Category: Attorney Post

Know Your Right to Fair and Accurate Credit: How to Fix Credit Errors After Data Breaches and Identity Theft

In light of the Equifax data breach, we understand consumers are concerned about their personal information and confused about what to do to protect themselves should they be among the 143 million American’s whose information was compromised. We here at Lexington Law understand your concerns and want to clarify your rights as they relate to credit errors that might occur because of the breach, and help you understand the law is on your side to help fix those errors.

On Thursday, September 7th, credit bureau Equifax announced that the personal information of up to 143 million Americans had been compromised. From May-July of this year, a massive cybersecurity breach resulted in the compromise of millions of social security numbers, birthdates, names, driver’s license numbers and addresses. While Equifax is offering identity theft protection and credit monitoring services to those that were affected by the breach, it is important to keep in mind that the bureau cannot repair any kind of credit damage or errors that may have resulted from the breach as they are not structured to do so.

Equifax’s terms and conditions states “We do not offer, provide, or furnish any products, or any advice, counseling, or assistance, for the express or implied purpose of improving your credit record, credit history, or credit rating. By this we mean that we do not claim we can ‘clean up’ or ‘improve’ your credit record, credit history, or credit rating.” This is where Lexington Law comes into play because we CAN work to repair your credit—it’s what we were founded to do, and what we have successfully done for thousands, for more than two decades.

According to The Fair Credit Reporting Act (FCRA), Fair Credit Billing Act (FCBA) and the Fair Debt Collections Practices Act (FDCPA), you as the consumer have the legal right to dispute any inaccurate items that may appear on your report as a result of this data breach, or otherwise. Our firm’s 13 years of experience fighting for consumers have helped us develop tools and strategies that advocate for you and help fight for the credit you deserve. We help consumers utilize consumer protection laws that were created to keep you from becoming a victim of the credit reporting system, and ensure that any information that appears on a client’s credit report is fair, accurate and substantiated.

arrow Read this post

Credit Card Chips Can Fall Out—And into the Wrong Hands

rebuilding credit

Protecting your personal information is important to protecting and repairing your credit. Security risks are everywhere, including your wallet. By now, you probably now have a credit or debit card that uses a chip. Those chips, however, can fall out of the plastic card. An intact chip could be placed onto another card, allowing an unauthorized person to access the account or personal information. Consumers should be aware of this issue to protect their security and identity.

When it comes to security, losing a credit card chip is equivalent to losing the entire card itself. Glue holds the chip in place, and normal wear and tear can loosen the adhesive. In an extreme scenario, a thief could remove a card’s chip and replace it with a dummy chip. With the stolen chip, a thief could make purchases without raising suspicion. Recovering from credit card theft is a time consuming process. Depending on the extent of the damage, the effects could have a long-term impact on your credit, especially if an account becomes delinquent.

Tips to Protect Yourself

Security risks always exist, but you can take measures to protect yourself. Bankrate compiled five easy techniques for consumers to protect their accounts and information:

  • Set up mobile banking alerts for your phone from your financial institution. You can discover unusual activity as quickly as possible.
  • Regularly monitor your accounts online. Being familiar with your activity can help identify fraudulent transactions faster.
  • Avoid public computers. Do not log on to your email if your bank corresponds with you there. Set up a separate email account just for your finances and checking it from safe locations.
  • Avoid doing business with unfamiliar online companies. Stick to established merchants and websites.
  • If your information has been compromised, notify your financial institutions and local law enforcement. Remember to notify any of the three credit bureaus—Experian, Equifax and TransUnion—to place a fraud alert on your credit reports.

Lexington Law can help you monitor and repair your credit. You can learn more here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Sources

http://abcnews.go.com/US/chips-potentially-fall-chip-credit-cards-leaving-consumers/story?id=49103435

http://abc7chicago.com/finance/credit-card-chips-can-fall-out-posing-a-security-risk/2284510/

http://kxan.com/2017/08/10/chip-in-credit-cards-can-fall-out-be-removed-and-stolen/

http://www.bankrate.com/finance/credit-cards/5-ways-thieves-steal-credit-card-data-7.aspx

arrow Read this post

How will you be affected by new reporting standards of public records on your credit reports?

rebuilding credit

In March, 2015, the three main credit bureaus launched an initiative called the National Consumer Assistance Plan in order to make consumers’ credit reports more accurate and easier for consumers to correct errors on their reports. Starting July 1, 2017, these bureaus (Experian, TransUnion, and Equifax) will change the way they collect and report civil judgments and tax lien information on credit reports. These changes may not only affect what items are appearing on consumers’ credit reports, but may also help give a boost to their credit scores.

Reporting of public records on credit reports

The new initiative from the credit bureaus will affect public records having to do with tax liens and civil judgments.

  • A tax lien is a lien that is imposed against one’s property to secure the payment of tax, and may be a result of failing to pay income tax or other taxes. Although unpaid tax liens may remain on a report indefinitely, in practice credit bureaus may remove them after 10 years, and must remove a paid tax lien after 7 years.
  • A civil judgment is a formal decision made by a court following a lawsuit. For many consumers, the most common civil judgment on a credit report results from a lawsuit by a creditor for failing to pay a debt. Civil judgments may stay on a credit report for up to seven years from the date of entry.

There will be two primary ways this new standard will affect how the credit bureaus obtain and report this data on consumers’ credit reports. First, in order for a tax lien or a civil judgment to appear on a credit report, the public record must contain the following three items of information: (1) name, (2) address, and (3) Social Security Number and/or date of birth. This standard not only applies to new records that may become available, but also existing data that may already be reported on a credit report. Second, public records that are reported on credit reports must be checked for updates by the bureaus every 90 days to ensure their accuracy. If the records are not checked then they should be removed from the credit report.

The higher standards for public records are estimated to improve the credit reports of roughly 12 million U.S. consumers. Because this change will affect such a great number of people, it is important to review your personal credit reports regularly for possible errors.

Effect on consumers’ credit scores

With the possible removal of negative information on consumers’ credit reports, the effect on an individual’s credit score will vary. According to a FICO study, of the 12 million consumers that would have a public record removed because of these new standards, approximately 11 Million would see some kind of increase in their overall FICO score. The amount of the increase, however, may not be as substantial as one would think. FICO estimates that for the majority of these people the increase in their FICO score would be less than 20 points. Although the bump in credit score may not seem substantial, it may help many people increase their score enough to secure a new loan or mortgage.

It is important to remember that although one or more public records may be removed based on these new standards, there are still many other factors impacting your credit score. There may be additional negative items affecting your payment history besides the lien or judgment that was removed. Other factors that will influence your score include your credit utilization, length of credit history, new credit accounts, and credit mix.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

arrow Read this post

Is Debt Settlement Worth It?

rebuilding credit

Many Americans struggle with an increasing amount of debt and a desire to be in a more stable financial situation. In contemplating how to overcome large amounts of debt, some consumers may pursue the route of debt settlement in order to decrease the amount of money they must pay back to their creditors. Although debt settlement can be an effective way to pay off your financial obligations, you must consider the benefits with any potential setbacks that may occur.

Debt settlement is when you negotiate with creditors to pay less than the full amount for a debt you owe. Negotiations occur and you make an offer to the creditor, for example, to make a lump sum payment of $2,000 instead of the $4,000 you owe. If the creditor accepts your offer, you then would make your payment and the account will be settled, meaning you will have no additional obligation to pay the creditor for the full amount.

The benefit of not having to pay your full obligation to the creditor seems very attractive on its face, but must be reconciled with the potential downsides of the settlement. Many people do not want to undertake the task of negotiating the debt themselves and will hire a debt settlement company to work on their behalf. The following are a few of the main things you should look out for and consider when deciding if debt settlement if the right path for you:

  • Making payments towards your debt during the settlement process

    Some companies will advise you not to make payments during the process as it will make your financial situation seem more dismal, and possibly more likely the creditor will want to settle the account for less than the full amount. By not paying your bills, however, you may rack up more fees and interest during this period, and there is no guarantee the creditor will agree to a settlement.

  • Amount of Fees charged

    Make sure to pay attention to and fully understand the fees associated with using a debt settlement company. Often times, the company will charge you a fee equal to the amount of money paid to settle the debt, which could be as high as 25% – 30%. Alternatively, companies may charge you a lower percentage equal to the total amount of debt owed. You should also ensure whether money paid to the company is going directly towards your debt or if it is being applied to the company’s fees.

  • Tax consequences

    Because the amount you ultimately settle for is less than your total obligation, the creditor will report a loss on the amount of money not paid. If this amount exceeds $600 then the creditor will report this to the IRS, who will in turn consider it income and require you to list it with your taxes. Depending on the amount of debt forgiven in the settlement, this may cause your refund to be significantly lower or cause you to owe more money in taxes to the IRS.

  • Impact on your credit score

    If you choose to settle an account instead of paying the full amount owed, the account will show as “settled” on your credit reports and will reflect negatively on your credit history. The account will reflect this way regardless of whether you previously paid the account on time or not. If the account was never late and then settled, it can remain on your credit reports for up to 7 seven years from the date of the settlement. If the account was already late or delinquent before being settled then it can stay on your report for up to seven years from the date the account first went late or delinquent. Furthermore, failure to pay a debt in full will almost always be a sign of risk to potential lenders.

The decision to attempt to settle your debts either yourself or through a company should be carefully thought out and based upon your own personal circumstances, with both the advantages and disadvantages kept in mind. It is also important to consider other means to begin paying down your debts, such as debt consolidation or a debt management plan in connection with credit counseling. If you have questions about what method would be best for you then strongly consider speaking with someone who can assist you along the way or point you in the right direction.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

arrow Read this post

IRS Now Using Private Collection Agencies for Certain Tax Debts

rebuilding credit

Consumers commonly receive phone calls from scammers impersonating government agents to collect money. The Internal Revenue Service (IRS) regularly warns consumers about falling victim to phone scams, especially those involving payment for back taxes. Under a new federal program, however, the IRS will assign certain overdue federal tax debts to four private collection agencies (PCAs). These private debt collectors will contact taxpayers on behalf of the IRS to collect certain outstanding tax debts. Consumers should familiarize themselves with the IRS’s private debt collection program to protect themselves against scams.

IRS Private Debt Collection Program

Federal law requires the IRS use private debt collection agencies to collect certain overdue tax debts. In December 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST Act). Although the primary purpose of the FAST Act is to fund transportation projects, Section 32102 requires the IRS to use PCAs to collect inactive tax receivables. Accordingly, the IRS implemented a new private debt collection program in April 2017.

The IRS assigns only certain accounts to private debt collection agencies. These accounts involve “inactive tax receivables,” meaning any tax receivable:

  • That has been removed from the IRS’s active inventory for lack of resources or an inability to find the taxpayer;
  • For which more than one-third of the applicable limitation period has passed and no IRS employee has been assigned to collect the receivable; or
  • That has been assigned but more than 365 days have passed without interaction between the IRS and the taxpayer or a third party.

The IRS does not assign accounts to PCAs if the taxpayer is:

  • Deceased;
  • Under the age of 18;
  • In designated combat zones;
  • Victims of tax-related identity theft;
  • Currently under examination, litigation, criminal investigation or levy;
  • Subject to pending or active offers in compromise;
  • Subject to an installment agreement;
  • Subject to a right of appeal;
  • Classified as innocent spouse cases; or
  • In presidentially declared disaster areas and requesting relief from collection.

Only four PCAs are designated to collect the tax debt on behalf of the IRS: CBE, Conserve, Performant, and Pioneer. Taxpayers will be notified in writing by the IRS and the PCA when an account has been transferred from the IRS to a collection agency.

Because the IRS uses only these four designated PCAs to collect a specific type of tax debt, consumers must remain cautious if they receive debt collection calls pertaining to other types of tax debt.

Other Tips to Avoid Being Scammed

Concerned consumers who receive contact attempts from someone they suspect is impersonating the IRS and requesting money can take the following steps to avoid being scammed:

  • If you know you owe taxes or think you might owe, call the IRS at 1-800-829-1040. The IRS workers can help with a payment issue.
  • If you know you do not owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484 or at tigta.gov.
  • You can file a complaint using the FTC Complaint Assistant, choose “Scams and Rip-Offs” and then “Impostor Scams.”

 

If your credit has been damaged, learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Sources:

arrow Read this post