Credit Justice Services BLOG

Fortunately, like lemmings to the sea, there are plenty of great examples around us in our friends and neighbors as to how to model the “Ultimate American Consumer.” In case it escapes you, here is a simple ‘How To’ guide that can serve as a great roadmap to this continued process. Enjoy!

• Always spend right at the level of your after tax earnings. Having surplus dollars is troublesome for most because it’s difficult to know exactly what to do with them.

• Avoid having 3, 6 or even 12 months of basic living expenses tucked into a liquid account such as a money market or CD.

• Repeatedly purchase, preferably on credit, items that rapidly depreciate such as cars and consumer goods. Why pay all cash for something when you can use other people’s money (OPM)?
• Be sure to maintain at least $7-12,000 of revolving credit card debt and preferably ‘store credit cards’ and be sure not to read the monthly statements.

• In the event that revolving debt gets to be somewhat of a burden, be sure to take out a home equity line of credit (HELOC) to alleviate the monthly payments

• Look for and take advantage of ‘get rich quick’ opportunities that offer simple and easy wealth accumulation plans with little effort. Leave the hard work to all the ‘drubs’ who don’t know any better.

• Spend at least half of your allowable IRA contribution each year on Christmas and holidays (preferably on credit)

• If you have an investment or asset plan, be sure not to review it too often as this can be tedious, boring and rather dull. Once every 6-10 years should be fine

• If possible, avoid the toilsome task of creating asset accumulation strategies in favor of more dinners out with friends and fun vacations. After all, you only go around once

• Be sure to invest in insurance and protect yourself from disability, death, dismemberment, accident, ill health and be sure to insure your pets as well!

• Be sure only to buy new automobiles due their quality and reliability over used vehicles. Used vehicles can cost as much as $150/month in long term average maintenance.

• Avoid regular financial plan setting and goals progress

• If you have a home mortgage, be sure to refinance every couple of years to capitalize on low rates. Ideally you could own your house for 20 years and still have 20-25 years remaining on whatever debt is there at the time

• Avoid having financial coaches and truly objective advisors assisting you with your money plans

By following this plan, you’ll have every opportunity to engage in being the “Ultimate American Consumer” with all of the rank privilege that is conferred by that term. If, on the other hand, you want out of this, call Eric Johnson for guidance at 941.713.9307.

As you all may know I was an owner of a large collection agency and national subrogation company (insurance collections) Having 350,000 debtors in my data base I heard all the excuses and had seen all the collection tactics legally used by my corporation. I am ashamed to say; just like the credit repair business the collection business has some very unscrupulous companies collecting debt. Now that I’m on the other side of the table helping consumers know their rights about credit, I would also like to share with you your rights as a consumer against the unwarranted collection agency. I get hundreds of complaints in my office every day about harassing collection agencies and the illegal tactics used by the companies.
A great many people have collections on their credit report. Most of us have a time in our lives with a medical situation where the bills mounted up or just a web of circumstance that led to us having our accounts sent to collection. It’s not unusual. You may even have the will and volition to pay the debt, but not the means. Whatever the case, it is important to know your rights so that you are equipped with the knowledge to deal with these companies.

Let’s look at the Facts.

FACTS:

1. The consumer is protected under the Fair Debt Collections Practice Act (FDCPA). You may find your rights in detail on line at http://www.ftc.gov/os/statutes/fdcpajump.shtm
2. The original creditor is NOT governed under FDCPA only the collection agencies are held to this act.
3. There are 3 sections to the FDCPA that collection agencies seam to have the most complaints with.
a. FDCPA 806 - Harassment or Abuse
b. FDCPA 807 - Fails or Misleading representation
c. FDCPA 809 - Validation of Debt

Let me give you the "Cliff Note" version of each section. Make sure you challenge the collection agencies on the following:

FDCPA 806 – Harassment or Abuse

• Threatening or the threat and use of violence or the reputation of an individual
• Use of profane language
• Letting the telephone ring, or engage any one in a telephone conversation repeatedly with the intent to annoy, abuse, or harass

FDCPA 807 - Fails or Misleading representation

• Telling you they work for the State or Federal Government Agency
• Telling you they are an attorney or represent an attorney when they do not
• Implying that non payment will result in an arrest, garnishment, lien, ECT. When the collector has no intent or legal ground to do so.
• Telling the consumer they committed a crime in order to disgrace you

FDCPA 809 - Validation of Debt

• Written notice of debt must be sent to you within 5 days of initial contact by phone
• You have 30 days; from the time you receive the collection letter (Dunning Letter), to dispute validity of the debt and ask for proof.
• Upon disputing the debt the collection agency MUST cease all collection activities until verification is mailed to consumer.

Keeping records of all phone conversations is imperative to winning your case. Keep all letters and correspondence received by the collection agency in a file, this will help you if you need to go to court. If the collection agency continues to try and collect the alleged debt without providing you validation you are then able to take them to small claims court in your local area and file suite for $1,000. Remember, the collection agencies count on the consumer’s ignorance of their rights. Although I, at one time, ran a collection agency, it is now my steadfast commitment to shed light on the dubious practices of the unscrupulous companies that take advantage of you, the consumer.

Educating the consumer,

Douglas Muir, CEO

You can help your clients increase their scores before applying for credit. Major purchases generally require financing, and a consumer’s credit score directly affects the terms of the loan. Share the tips below to empower your clients to increase their own credit.

1. Shop around when looking for a credit card and choose a card with a low long-term interest rate

2. Review your credit report every six months to ensure that the information is accurate and up-to-date

3. Limit your credit to mortgages, auto loans and only a few major credit cards

4. Consolidate outstanding debt onto one low-interest-rate credit card

5. Pay credit cards and mortgages on time

6. Develop a plan to pay down your debt to less than 40 percent of available credit

7. Call your credit card companies once every six months to check your current interest rate

8. Stay at your job for longer than one year

9. Systematically pay off your loans starting with the highest interest rate loans

10. Keep telephone and utilities in your name

11. Don’t needlessly open new accounts

12. Keep the credit cards you’ve had the longest to show established credit

What you may not realize is that every time someone inquires about your credit, a deduction is made to your credit score. One point can be removed for every bank inquiry. When applying for a credit card, three points can be taken off immediately. And when a collection agency inquires about your credit, it can cost you five points.

A maximum of 15 points can be deducted each month. Those little point deductions can quickly add up. Keep this in mind when applying for credit and paying off debt. By following the tips above, you can reap the benefits of a better credit score.

Douglas Muir, CEO