 30 days.

If the collection item is legitimate

Do not pay it until you get an agreement with the debt collector to REMOVE the collection item from your credit report altogether in exchange for payment. Be sure to get the agreement in writing before your client pays the debt. Get the debt collector’s fax and email to be sure that you send a confirmation of the agreement to the debt collector if they refuse to give you something in writing to memorialize the agreement. Do NOT settle for a notation of “paid in full” .

CHAPTER 7 – A general discharge from all debts

A bankruptcy petition begins the bankruptcy.  The filing date is the key date to note. Every debt incurred after the filing date is called a post petition.

Reaffirmation agreement – preserves a debt after discharge.  If the consumer wants to keep an asset, then they must also keep the liability.

There are several violations to look for. Here are a few.

  • Reporting a balance due or a payment due that was discharged in BK.
  • Reporting a trade line as included in BK that was reaffirmed.
  • Failing to report post BK payments on a reaffirmed debt.
  • Reporting a $0 balance on a reaffirmed debt.

Chapter 13 – A reorganization of debts in an attempt to repay as much as possible.

A bankruptcy petition is the same as Chapter 7.

Reorganization plan – Debtor creates a plan to repay as much and many of his debts.  If the plan is accepted by the court, it becomes a new contract between the consumer and each of his creditors

There are several violations to look for. Here are a few.

  • Failing to report a trade line as included or as discharged in BK
  • Non filing spouse reported as having filed BK –Reporting the old unadjusted balance or payment on a crammed down debt in Chapter 13.
  • Reporting the old unadjusted balance or payment on a crammed down debt in Chapter 13.

There are several ways to obtain your credit reports fairly easy. The most popular is annualcreditreport.com. Personally, we recommend IdentityIq. With IdentityIQ, you are able to see all three credit reports, as well as your scores. You also get a side by side comparison of everything reporting on your credit report. If you are our client, you will get your report at a discounted rate the first month, instead of $29.99.

Delinquencies can remain on your credit report for 7 years.

Derogatory credit information has to be removed from your credit report after 7 years from the date of first delinquency. Sometimes a debt buyer or a collection agency may re-age the date of last delinquency so that negative information stays on your credit report longer than seven years. This is illegal and you are entitled to compensation.

Statutes of Limitations for Credit Reporting

Bankruptcies.

a. Chapter 7 is a total discharge of your debts and can stay on your credit report for up to 10 years.
b. Chapter 13 bankruptcy is a reorganization of your debts and can stay on your credit report for up to 7 years.

Tax Liens.

a. Unpaid tax liens can stay on your credit report for up to 15 years.
b. Paid tax liens can stay on your credit report for up to 7 years from the date that its paid.

Judgments can remain on your credit report for up to 7 years from the filing date. Paying the judgment will not change that date, but the credit report must reflect that the judgment has been satisfied.

Managing your credit report is YOUR responsibility

The statutes of limitations above are NOT self-executing. It’s your job to periodically review your credit report to see what items should fall off. If an out of statute item has not fallen off, contact us and we will begin the process of getting it removed.

For a free copy of your credit report, go to http://www.annualcreditreport.com. This is the government sanctioned website and it allows you to obtain a free credit report from all three credit reporting agencies.

These error occurs between different people with the same name. For example, Bob Smith who lives in Montana may have his credit information placed on Bob Smith who lives in Arizona. This is a very common mistake. This also happens a lot between fathers and sons with the same name, especially when they both live under the same roof. If this isn’t the case, then you have been compromised and a fraudster has used your information to open accounts.