Negotiating with Creditors

When you're negotiating with creditors, be aware that the credit laws were put in place to protect you. As a credit attorney, I developed credit improvement strategies for our company based upon the simple concept of requiring the credit bureaus, collection agencies and creditors to comply with various credit laws. Your creditors have to prove to you they comply with the credit laws regarding your credit information.

So to legally improve your credit, it helps to know which credit laws you can use when negotiating with creditors, collection agencies, or credit bureaus; because different credit laws may apply for each.

For example, the Fair Credit Reporting Act dictates what the credit bureaus must do when "reporting" your personal information. But it also outlines certain requirements for creditors and collection agencies when they "furnish" your personal information to the credit bureaus.

Other credit laws like the Real Estate Settlement Procedures Act and the Truth in Lending Act can be used when dealing with mortgage companies or foreclosures. So, when negotiating with creditors, be aware of which credit laws to apply.

Here's a few of the legal credit improvement strategies we sometimes use when dealing with creditors:

1. Using the Fair Credit Billing Act, you can demand your creditors to dig up original documents and provide you with information to verify that charges on your previous billing statements are accurate. Take a look at this Sample Demand Letter (word doc) to see how you can use this credit law when dealing with creditors. If they can't provide the documentation, your negative credit information must be deleted from your credit reports. Sometimes your creditors can't locate the documentation you are entitled to. Remember, if they can't comply, your negative information must be deleted. This credit improvement strategy is sometimes used for credit card charge offs, late payments, or delinquent credit lines.

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2. Using the Fair Debt Collection Practices Act, or the FACTA of 2003 you can file a debt validation demand with a debt collection company or dispute an inaccurate credit item directly with your creditors and demand they verify the accuracy of your information being reported to the credit bureaus. As a furnisher of information, the FCRA limits them to only reporting information that is 100% accurate and verifiable. So if any part of the information reported is not accurate or if the debt cannot be validated, the creditor is not allowed to report it. Any inaccurate information must be corrected or deleted. See this Sample Debt Validation Letter (word doc) to see how you can use the FDCPA when negotiating with creditors.

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3. This credit improvement strategy is often used in conjunction with a method of verification demand letter to the credit bureaus requiring disclosure of the process they used when conducting a dispute reinvestigation. If the credit bureau claims they sent your dispute to your creditor and the information was verified, but your creditor can't provide you with the verification information you demanded, there is an obvious conflict. Either way the negative information should be deleted from your report.

In addition to becoming familiar with the credit laws applicable to creditors, you should also know that, believe it or not, many creditors actually benefit from your bad credit. How? They charge consumers with poor credit higher interest and fees than those with good credit.

As a result, there may not be an incentive for some creditors to cooperate in the process of reinvestigating your credit disputes or locating archived documentation to comply with your demand for verification of the accuracy of your reported information. Can you see the potential for a conflict of interest here?

We want you to be aware of these conflicts of interest and understand your rights when negotiating with creditors. But you may not want to fix your own credit. If not, contact us. We can help.