How to Deal With Your Debts

For better or worse, we live in a society that thrives on credit.  Almost any product can be purchased through installments. Credit cards and credit applications come through the mail on a regular basis.  Unfortunately, some consumers become overwhelmed by their credit obligations. Because of a variety of reasons, overspending, illness, the loss of a job, it becomes impossible for them to pay all their bills.

If you cannot resolve your credit problems alone or need additional assistance, you may wish to contact an agency like the Consumer Credit Counseling Service or another credit counseling organization.  These nonprofit organizations counsel consumers who are in debt.  A counselor will try to arrange a repayment plan between the consumer and their creditors, and will help set up a realistic budget and plan expenditures. These services, are generally offered at little to no cost.

If you have a problematic credit report, there are no quick, "magic" fixes.  The only way to fix your credit history is through sound management of your money.  And, then continued management your finances for a long enough period of time so that your history reflects responsible spending habits.

Some consumers turn to companies, which claim to be able to fix credit problems.  These companies, sometimes called "credit repair clinics," often make misleading promises to consumers, such as promising to remove a bankruptcy from their credit report and charge high fees for doing the same things consumers can do on their own.

You need not pay someone else to learn what is in your file or to correct inaccurate information.  See the Credit Reports section for more information about how to get and correct information in your credit file.

Your Credit Report will contain information about your:

Identity:  includes your name, address, marital status, your date of birth, number of dependents, previous address, and Social Security number.

Employment:  includes your present position, length of employment, income and previous job.

Credit History:  consists of your credit experiences with specific credit grantors.

Public Record:  includes civil suits and judgments, bankruptcy records, or other legal proceedings recorded by a court.

Under the federal Fair Credit Reporting Act, consumer-reporting agencies may keep correct and verifiable information in your file for seven years, and ten years in the case of bankruptcy.  There are a few exceptions:

if you apply for a job which pays more than $75,000 per year, the reporting agency may provide all the information it has, including items over seven years old.

information reported because of an application for more than $50,000 worth of credit or life insurance has no time limitation;

information concerning lawsuits or judgments against you can be retained in your file for seven years or until the statute of limitations expires, whichever is longer.  Under Utah's law relating to judgments, a judgment can remain on your report for an eight-year period after it is entered.  If the judgment is renewed, it can remain for an additional eight-year period.

Others Who Can Obtain Your Credit Report

Any business, individual, or government agency may request a credit report for its legitimate business needs involving a transaction with the consumer.  These include: credit granting considerations; review or collection of an account; employment considerations; insurance underwriting; a potential partnership; security clearance; or lease.  Reports may also be issued at the written request of the consumer or a court.

Reviewing Your Credit File

You have the right to know the contents of your credit history.  Upon request a consumer reporting agency must disclose to you all of its information about you and its sources for that information.  This includes the names of all those who requested credit reports or other information about you in the last six months as well as anyone who obtained reports for employment purposes in the past two years.  You may either make an appointment to review your file or request the information over the phone.  The credit-reporting agency must provide you with a free copy of your file if you have been denied credit within the last 30 days.  Otherwise, the agency may charge you a reasonable fee not to exceed $8.

The three primary reporting agencies are:
Equifax - (800) 685-1111 - www.equifax.com
Experian - (800) 831-5614 - www.experian.com
TransUnion - (800) 851-2674 - www.transunion.com.
 

Correcting an Error in Your Credit File

If you've discovered an error in your file, you should notify the credit-reporting agency.  The agency is required to investigate any items in question within 30 business days of receiving your notice of dispute. If the investigation reveals an error or if the disputed information cannot be verified, a corrected version will be sent, at your request, to anyone who received the report in the past six months.  Job applicants can have corrected reports sent to anyone who received a copy during the past two years.

If the new investigation does not solve the problem, you may have the agency include your version of the disputed information on your file.  This written explanation or summary must be 100 words or less.  This statement will be included in all future issues of your report.

Collection Agencies

The federal Fair Debt Collections Practices Act (15 USC 1692) applies to businesses which collect debts for other businesses.  They do not apply to a firm which is collecting its own past-due accounts.

When a Collection Agency Contacts You

The first time a collection agency contacts you; it must give its name and address, and the name of the original creditor (the business or person you owe money to).  It must also tell you in writing the amount of the debt and any fees which have been added, such as interest or collection fees.  You must also be informed of your right to dispute the information.

• Under the FDCPA, a collection agency cannot call or write to you more than three times a week.  Only one of those calls can be at work.  You cannot be called between 9 pm and 8 am.
• A collection agency cannot harass, intimidate, threaten, or embarrass you.  It cannot threaten violence, criminal prosecution, or use offensive language.
• If you send a written statement requesting a collection agency to stop, it cannot continue to call or write to you to demand payment.

When Contacting Other People

If you have an attorney, the law prohibits a collection agency from contacting anyone other than your attorney.  If you do not have an attorney, the agency can contact other people only to find out where you live or work.  The collector cannot tell these people that you owe money.  In most cases, the collection agency can contact another person only once.  These same rules apply to contact with your employer.

Notifying a Credit Bureau

A collection agency can contact a credit-reporting bureau about the debt, but if you have disputed the debt in writing that also must be included in the report.

Adding Additional Charges

To determine if the collection agency can add additional charges onto your debt, consult your original contract.  If you agreed to pay "collection costs," the agency can add reasonable charges such as attorney fees, court costs, or credit reports.  If the agency is collecting on a bad check, it can add collection and legal fees as allowed by state law.

Partial Payments

A collection agency can demand full payment of the debt.  It can, but does not have to, accept a partial payment plan.

Post-Dated Checks

A collector can ask that you write a post-dated check, but you cannot be required to do so.  If you give a collection agency a post-dated check, under federal law the check cannot be deposited before the date written on it.  And if you give the agency a check with the date more than five days in the future, the collector must give you timely written notice before the check is deposited.

A Collection Agency Cannot:

• publish lists of people who owe money; use a badge or uniform of a law enforcement agency or claim to be from a government agency;
• use documents which look like court or government documents, telegrams, or emergency messages;
• make collect phone calls or send collect telegrams;
• violate postal regulations;
• threaten to add charges that aren't legal, for example, an interest rate higher than the rate in the original contract;
• garnish your wages or take your home or possessions without a court judgment, or;
• threaten to have a debtor put in jail for bad debt.

Repossession

How Repossession Can Take Place

• The buyer does not have to be notified before the repossession occurs.
• The creditor cannot commit a crime, use abusive language, enter a home without permission, or take an item if the owner physically resists.
• Cars can be towed from public or private lots.
• A car can be towed from the owner's driveway if no other car is moved
• A car cannot be towed from the owner's garage.

After an Item is Repossessed

If you have paid more than 60 percent of the amount of the loan, the creditor must sell, lease, or otherwise dispose of the item, unless the consumer signs a statement after the default which permits the creditor to keep the item in full payment of the loan.  The sale must be held within 90 days of repossession.  You must be notified of the time and place of the sale.

If you have paid less than 60 percent, the creditor may decide if the item is to be kept as payment for the loan or sold.  You must be notified in writing by the creditor of what will be done.  If the creditor chooses to keep the article, you have 21 days to protest in writing and demand the item be sold.

The Conditions of Selling a Repossessed Item

The proceeds from the sale go to cover the balance of the loan, and the costs of the sale and repossession.  Any remaining money is returned to the buyer.  If the proceeds of the sale do not cover the loan and expenses, the repossessor is allowed to sue the buyer for the full amount owed, including repossession fees, auction costs and legal fees.

Other Things You Should Know

Women and Credit

Each year, many women are denied credit because they have no credit history.  If you are married, tell creditors or stores to report shared accounts in your name as well as your spouse's name.  You may have difficulty establishing credit in your name if you have kept all your credit cards in your married name (e.g. Mrs. John Smith).  Make sure credit bureaus have a file on you, and that shared accounts listed in your spouse's file are listed in your file.

Whatever your marital status, you should establish your own credit history.  If you've never used credit and are considering doing so, consider opening a checking or savings account in your name; acquire a credit card in your name; or establish a pre-arranged credit line with your bank.

If you are no longer married, you can still apply for credit on the basis of accounts you shared with your spouse.

Other Laws

If you applied for and were denied credit, the Equal Credit Opportunity Act requires creditors to provide you written notice and to specify the reasons for your denial.  For example, the creditor must tell you whether the denial was because you have "no credit file" with the credit-reporting agency, or because the agency says you have "delinquent obligations."  This law requires creditors to consider, upon request, additional information you might supply about your credit history.