Credit repair services

Credit Repair Organizations Act 

This Act, Title IV of the Consumer Credit Protection Act, prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of "credit repair" services. The Act bars companies offering credit repair services from demanding advance payment, requires that credit repair contracts be in writing, and gives consumers certain contract cancellation rights. 

15 U.S. Code § 1679 - Findings and purposes 

 (a) Findings The Congress makes the following findings: 

 (1) Consumers have a vital interest in establishing and maintaining their credit worthiness and credit standing in order to obtain and use credit. As a result, consumers who have experienced credit problems may seek assistance from credit repair organizations which offer to improve the credit standing of such consumers. 

 (2) Certain advertising and business practices of some companies engaged in the business of credit repair services have worked a financial hardship upon consumers, particularly those of limited economic means and who are inexperienced in credit matters. 

(b) Purposes The purposes of this subchapter are— 

(1) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and 

(2) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations.

In FTC v. Gill, 265 F.3d 944 (9th Cir. 2001) Circuit Judge Paez wrote:

 "It has been said that bad credit is like a "Scarlet Letter." As Americans' reliance on credit has increased, so-called "credit repair clinics" have emerged, preying on individuals desperate to improve their credit records. These organizations typically promise they can have any negative information removed permanently from any credit report ... for a fee. On September 30, 1996, Congress enacted the Credit Repair Organizations Act ("CRO Act"), 15 U.S.C. §§ 1679-1679j, to ensure that the clinics provide potential customers with the information needed to decide whether to employ the services of such an organization and "to protect the public from unfair or deceptive advertising and business practices by credit repair organizations." 15 U.S.C. § 1679(b)."

The three levels of debt collection

 There are three levels to debt collection

The foundation level is the original debt. It might be a credit card debt, a student loan, a medical debt, or any other type of consumer debt obligation. The original creditor is the credit card company, the bank that made the loan, or the hospital that provided medical services.

The next level is the debt collection agency or the debt buyer who purchased the original debt.

Finally, there are the credit reporting agencies such as Equifax, TransUnion, and Experian.

A debt collection can impact you on each of these three different levels The problems caused by a debt collection must be solved on the level where the problem arose. For example, if a debt collection is time-barred by the statute of limitations on the first level it can still legally stay on your credit report for seven years.  But, if a collection agency improperly threatens to sue on this old “zombie debt”, it is possible to go after the debt collector directly in court for a Fair Debt Collection Practices Act violation and clean up your credit report in the process.

Never underestimate the power of litigation in the hands of a wizard attorney.