CREDIT REPAIR

CREDIT REPAIR: Is it Possible?

Credit repair is in high demand, especially today where consumer borrowing is reaching record figures. However, credit repair is not a magical service offered by anyone, nor does credit repair happen overnight. In most cases, credit repair can start to happen when your 'present' circumstances are favourable for taking out credit: today, most lenders look at your current circumstances as opposed to your history. If you are finding it difficult to make repayments to existing creditors, you can avoid a poor credit record - the reason for credit repair - by using a debt management company. A debt management company will help you consolidate your debt and offer you an affordable solution to meet monthly payments.

If you have been rejected for credit, you should check your credit report to ensure that the information the lender has used to assess your credit worthiness is up-to-date and accurate.

Credit Repair Company

There is much debate about credit repair companies. Can they remove CCJ’s? Can they get the money owed on a CCJ reduced?

Lets start at the beginning - [ ( ) refers to notes below]

1. You do not pay a bill, a loan, an invoice etc

2. You receive a formal demand for payment from the creditor (1)

3. You ignore the demand

4. The creditor sends you a ‘Claim Form’ (previously a Summons) demanding payment within 14 days or your defence in writing (following court rules)

5. You ignore the Claim Form

6. The creditor asks the court to enter a Default Judgment (the CCJ) (2)

7. The court send you the CCJ giving you 28 days to pay (3)

8. You ignore the CCJ

9. When the 28 days expire, the CCJ will be on your record for 6 years (4)

Note 1:  The demand must say who you are, delivered to where you live (or work), who the creditor is, their address, how to contact them, what is owed, what it is owed for, when you must pay the amount by and what will happen if you do not pay i.e. “if you do not pay £100 by 12/11/04 we will take legal action”.

Note 2: When the Defendant (debtor) does not reply to the Claim Form (previously Summons) the court enters a ‘Default Judgment’. The term Default means you defaulted on your opportunity to respond to the creditors claim.

Note 3: If you pay within the 28 days the CCJ is not recorded if you contact the court

Note 4: On the sixth anniversary of the date of the Judgment the CCJ will automatically erase from your credit record.

Now back to the credit repair...

The fundamental issue with all credit repair opportunities is did you receive the Claim Form (previously Summons). If you did, you cannot remove the Judgment. However, this is not the end of the matter with most (but not all) credit repair companies. If you are prepared to state that you did not receive the Claim Form (previously Summons), and you have a reasonable reason why you did/could not receive it, you have the grounding for a successful credit repair. You will complete a few forms with the credit repair company and make an application to set aside the ‘Default Judgment’.

You cannot set aside a CCJ that you knew about, did not pay, but can pay now. However, credit repair companies may correspond with a company that secured a CCJ against you, say, 3 years ago, for £7,000 and offer them, say, £4,000 if they not object to a credit repair and application to set aside the Judgment Default of their CCJ. If you have paid off a CCJ that is 3 years old the credit repair company cannot use the leverage of paying the creditor some money not to object to the credit repair: the credit repair company relies on the creditor not being bothered to object. Credit repair companies are most effective if you have not paid any money towards the CCJ. If you settle a debt after the first 28 days, the CCJ will not be taken off the register. The file can be marked as ‘satisfied’, if you apply to the court.

A further problem can exist on your credit record that is as destructive as a CCJ: a ‘Default’. If you miss two to three payments of an agreement (Hire Purchase, Lease) the creditor can send you a formal default letter. A CCJ and a Default are both regarded as serious information by lenders etc. You cannot pay or satisfy a Default: it is just there! An inexperienced clerk at a finance company can send a Default to you without any supervision or serious default.

Our Personal Summary on Credit Repair

The credit repair companies are under immense pressure from government, credit counsellors, finance companies and institutions: and of course the main credit reference companies who rely on poor credit ratings to earn profits – at times it is difficult to see who the ‘goodies’ are! Should someone who went through a very difficult time in the past have the opportunity to correct his or her standing in life before a 6-year term? I know of many such cases where debt had very little to do with recklessness, and more to do with such things as poor health, redundancies etc.

Banks and finance companies use computers to sort the good from the bad. With CCJ’s lasting 6 years (and the computer treating a 1-month debt the same as a 5 year 11 month debt) the punishment is out of proportion to the ‘crime’. The choice is a personal one: to use or not to use. Our peers (governments, Lords etc) have been making laws to abide by, and ethics to follow that they at times do not abide by themselves – do you think our peers would use credit repair?

The Dark Side of Credit Repair & Credit Repair: Fact or Myth

The following email was received, unsolicited I add...

"(Name removed) is a prominent Beverly Hills company that repairs: repossessions, foreclosures, court judgments, collection accounts, bankruptcies, tax liens, charge offs, late payments, past due debts, loans, defaults, credit cards, credit rejections, credit inquiries, some unpaid bills and more.

Our company uses prominent Beverly Hills attorneys that use a legal loophole found in the recent 1997 modification of the Federal Fair Credit Reporting Act designed to monitor the credit reporting agencies (Experian/TRW, Transunion, and Equifax) and to protect debtors' rights like yours. The Fair Credit Reporting Act allows us to have your credit cleared up even if the information on your credit report is accurate. If the credit reporting agency does not follow the proper procedure that includes approximately 320 legally required steps for reporting each bad credit ding, the law says the credit reporting agency must permanently delete that bad credit ding. Moreover, our company uses an efficient special software program to find out if the credit agency followed the 320 legally required steps for each of the bad creditings on your report.

Once we have run our program that finds out where the credit reporting agency has made a mistake, we use our Beverly Hills attorneys to put the legal pressure on the credit reporting agencies to enforce the Federal Fair Credit Reporting Act"

Well, the message is clear: this credit repair business will do anything to rid you of a negative credit record, and it must sound inviting to just about everyone in such a situation. What of the 'right and wrongs' of this service.

The old chestnut from the credit repair company is that the law is there to protect the debtor as well as the creditor: break one of those "320 legally required steps" and you have lost your rights. The USA legislation, unlike our UK legislation, seems overburdened with ancillary "steps" each of which appears to be a potential minefield for the creditor.

The UK (England & Wales) has very few 'loopholes', mostly to do with whether or not you received the paperwork leading up to the CCJ, Default etc. Saying that you did not live at an address when the court papers were sent to you is sufficient grounds to appeal. Would you lie and say that you did not receive the paperwork in order to appeal for the removal of a CCJ?

If you missed two payments of a hire purchase agreement for which a Default Notice (a serious arrears letter) was sent to you and sat on your credit record for SIX YEARS (even if you paid it when you received the letter) would you lie to appeal against the Default being registered?

In the UK at present, our legal profession has not entered the credit repair arena, but I am sure it will soon and we will see similar letters to the above that quite simply say, - 'Your Rights Were Violated - Get The CCJ Removed For £...' - Then, all of a sudden credit repair becomes respectable and clean: funny world!

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