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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Who Are Your Creditors?

Take a deep breath. Perhaps your face is beet red and your blood boiling while looking over your credit card statement. How could you have possibly spent that much money? Sometimes charges appear you never made or you were double charged for an item. You may have a phantom late fee, an interest rate hike or a whole host of blatant errors listed in your bill summary. Worse yet, you may have been delinquent on your payments and received a letter from a collection agency claiming that they have purchased your debt and are ready to collect – or even sue!

Before you scream at the top of your lungs and rip out your hair, remember that you have legal recourse. You can dispute this debt if you feel you have been wronged. Legal professionals recommend reading up on the Fair Debt Collecting Act and always requesting a debt validation when a collection agency is attempting to solicit money from you. With so many fly-by-night operations out there, you can never be too safe. You should also remember that the person you will be writing to is not the root cause of your frustration: he or she is just another person like you. Many people working in the finance industry would actually like to work with you to resolve a situation, so always be as courteous as possible when dealing with these people. While it may feel counterintuitive at first, you can win more flies with honey than with vinegar!

credit theft

Step One: Sending a Debt Dispute Letter

In your debt dispute letter, begin with a heading that includes your name and address, your collector’s name and address, as well as the date. Let them know that you are writing in response to a phone call or letter (include the date) and tell them you feel the notice was erroneous. Tell them that, in accordance with the Fair Debt Collection Act, they are legally required to stop harassing you for the debt until they provide you with written verification for the amount owed. Ask for the amount of the debt, the name of the creditor (if it’s a collection agency) and proof that they are licensed to collect debts in your state.

Video: How to Write a Debt Dispute Letter

What Are Your Rights Under the FDCA?

dispute letterAccording to the Fair Debt Collecting Act, you are entitled to a written verification of your debt, including the name and address of the original creditor, along with proof that the collector has been given license to collect that debt from you. If you do not receive these materials within 30 days, all communication must cease. The collector is not allowed to call you or hassle you to pay until they comply with your request. Also, in every conversation, the collectors must identify themselves as debt collectors and let you know that “this is an attempt to collect a debt.”

Debt collectors are not allowed to contact you outside the hours of 8am to 9pm. They cannot use profane language, threaten to take legal action against you, misrepresent themselves as someone else, call you incessantly with intent to harass you, or threaten to report false information to the credit bureaus. If you have requested that they cease communication with you, they must comply.

Did Someone Steal Your Identity?

Identity and credit card theft is one of the fastest growing crimes in America, particularly with the poor economy and high unemployment rates. The first step in establishing whether someone has stolen your social security number is to check your Social Security Statement online for suspicious activity. Sometimes people will use your social security number to gain illegal employment if they’ve been released from prison, have a criminal record or are an illegal alien.

You should also get a free copy of your annual credit report to see if there are any mysterious accounts opened in your name. Watch out for big purchases like mortgages or car loans, as well as credit card accounts. This can be the biggest clue that someone is piggybacking off your credit for their own personal gain. Get your hands on your latest credit card statements to see if you can verify all the purchases made.

Video: How to Tell if You’re a Victim

If you are indeed a victim of identity theft, then you must place a fraud alert or credit freeze with the credit bureaus and file a complaint with the Federal Trade Commission. Then you’ll need to file a report with the local police department. Your life will be very disrupted during this difficult period when law enforcement officials try to track down the source of this disturbance. To help prove you’re a victim of identity theft, you can ask your creditors to provide you with a copy of the application used to open your account or transaction records.

How Will Disputed Debt Affect Your Credit?

Your credit will not be affected simply by disputing a debt. Your credit may, however, decrease as your late payments are reported and more time elapses since you last paid your debt. Losing a dispute will not hurt your credit score, although winning can remove negative items from your report, therefore increasing it! When you look at your annual credit report, it often pays to dispute any inaccuracies you see. If the creditor does not respond to the credit bureau within 30 days with verification of the debt, then the item will fall off your report automatically.

Companies That Dispute Debt for You

Fidelity Debt Solutions
San Diego, CA

J. Grew Family Law Attorney
Saugus, MA

Philip S. Aurbach
Las Vegas, NV

Law Office of Gregory Messer
Brooklyn, NY

Ryan, Kathryn Warnecke Attorney
Lexington, KY

Boleman Law Firm
Richmond, VA

Do It Yourself Legal
Mukilteo, WA

Credit Dispute Pro of North Texas
Dallas, TX

Tilem Law
Casper, WY

Melvin Drukman, PC
Atlanta, GA

Jeffrey J. Harley Attorney
Mobile, AL

David M. Wiseblood Attorney
San Francisco, CA

Financial Law Group
Warren, MI

Phillips & Boring
Pittsburgh, PA

Ellen Holland Keller Attorney
Cleveland, OH