CREDIT REPAIR SCAMS

Late night television and the Internet is full of advertisements for companies promising to remove bankruptcies, judgments and other negative information from credit reports. Sometimes they even offer to help you create an entirely new credit identity. These promotions need to be approached cautiously  though. In truth, no one can remove negative information from your credit report if it's accurate. And some of the tactics suggested by credit repair companies are illegal or ineffective, such as applying for an Employer Identification Number under false pretenses or disputing every credit report entry even if they're accurate. The Credit Repair Organizations Act prohibits companies from charfing a fee for their services before they've  completed the services they promised and many of the strategies offered can be done yourself for free. The Federal Trade Commission warns consumers to avoid credit repair companies that promise to eliminate accurate but negative information and tell you not to contact the credit bureaus directly.

If you've identified false entries on your credit report there are procedures for disputing the entries and perhaps obtaining damages from both the credit bureau and furnisher of the information. Contact  us at www.thompsonlawoffice.net if you have inaccurate information on your credit report that has caused actual damages.

STUDENT LOAN DEFERMENTS

Deferring payment on student loans is necessary when circumstances prevent a borrower from staying current on payments. There are many types of deferments available depending on the kind of student loan and the situation. For instance, deferments on private loans are completely discretionary to the lender. If a private lender wants to grant or deny a deferment they can, without consequences. Ironically, they may also charge a borrower requesting a deferment because they're unable to pay. Sallie Mae often charges $150 for a three month deferment.

For deferments of federal loans there are rules to be followed and made available to borrowers. The most common deferment on a federal student loan is the "in school" deferment. In other words, if a borrower is in school for at least half-time, payments on the federal loans will be deferred. For Stafford loans there are also deferments available when a borrower is unemployed, in a rehabilitation training program, in a graduate fellowship, in the military service or following active duty, temporarily totally disabled or caring for a disabled spouse or dependent. Deferments are also available for economic hardship.

Economic hardship deferment applications must be in writing and can be issued in one year increments for a maximum of three years. To qualify for an economic  hardship deferment a borrower must show that they are receiving federal or state public assistance, are a Peace Corps volunteer, have an economic hardship deferment on another loan or is working full time but still at 150% of poverty. An unemployed borrower seeking a deferment must be registered with an employment agency and must show proof of eligibility for unemployment benefits. To obtain an economic hardship deferment on a Parent PLUS loan, all cosigners to the loan have to be unemployed.

In addition to deferments, borrowers can verbally request a discretionary forbearance for causes such as poor health or other personal problems. While a forbearance may be needed for a short term crisis it's important to remember that when a forbearance ends, all interest is capitalized, creating a long term significant increase in the amount of the student loan debt. If you're having student loan issues contact us at www.thompsonlawoffice.net.

DEBTORS' PRISON

The practice of putting people in prison for not paying their debts ended in the United States more than a century ago. Some state constitutions include provisions banning these "debtors' prisons." But some creditors are increasingly using a little known tactic that, to the people they target, feels a lot like being sent to jail for not paying their debts. In Iowa, as in many states, a creditor who gets a judgment against a debtor but is then unsuccessful at collecting the debt can ask for a "debtor's examination." These "exams" take place before a judge and are used to find out where a debtor has bank accounts, what property they own and where they're employed. Debtor's exam hearings are unlike other debt collection hearings that are frequently ignored by debtors without consequence, though. Failure to attend a debtor's exam is considered contempt of court and can result in the creditor asking for a bench warrant to have the debtor arrested and brought before the judge. If the arrest takes place at night or in a different county then where the lawsuit occurred, the debtor may be put in jail until they can be brought before a judge. Some of these jail stays last for days. Bond to be released from jail is the amount of the debt itself, which is often impossible for the debtor to pay. When the debtor can be brought before a judge the examination takes place. If the debtor has no money or property available to pay the debt they're released without further proceedings. But the consequences of being arrested, perhaps placed in jail and being brought before a judge can be severe to someone's employment and family life.

The lesson is to never ignore a notice of hearing for a judgment debtor's examination. If you're not certain about a hearing notice contact us at www.thompsonlawoffice.net. But more importantly, even before a debtor's exam is scheduled make plans for how to deal with the debt. If you're not going to file bankruptcy then how will you pay the debt? Are you going to try to negotiate  a payment plan or settlement with the creditor? If so, contact them immediately. If this debt is just one of many, how do you plan to deal with them all? Start making plans for whatever solution you choose sooner rather than later. Don't wait to take action until the result of missing a hearing lands you in jail.

TELEPHONE CONSUMER PROTECTION ACT

The Telephone Consumer Protection Act (TCPA) prohibits debt collectors from calling a cell phone number using an automatic telephone dialing system without the debtor's prior express consent. Automatic telephone dialing systems include "predictive dialers" and any equipment that has the capacity to store or produce telephone numbers using a random or sequential number generator and to dial the numbers automatically. You can often recognize calls made with these systems because of the brief delay between when the call is answered and the caller speaks. 

Prior express consent means the debtor gave his or her cell phone number to the original creditor at the same time the debt was incurred, for instance in a credit application. If the cell phone number was provided to the creditor after the debt was incurred, it doesn't fit the law's definition of prior express consent. Violations of the TCPA can result in statutory damages of $500 for each call, or up to $1500 per call if the violation was willful or knowing. Since most debt collectors know whether they are calling a cell phone or landline, their phone calls are frequently willful or knowing, leading to treble damages. If you think a debt collector is violating the TCPA start keeping good records and contact us at www.thompsonlawoffice.net.