The Year of Dispute Using 623 Method Disputing Negative Items on Your Credit Report with the Original

Creditor While case law has established for the past few years that the original creditor can be held liable for reporting inaccurate information (Richardson vs. Fleet, Nelson vs. Chase Manhattan ), the FACTA legislation passed recently allows the consumer to go directly to the original creditor and dispute information which the original creditor (called the information furnisher) in the FCRA, has supplied to the credit bureaus. However, before disputing with the original creditor, the CONSUMER MUST HAVE DISPUTED WITH THE CREDIT BUREAUS first. We'll see why later. Congress has amended the FCRA Section 623 with a new FACT Act law that is located at Section 312. Section 623 of the FCRA is entitled: Responsibility of Furnishers of Information to Consumer Reporting Agencies. In the interest of accuracy, especially with regard to a consumers ability to dispute the accuracy of information directly with an issuer of information/credit, or an original creditor. Section 623 places a requirement on issuers of information to provide accurate information to the credit bureaus. The FCRA gives consumers the right to directly engage the issuer of credit in the dispute process by demanding to see exactly HOW they came to their conclusions about debts they say the consumer owes them; Issuers are required to provide, upon written request, all documents that prove the legitimacy of the debt; prove the alleged debt is strictly accurate with regard to the amount, correct dates of delinquency, and all late payments. If they cannot provide proof in those and other areas, they must cease reporting the information to the credit bureau, who in turn must delete the debt listing from the consumers credit file. The new FACTA Section 312 gives FCRA Section 623 the teeth it should have been born with. It places not only a requirement on issuers of information to keep complete and accurate records; it also creates a right of the consumer to bring a lawsuit under FCRA Section 616 - willful non-compliance. The FCRA requires that issuers of credit must perform a "reasonable investigation" and that they must have appropriate audit plans in place to evaluate their own ability to retain complete and accurate records. If they do not have such a program in place, there are no way they can claim they are following reasonable procedures to insure their data is accurate? What does all of that mean for a consumer trying to restore their credit? It means the dispute process just got a little easier, in many ways. The dispute process can be complicated, but these two important sections of the FCRA and FACTA make it easier for the consumer to navigate the process. Just remember, my brother in arms, that credit repair is not about finding loopholes in the law, or luck. It's about protecting your rights as a consumer and holding companies accountable for violating those rights. 623 Dispute Method When the conventional method of disputing an inaccuracy on your credit report fails to yield results, the 623 dispute method may be a viable alternative to getting erroneous or unconfirmed information removed from your report.

The 623 dispute method allows you to dispute any inaccurate information on your credit report directly with the original creditor. A 623 dispute does not work in the same way as a traditional dispute through the credit bureaus because you are not asking for verification of the debt, but for an investigation as to the accuracy of the records on that debt. If you creditor does not have accurate records pertaining to that debt, then they must remove the negative information on your credit report. The process usually follows these steps: In order to successfully challenge negative listings on your credit report through the 623 dispute method, you must first dispute the information through the credit bureau. When you dispute the information to the credit bureau, you must wait for the 30 days for the investigation to be complete. If the original creditor verifies that the negative listing is accurate, then you move forward with the next step which is to dispute directly with the original creditor itself. Under the laws governing the 623 dispute method, creditors must conduct an investigation when requested. In addition, when investigating, they must review the information that you provide relating to that dispute, and they must respond within 30 days to your original investigation request. The new laws governing fair credit reporting explicitly require the original creditors to investigate when requested. This method will only work to remove entries on your credit report that are inaccurate, or entries in which the creditor no longer has to verifiable information. While you might think that the credit card agencies will have up-to-the-minute information about your past debts, this is often not the case. In fact most credit card companies will only keep your records for 13 to 18 months. Any late fees, charge-offs, or other information prior to this time they will not be able to verify through their records. The 623 dispute method works because anything that is inaccurate, or not in the records will have to be corrected on your credit report. What this means is, if the credit card company does not have any records on your account at all they must contact the credit bureaus to have the negative information removed. If you have disputed the information through the credit bureau before initiating the 623 dispute process, and the creditor refuses to remove erroneous information, you will have grounds to sue. Otherwise, your only legal recourse will be to have the state or federal authorities pursue the case, and it is solely at their discretion to do so. Warning: This dispute method probably will not work for a debt that is fairly recent. It is also unlikely to work for those companies who do keep detailed records spanning several years. In addition, you will need to be somewhat specific about the information you wish to be investigated and any records that you have that can prove that there is an error will be helpful. At the very minimum, you must identify the account by the actual account number and provide a reason to the original creditor explaining why you are disputing the accuracy of their records. If you do not provide this information as a part of your investigation request, the original creditor may determine that your request

is frivolous and deny the investigation. Overall, the 623 dispute method works best for past delinquencies and charge-offs that may no longer is listed appropriately in the records. Lastly, as such, collection attorneys should take note of several recent rulings in 2005 from federal courts around the country regarding the FDCPA. The Fair Debt Collection Practices Act (FDCPA) is a federal law that governs what actions a debt collector can take while trying to collect a debt. Collection attorneys are also governed by the FDCPA. The Ninth Circuit has held that debt collectors cannot tell consumers that they will assume a debt is valid unless they receive written notification of a dispute. A consumer can dispute the validity of a debt in writing or orally. Although there are some sections of the FDCPA that require written notice, the Court declined to impose the written notice provision on other sections. The Court reasoned that it would not make sense to read a written notice requirement into 1692g(a)(3) because other sections of the FDCPA require debt collectors to take note of consumers' oral disputes. The Ninth Circuit followed Supreme Court rulings that have held that courts should not insert language into a statute unless the failure to do so would result in absurd or unreasonable results. Collectors Must Notify Credit Bureaus of Orally-Disputed Debts. The FDCPA requires a collector to notify the credit bureaus that a debt is disputed if the collector has reason to know the debt is disputed and reports about the debt on a consumer's credit report. This requirement applies even if the consumer disputes the debt orally. This requirement has been extended by recent court rulings. First, the debt collector does not have the authority to decide unilaterally if a consumer's dispute has any merit. As long as a consumer has disputed the debt, the collector is required to inform the credit bureaus of the dispute. Second, a simple inquiry by a consumer about the validity of additional charges is an oral dispute of the debt and requires reporting to the credit bureaus that the debt is disputed. In addition, an important ruling, the Sixth Circuit has recently held that debt collectors and collection attorneys who sign and file affidavits to obtain garnishments in state courts are fair game for FDCPA lawsuits. NEW LAW Rules of Civil Procedure that will force debt collectors to provide extensive additional evidence to support their claims against consumers, require creditors to file an Affidavit of Debt along with the Notice of Claim if the amount disputed is based on an account. What is an "account?" An "account" has been broadly defined as "all types of accounts and is not limited to written accounts." Some examples provided by the Courts include: credit cards, utility bills, medical bills, a judgment issued by a court, etc., first, the rule changes require additional documents providing evidence of the underlying debt and its terms. A plaintiff asserting a claim for consumer debt that is not the original creditor is required to support its claim by attaching "a certified or otherwise properly authenticated photocopy" of at least one of the following documents to the affidavit:

a document signed by the defendant evidencing the debt or the opening of the account; a bill or other record reflecting purchases, payments or other actual use of a credit card or account by the defendant; or an electronic printout or other documentation from the original creditor establishing the existence of the account and showing purchases, payments or other actual use of a credit card or account by the defendant. In addition, a collector is required to itemize all money claimed, including principal, interest, finance charges, service charges, late fees, and other charges, a statement of the amount and date of the last transaction giving rise to the debt, and a statement of the amount and date of the last payment made on the debt. Affidavits also must contain the full name of the defendant as it appears on the account; the last four digits of the defendant's social security number; the last four digits of the account number; and the nature of the transaction. A plaintiff also is required to attach a copy of "a document evidencing the terms and conditions to which the consumer debt was subject," if the debt was subject to such a document. There is an exception to this requirement in cases in which (1) the debt is an unpaid credit card balance; (2) the original creditor was a financial institution subject to regulation by the Federal Financial Examination Council; and (3) the claim does not include a request for attorneys' fees or interest in excess of six percent. Many credit cards carry interest well in excess of six percent, and, thus, this carve-out may prove extremely limited. Second, the new rules require documents showing that plaintiff owns the debt. Affidavits now must be accompanied by, among other documents: a chronological listing of all prior owners of the debt and the date of each transfer; and A copy of the bill of sale for each transfer in the chain of ownership. Also included in the Affidavit of Debt are a statement that the defendant is not a minor or incompetent, and information regarding the defendant's military status. Third, the new rules require that an affidavit include information on any charge-offs, including the date of the charge-off, the balance, an itemization of fees or charges, and an itemization of all post-charge-off payments and other credits. These new rules are mandatory for cases in which a defendant timely defends, courts "may" require such proof even in cases of default judgment. Although the new rules leave the burden of proof in default judgment situations within the discretion of the particular court, for practical purposes. Consumers have the right to file a lawsuit against any debt collector or collection attorney who violates the FDCPA. The consumer can recover actual damages, statutory damages of up to $1,000 and attorney's fees and costs.