Credit Repair FAQs

Credit Repair FAQ's

Answers to the most Frequently Asked Questions about repairing your credit & improving your credit score

What does the law say about repairing your credit?

What is the truth about credit repair companies? Can they really do what they say they can do?

How long can the credit bureaus keep a negative item on my credit report and what actions will restart that date?

How long do the credit bureaus have to respond to a dispute letter when credit repair is attempted?

How does a person's credit score affect their credit?

What does the law say about repairing your credit?

As the credit bureaus computerized their processes and greatly expanded their reach and influence in the late 1960s and early 1970s, consumer complaints began to pile up at the FTC and state attorney generals' offices. The credit reporting agencies quickly became huge bureaucracies second only in size to the federal government. Yet, the credit bureaus expressly served only the needs of their clients, the credit grantors.

Many consumers were negatively effected by the credit bureaus, but they had no way to correct or change their credit information. The American consumer lay completely at the mercy of the credit bureaus. The United States Congress enacted the Fair Credit Reporting Act (FCRA) in 1971 to insure that the credit bureaus investigate the credit items disputed by consumers. This federal law set procedural guidelines which gave the consumer the right to challenge the accuracy, validity, and verifiability of the credit listings appearing in their consumer credit report. It also required that the credit bureau repair any credit listing if it was inaccurate or could not be verified.

In theory, the FCRA charges the credit bureaus with responsibility to the consumer as well as the credit grantor. In reality, the credit bureaus resist, resent, and reject consumer disputes. The credit bureaus would rather be left alone to make a profit. And, each time a consumer challenges his credit, profit is lost.

The credit bureaus first defend their profits by erecting walls of stall tactics, including requests for more information, further clarification, and additional identification. The vast majority of consumers give up before they even receive copies of their credit reports. If a consumer manages to get a credit report, decipher the codified information, write a coherent dispute, and mail it, the bureaus may still find some reason to disregard the challenge. The entire dispute system is designed to frustrate and discourage the consumer.

Many consumers have the idea that the credit bureaus must complete their investigation within thirty days or be forced to remove all disputed information. They threaten to sue the credit bureaus if they don't conclude their investigation in time and repair their credit. In practice, such thinking is delusional. Nobody forces the credit bureaus to do anything.

However, if you manage to submit a valid dispute letter, and the credit bureau investigates your dispute, the chances of success are good - whether or not the negative listings are accurate! Accuracy actually has little to do with the deletion of negative items.

If a credit bureau cannot verify an item before completing its investigation, that item will be removed. Many creditor grantors are simply reluctant to take the time to verify the data. While the credit bureaus may be in the business of reporting credit histories, creditor grantors are not.

What is the truth about credit repair companies? Can they really do what they say they can do?

Many "credit repair" companies claim to remove negative credit with the flick of a wrist. Their advertisements make bold assertions and money back guarantees; "Bankruptcy, tax liens, judgments, . . . no problem!! One hundred percent guaranteed!! Credit report 100% cleared in 30 days!!" Can they really make such sweeping guarantees?

While some credit repair companies are outright frauds, others are not frauds and they use the dispute process to obtain impressive results. In fact, they delete thousands of negative credit listings every day - regardless of whether or not the listings are technically accurate. In truth, credit repair fraud is less common today then five years ago. Vigorous regulatory sweeps by state and federal regulators have cleared away most of the illegitimate (and some of the legitimate) credit repair companies.

Unfortunately, it's risky to trust anyone to help you repair your credit. It is estimated that credit repair companies have bilked Americans out of more than fifty million dollars. The majority of credit repair companies were started by entrepreneurs with a penchant for marketing. Consumers have flocked to these "credit doctors" only to discover that their advertisements proved far more impressive than their results. Hiring a credit repair company is like playing Russian roulette. Many of them are effective and legitimate, but it is difficult to tell a rip-off from the real article.

Working within the credit bureau maze requires substantial background knowledge; knowledge it takes credit repair companies years to learn. In fact, U.S. District Court Judge J. Wexler entered the following legal opinion in the Federal Supplement. "Since allowing third parties to assist consumers will likely lead to the expedited correction of credit reports, it will further the purposes of the [Fair Credit Reporting] Acts."

So, can credit repair companies really guarantee results?

Not a chance! No credit repair company is so good that it can guarantee a specific outcome. It would be like a defense lawyer guaranteeing that the jury will find his client innocent. Guarantees are a sure sign of credit repair fraud. A warranty, where the credit repair company promises a refund if certain results don't occur, is a better, more realistic claim.

Get help fixing your credit problems:

Learn how you can remove past credit problems from your credit report, raise your credit score, & get your credit back to normal!

Not surprisingly, the credit bureaus have declared war against the credit repair companies and those selling instruction on how to do-it-yourself. The bureaus lambaste credit repair companies in the media and send anti-credit repair literature to anyone whom they suspect of using credit repair services. The bureaus unflinchingly deny that accurate information can be removed from a credit report.

Some time ago, a couple in the Northwestern United States, who were using the services of a legitimate credit repair company, received a scathing letter of reproach from their local credit bureau. The letter chastened them for relying on the "unethical" methods of credit repair, and pointed out how all their efforts had come to nothing. "As you can see," the letter chastened , "your credit reports remain unchanged." The couple was bewildered because almost all of their many negative credit listings, including a bankruptcy, had long since been deleted.

The simple truth is that you don't have to endure bad credit for seven to ten years. It is possible to repair your credit within a much shorter time.

However you decide to address your credit challenges, realize that regardless of what you may hear in the news media, thousands before you have sought help and repaired their credit. They can show you their homes, cars, and credit cards. Despite the newspaper articles, TV reports, and other credit bureau propaganda to the contrary, you can repair your credit.

How long can the credit bureaus keep a negative item on my credit report and what actions will restart that date?

On this issue, there is much confusion. Almost every so-called credit repair expert has a different opinion regarding the actual credit reporting period allowed by law.

Most negative listings may be kept on your credit report for a period of 7 years beginning on the date that you were last reported late before they repair themselves. This means that if you were late every month from March to August of 1995, that your date of last activity would be on August of 1995. In this case, the item would be due to repair itself on August of 2002. You don't have to live with 7 years of Bad Credit!

There are several exceptions to the seven year rule. Bankruptcies may be reported for 10 years from the date that the bankruptcy was discharged. Liens and judgments may be reported for seven years or until the statute of limitations in that state (usually between seven and ten years) runs out, whichever is longer. However, credit bureaus usually keep these listings on the report for the seven year period regardless of the local statute of limitations, unless you repair them first.

The other interesting exception is in the case of a negative listing that has been sent to collections or has been charged off. The seven year limit begins 180 days after the last late payment before the account was charged off or sent to collections. In other words, if you didn't pay a certain bill from January to March, and the creditor sent the account to collections in June, then the negative listing could remain on your report for 7 and 1/2 years from that last payment in March unless you repair your credit first.

How long do the credit bureaus have to respond to a dispute letter when credit repair is attempted?

Under the most recent version of the Fair Credit Reporting Act, the credit bureaus must complete a reinvestigation within 30 days of receiving a dispute letter from the consumer.

However, the credit bureau still has the right to consider a dispute letter "frivolous and irrelevant" at their own discretion, if they feel that someone is attempting credit repair. While the credit bureaus are careful not to overuse this privilege, they may deem virtually any dispute frivolous or irrelevant without having to justify their decision or point to credit repair methods. Learn how to get the credit repair companies to take positive action on your dispute.

While the credit bureau is required to complete their reinvestigation in 30 days or less, the consumer has little recourse against them if they don't. Many consumers assume that the credit bureau must repair all disputed credit if the investigation isn't completed within the required time. This is not the case. The credit bureau may take as long as it likes to repair the credit. The only real recourse a consumer might have would be to gather a class-action lawsuit to penalize the bureau for taking too long. At Trans Union, for example, it is common practice to receive the credit repair dispute letter, take a week or two to process it, then send the consumer a letter saying that the reinvestigation will begin on the date that the credit repair dispute was finally processed. This often gives them a total of six weeks from the date of receipt of the dispute to complete the reinvestigation.

How does a person's credit score affect their credit?

Your Credit Score is used by anyone loaning you money. Credit card companies, home equity lenders, auto loan lenders and finance companies all use a model created by Fair, Isaac and Co, the San Rafael, California company that pioneered credit scoring 40 years ago and dominates the field today. This score is most often known as FICO and serves as a snapshot of your credit history.

A low score can raise the price of your loan and a very low score can mean denial of your loan completely. Here are the approximate percentages that determine your FICO Score.

Payment history (35%). The largest factor determined on your FICO score is your basic payment history. The number of unpaid bills you have, any bills sent to collection, bankruptcies etc... The more recent the problem, the lower your score.

Outstanding Debt (30%). Are your cards maxed out? High balances or more precisely, balances that are close to your credit limit can negatively effect your score. Keep your balances below 30%.

Length of your credit history (15%). How long have your accounts been open? The longer, the better.

Recent inquiries (10%). Every time you apply for credit of any kind, you create an inquiry on your credit report. Lots of Inquiries negatively effect your score.

Types of credit in use (10%).Current loans from finance companies. How many and how much.

Your score will range between 300 and 870. The higher the better. As your score increases, your credit risk decreases. Exact numbers differ by lending institution but the average high approval score is 680 or above. Often times your score is taken from all three credit reporting companies and the middle score or average score is used.

Depending on the lending institution, your score can cost you. Some lenders will charge a higher interest rate if your score is below 600.

When you apply for credit your score does not come directly from FICO. Instead each bureau has its own version of the rating system with its own name.

Equifax is called Beacon
Trans Union is Empirica
Experian is Experian/Fair Issac

A credit score of 680 or above can save you money, especially for home loans. If you are considering a significant loan you will want to be sure to check your credit reports first. If negative items appear on your report you have two choices. Live with it for 7 to 10 years or dispute these items. For more detailed information on repairing bad credit click here.

FAQs About Bankruptcy

Frequently Asked Questions

 

 

1. Will I lose any property, assets or belongings?

Bankruptcy laws protect what you own. These are called "exemptions". Most, if not all, of your assets (including automobiles and certain amounts of equity in your home) are "exempt" allowing over 99% of our clients to keep everything and lose nothing. In a typical Chapter 7 Bankruptcy, filed through our office, you will lose nothing. In Chapter 13 (Debt Consolidation) you keep all the assets you choose because your debts are paid off or wiped out.

 

2. How soon can you stop calls from my creditors?

IMMEDIATELY! Once you retain the Law Offices of Daniel L. Allen, the law requires your creditors deal with us and leave you alone.

3. Can you stop wage garnishment?

Yes. Any wage garnishment must immediately stop when we file your case.

4. Will I have to go to court?

Yes, but it is nothing to worry about because an attorney will be present to represent you. Only one hearing is required approximately 30 to 35 days after filing. This is normally a very short hearing called a "341a Meeting of the Creditors". While many times no creditors appear, it is possible that one or more of your creditors may be present to ask questions.

5. How does bankruptcy affect my credit?

Chapter 7 or a Chapter 13 Bankruptcy remains on your credit report for up to 10 years. However, you can immediately begin re-establishing your credit after your case is filed. Due to the fact that you are wiping out your debts and cannot file again for 8 years, credit companies want to be first in line to extend credit to you again. By not filing Bankruptcy, your credit report may show negative information for 7 years from the time you become current. By filing, negative reporting stops immediately. This allows you to begin re-establishing credit faster by keeping house, auto or other payments current.

6. Can you stop auto repossession?

Yes. No one can repossess your auto after your case is filed.

7. Does my spouse have to file with me?

No, but because California is a community property state, your debts are usually your spouses debts. Creditors may pursue your spouse (or ex-spouse) for the entire community debt.

8. Can I sell or refinance my home?

In either a Chapter 7 or Chapter 13 Bankruptcy, you must obtain court permission to sell or refinance your home. After discharge, you may immediately assume a sellers loan or, after two (2) years, possibly qualify for a new home loan using your re-established credit record.

9. When can I purchase a new home?

After discharge, you may immediately assume a sellers loan or, after about two (2) years, you may possibly qualify for a new home loan (depending on your income and your re-established credit record). Additionally, there are many mortgage lenders who specialize in extending credit to those people who file Bankruptcy.

10. Can you stop my home foreclosure?

Yes. In a Chapter 13 case, we can permanently stop foreclosure by proposing a plan whereby you come current over time and continue to make the regular monthly mortgage payment. In a Chapter 7 case, if you are not current on your payments, the Bankruptcy will postpone the foreclosure until your case is dismissed or until your creditor/mortgage holder files a motion for, and is granted, "Relief From Stay".

11. What kinds of debts does Bankruptcy eliminate?

A Chapter 7 Bankruptcy will eliminate most all unsecured debts (credit cards, loans) but not secured debts such as your car or home. To keep your car and home, payments must kept current. In a Chapter 13 case you pay all or only a portion of your debts, depending on how much disposable income you have each month.

12. Do I have to list all my creditors?

Yes. You must list all creditors at filing except accounts with a zero balance. If you no longer owe an individual or company money, they are not a creditor. Our office will assist you in obtaining a credit report so that you are certain to list all your creditors.

13. Can you remove a lien?

If the lien was not incurred to purchase the asset, was not consensual, and impairs your ownership interest in property (an exemption), it may be possible to have the lien removed by using lien avoidance techniques.

14. Why try to payback creditors in Chapter 13, why not just file Chapter 7?

If there is enough money left over after monthly living expenses the court may require full or partial payment to your creditors in a Chapter 13 debt consolidation.

15. Can my co-signor be protected?

All consumer co-signors are protected under a Chapter 13 case. However, co-signors are still liable and creditors can attempt to collect against them in a Chapter 7 case.

16. Will my employer be notified?

No, unless your employer is also a creditor or you authorize a wage deduction in a Chapter 13 case. Your payroll department would have to be notified of your filing in order to stop a wage garnishment.

17. Will my landlord be notified?

No, unless you have been evicted or are moving and need to include your landlord as a creditor in your Bankruptcy.

18. Will my bank accounts be affected?

Typically not. However, if you owe your bank or credit union money (your bank or credit union is an unsecured creditor), close the account and move to a bank where you owe nothing. Otherwise, at time of filing, your bank could offset or freeze your account.

 

19. Does Chapter 7 or 13 stop lawsuits and judgments?

Yes, immediately when we file your case.

20. Can I get out of a contract?

Yes. In both a Chapter 7 and Chapter 13 bankruptcy case you can cancel unwanted contracts as long as you discontinue the service and/or return the merchandise. Examples of this could include an agreement with an Exercise/Gym facility you no longer wish to attend or a lease/loan on a returned or unwanted Automobile.

21. How often can I file a Bankruptcy?

Chapter 7 bankruptcy allows 1 discharge every 8 years. Chapter 13 Bankruptcy lets you file as often as needed, if filed in good faith and 70% of unsecured debts were paid in a previously discharged Chapter 13.

22. What about back spousal or child support?

In a Chapter 13 case you pay back child and spousal support in full, without further interest, in your payment plan. In a Chapter 7 case, child and spousal support is not dischargeable. Although you can postpone the payments while you are in Bankruptcy, you eventually will have to pay them off.

23. What about back taxes?

In a Chapter 13 Bankruptcy you pay back taxes without interest, or further penalties over the course of your payment plan. In Chapter 7 - Bankruptcy, secured taxes, such as property taxes, cannot be discharged. However, unsecured, personal income taxes may be discharged if the taxes are 3 years old, you filed timely, you have not been assessed the taxes in the prior 240 days and you have not entered into a written "offer in compromise" to settle the debt.

24. Can Bankruptcy help with delinquent student loans?

In a Chapter 13 Bankruptcy you can pay student loans in your payment plan. In Chapter 7 Bankruptcy, student loans are generally not dischargeable (there are some rare instances where an extreme hardship may render student loans dischargeable).

25. Can I use or obtain credit during my Chapter 7 or 13?

No, not until you receive your discharge notice. In Chapter 13 - Debt Consolidation you must get court permission to incur debt over $250, except in emergencies.

26. How long will I be in Chapter 7 or 13?

Chapter 7 Bankruptcy usually takes about 4-5 months, although your creditors cannot attempt to collect on the debts once your case is filed. A Chapter 13 case takes from 3 to 5 years to complete.

Important Facts About Criminal Defense

What is a crime?
A criminal offense is broadly defined as an act which violates state or federal law. For criminal offenses committed in the United States, the prosecution must prove that the accused committed the “guilty act” (actus reus) while having a “guilty mind” (mens rea) or intention to commit the act. In the United States, people accused of criminal offenses are innocent until proven guilty and are guaranteed a number of rights. Details about the legal rights of the accused, crime victims, and prisoners can be found in the Your Rights Section.

State or Federal?
Laws regarding criminal offenses are passed on both the state and federal (national) level. The laws applicable to criminal offenses depend on the specifics of the crime. In general, if federal law enforcement makes the arrest, the criminal offense is a violation of federal law. If state or local law enforcement makes the arrest, criminal charges are filed for breaking state law. There are certain crimes that are almost always handled by federal courts, such as drug smuggling , Internet fraud , bank robbery , mail fraud , interstate crimes, and more.

Drug-Related Crimes
As the name would suggest, drug related crimes involve controlled substances. These crimes can be handled on the state or federal level depending on the nature of the case. For example, drug smuggling , drug trafficking , and large quantity drug conspiracy cases are handled on the federal level. Drug possession, is often handled by state criminal systems.

Drunk Driving Offenses
In all fifty states it is a crime to operate a motor vehicle while intoxicated. In some states, this crime is called DUI or driving under the influence, in other states it is called DWI, or driving while intoxicated. There are many important laws that apply to DUI and DWI cases which are further detailed in this section.

Motor Vehicle Offenses
These are criminal offenses involving any motor vehicle, including cars, trucks, boats, and motorcycles. The criminal offenses involving motor vehicles can be minor crimes (i.e. traffic violations) or serious offenses, depending on the nature of the act. Motor vehicle offenses include vehicular manslaughter, hit and run, carjacking, and more.

Sex Crimes
Certain unacceptable forms of human sexual behavior are considered sex crimes. When activities or behaviors that are sexual in nature involve an individual under the age of consent they are considered sex crimes (i.e. child molestation, child pornography). When sexual activity involves a non-consensual party, it can also be considered a sex crime (i.e. rape, sexual assault , indecent exposure).

Domestic Crimes
Domestic Crimes are those which involve family members or close kin. For example, spousal abuse, child abuse, elderly abuse, and other forms of domestic violence are considered crimes. In the past, domestic crimes were largely regarded as a private matter. Today, domestic violence is considered a crime in all fifty states.

Property Crimes
These are crimes that involve unlawful involvement with property. Many of these property crimes involve taking or destroying another's property with the intent to permanently deprive the rightful owner of his/her property. Property can include any tangible items, from homes and buildings to small retail items. Property may also be intangible items, such as intellectual property.

White Collar Crimes
White-collar crimes are typically non-violent crimes carried out in a business or professional setting to achieve financial gain at the expense of another. Fraud is a major type of white-collar crime. Business professionals, politicians, civil servants, and private citizens can carry out white-collar crimes. Many white-collar crimes are considered felony offenses.

Violent and Weapons Crimes
Crimes that involve physical harm to another party are typically labeled violent crimes. Violent crimes can include assault, battery, homicide, and more. Weapons crimes may or may not be violent in nature. Unlawfully carrying a concealed weapon (CCW) is one example of a weapons crime.

Inchoate Crimes
The word “inchoate” means incomplete or unfinished. Inchoate crimes are those unlawful acts performed with intent to commit a crime or to aid in the commission of a crime before or after the fact. For many years, inchoate crimes were considered misdemeanors. Today, these crimes are often considered felony offenses. One cannot be charged with an inchoate crime and the crime itself. Inchoate crimes include attempt, conspiracy, solicitation, accessory, and accomplice offenses.

If you would like to learn more about specific crimes, we invite you to explore our criminal offenses section further. You will find additional useful information about the legal system and your legal rights in other areas of this website.

Kansas City Municipal Court

Recently, the Kansas City Municipal Court experienced tremendous changes in the way it interacts with the public and with attorneys.  These changes should streamline the process for all defendants and their counsel.  Why is it important to you that your attorney has an easier time negotiating with the Prosecutor?  Because your attorney is saving time, and if your attorney is not passing that savings of time on to you in lower attorney fees, you should bring your business to me.

I believe that since I can complete my work in the Kansas City Municipal Court faster and more accurately now than I could before these Court changes were implimented, I should not charge as much for Kansas City Municipal Court cases as I do with other criminal cases in Clay or Jackson or Platte Counties.  In fact, the Kansas City Municipal Court has become so efficient, that it is easier and faster to resolve your issues here, than in almost any other Court.  Does this mean I spend less quality time analyzing your case and resolving it to your satisfaction?  No.  But it does reduce the overall time necessary to complete the case.  Do you want to pay me to drive to Court and drive back to my office if you do not need to?  Of course not.