Tag Archives: Credit history

Fight back — we can all be Matlock

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I was being harassed & legally extorted by a collection agency & their client, a cable TV company, but I beat them myself with no lawyer’s fees . . .

The cable company overcharged me almost $200 when I canceled my service toward the end of the month, yet they continued to bill me into the next month.  I wouldn’t pay it, so they gave it to the collection agent who, instead of contacting me about it & negotiating it or providing me with evidence of the debt, they instead held my credit history (and essentially my entire life) hostage by putting it on my credit report immediately & didn’t bother to contact me to try to collect it first.  I didn’t find out until I applied for credit some months later & was denied.  They wouldn’t remove it whether I paid or disputed it & they had no proof I owed it.

After arguing with them for a month, I paid it, then sued the cable company myself without a lawyer (“pro se” they call it) for the $200 I paid them.  I sued them in my state’s District Court/Small Claims Court (the lowest level, where I knew I could get a quick trial) & also asked for $10,000 in damages, which was the dollar limit of Small Claims.  I asked for punitive damages because I knew it would get their attention even though I knew that they don’t typically award punitive damages at this level.

It took me 4 months total, but the lawyer for the cable company was a contracted lawyer in my area & just wanted to get it settled & was real nice & polite; we never went to court.  I said “let’s make a deal — keep the $200, plus no reimbursement for my $150 lawsuit filing fee, and I’ll forget about the $10,000, but I want ALL evidence of the collection removed from my credit report (not just showing “paid”) at all 3 major credit bureaus, and my offer is firm”, which of course is only what I wanted all along.  He said no problem & it was done within a few weeks.  Cost me $350 & some time, but my credit is clean once again and it saved me thousands in interest costs as I was about to get a $300,000 mortgage.

I also beat a lawyer/collection agent who tried to collect an invalid debt against my dear old 85-yr old mom before she died, a debt that she didn’t owe for a contract for services that she never signed & never used.  There are a lot of companies that prey on old ladies, and this was one of them — a complete scam operation.

I beat them by simply citing the state law.  Collection agencies usually try to sue people to collect a debt that is over 3 years old (which is the limit for collecting it in our state) by claiming it’s a “breach of contract” lawsuit, which has a 6-year statute of limitations, but a bad debt is NOT a breach of contract under the laws of my state.

I first filed a Response to Complaint for my mom a soon as she got the notice, because if you don’t respond within the time frame required by the court (30 days in our case), we’d automatically lose.

I then followed it up 3 days later with a Motion to Dismiss With Prejudice (“with” prejudice means they can’t ever refile the case again, vs “without” prejudice) and requested the court dismiss the case due to the Bad Debt statute being only 3 years from the date of last activity — they call that the “DLA” in the credit/collection biz, and that this debt was older than 3 years & that they were trying to circumvent state law using the Breach of Contract statute.

Within 30 days, the lawyer filed its own Motion to Dismiss With Prejudice knowing they were beat.  I didn’t do this, but I should have filed a complaint with the State Bar in conjunction with it to put added pressure on them.  Of course, I’m not a lawyer and I’m not recommending anyone do this — I’m just sharing my own personal experiences an as anecdote on how I fought back & won.  Sadly, my mom died about a month before the case was settled & didn’t get a chance to see me win it for her, but she knew I would win anyway.

How to fix an underwater housing market

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Here’s my plan to save America’s “underwater” homeowners when we eventually plummet into a “bear” housing market & find that we have a plethora of those who owe more on their home than its alleged fair-market worth — it’s a 4-step process:

1) Have the president create an agency within HUD funded initially by the US Treasury & later partially or (hopefully) wholly funded by fees that, upon application by a homeowner, they will issue a check at a short sale to cover the difference between the appraised value & the outstanding mortgage balance, which check will be paid to the mortgagee (the bank/entity holding the mortgage) at closing.  A fee must be paid by the seller along with the appraisal fee.  The homeowner also agrees to sign a note for the shortfall check that will become a gov’t debt (with no time limits/expiration) on any future homes they buy.  This debt/lien is not to be included on credit reports & instead entered on a gov’t database to let lenders & closing attorneys know there is a future debt to be paid at some point if they have a closing with this person as a seller so that if they have any equity in any new homes, that new equity will pay down the debt.  It would be an interest-free loan & it can’t be bankrupted upon for at least 25 years. This would allows sellers to move on to a hopefully more profitable/valuable home & free up the market to jumpstart sales again, as well as provide more liquidity for banks & more opportunities for homebuyers, which in turn would bring home values up again & would possibly cure the negative equity problem entirely.

2) Have the President remove the due-on-sale clause for all FHA, VA, USDA, FNMA & even private or other conventional mortgage loans that are more than 5 years old & are current so that ANY buyer can buy them so long as they meet these simple guidelines — A) Show income that meets the FNMA income ratio test or show assets equal to 20% of the price of the home, which you must pay down the loan with; B) Show a credit rating of at least 640, with only a 24-month lookback/seasoning for foreclosures & bankruptcies, and 12-month for any other negatives on your credit (i.e., no 30-day late pays within 12 months), and no consideration for any medical bills in collection (they won’t count against you as long as they’re not judgments). Only a $500 leader fee or 0.5% of the sales price may be charged by the lender (whichever is less) to transfer the loan. The loan must be “above-water”, i.e., not owe more than the home is worth or the “underwater” provisions apply above.  This would also apply to short-sales as explained above.

3) Bankruptcy & credit overhaul — Bar current & future prospective employers & insurance companies & anyone else from checking a person’s or a business’ credit history if not in direct relation to a request for credit, and insurance “premium financing” will not be considered a debt for this purpose. A person with bad credit is usually not a bad person; they just either got caught up in a situation that went sideways without warning or made a bad decision that looked good initially, or are burdened by medical bills or a student loan (which can’t be discharged, but they can discharge the other debt so they can afford to pay back the student loan). Restrict credit histories to 5 years instead of 7, and put Chapter 7 BK back to 5 years for reporting (from the current 10 years) & set repeat filings of BK at no earlier than 10 years (currently 8 years). Remove the $150,000 loan threshold & make it so that no one can go back & look at a person’s credit history more than 5 years for any amount of loan. FHA, VA, FHMA & USDA loan guidelines must restrict seasoning of BK & foreclosures to 2 years (current law is 3 yrs on foreclosures & 2 years on BK, which makes no sense) unless it’s an equity sale with 20% down, which would be no seasoning needed.  Require all creditors to allow the customer to reaffirm a debt in BK at no worse than its current terms, and require all interest & payments to be frozen until the BK case is discharged so that debts aren’t piling up between the date of filing & the date of discharge.

4) Require land developers to provide at least 33% upfront equity in the form of cash or other marketable liquid assets as collateral, and require spec home builders to provide 20% of the building cost in cash upfront which includes the cost of the land. This will slow down the supply, increase demand & slow down future speculative booms, plus get rid of speculative builders who have little capital.

All of this makes perfect sense & will step on the toes of many wealthy bankers & real estate moguls, which is why it won’t ever happen, but they can’t say they don’t have a plan to fix it now.