Consider this scenario: You’ve already tried everything you can to convince your creditors that the debts which got reflected in your credit report are not yours. You have already presented them proof. After countless phone calls and letter exchanges, the derogatory item still remains in your credit report and it’s killing your credit score, preventing other lenders from even considering your loan application. You have had it. Is it time to sue?
If you have exhausted all means to correct errors in your credit report and have coordinated with everyone concerned about it and still the item in question seems to stay there, the only recourse you have left would be to file a case against the creditor, the collection agency or even the credit bureau. Your quest to clean your credit report of items that shouldn’t be there is laudable. Not only will a lawsuit remove the debts that should be removed, it will also increase your credit score and allow you to redeem yourself from the bank who had previously denied you a loan or a mortgage because of it. In addition, you also stand to walk away with punitive damages ($1,000 at least) in the event that you will win your case.
But let’s face the hard facts as well. Suing creditors, collection agencies, and credit bureaus is going to be difficult. First of all, the laws vary from one state to the other. Except for the states of California and Massachusetts, it is virtually impossible or very difficult for individuals to sue a creditor under the Fair Credit Reporting Act. In these jurisdictions, the most that you can do is to report the matter to your state’s attorney general who has the power to sue a creditor for furnishing the wrong information.
Then there is the issue of looking for the right attorney who can handle your case. Just because you have a family lawyer doesn’t mean that he or she is the best person who can represent you against these creditors and credit bureaus who have their own legal teams. A consumer attorney is your best bet if you want to push through with your case since they are well-versed in the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). If you can’t find one through recommendations from friends, you can try going to the website of the National Association of Consumer Advocates or NACA at http://www.naca.net/. There you can click on the Find an Attorney tab. Although many of them will handle class action lawsuits, you are bound to find one who will be willing to handle your individual case.
The stress and financial requirements hiring a lawyer is going to entail is no doubt going to be enormous. However, if your main goal is to clean up your credit report, increase your credit score, and be credit-worthy in the eyes of creditors, then all the challenges that you will be facing will be well worth it.
If you want to sue your creditors, the collection agency, or the credit bureau, you can file your case in a small claims court. This court has jurisdiction over civil cases where the plaintiff is seeking money judgments or recovery of personal property amounting to $5,000 or less. In these courts, you are allowed to present your case without a lawyer.
A small claims court is an informal court where the judge has the discretion to admit evidence without really following the formal rules of procedure or practice. The main aim of trials done in small claims courts is to give justice as expeditiously as possible to the litigants. If a plaintiff wins the case, a money judgment is usually awarded.
Before filing your case in a small claims court, make sure that you have the correct name and home or if not, office address of the creditor, collection agency or credit bureau you are planning to sue. These are necessary in order for the service of process to be successfully carried out. When you go to the small claims division, you will be asked to fill out the appropriate civil warrant or civil summons form that will detail the claim. You should know the amount you are suing for, the basis of your claim and bring the necessary filing fees. Do not forget to send a copy of the warrant by first-class mail to the creditor at least ten days before the scheduled trial. Fill out a Certificate of Mailing so that in the event that they will not come to the court on the trial date, the judge can issue a judgment right then and there since the ten-day notice requirement has already been observed.
After the clerk receives your papers and fills out the necessary portions, it will then be sent to the sheriff of the county or city where the creditor, collection agency or credit bureau is located. The service of process will then be conducted by someone from the sheriff’s department. Here the warrant will be issued to the address of the defendant.
In the event that the defendant or their representatives will not appear during the appointed date, the judge will usually consider that the evidence you present is enough and will issue a judgment in your favor. In case you will not appear, the creditor may ask the judge to render a decision in his favor. If both parties appear, the trial continues. Once the judge has heard from both sides, he will then enter the appropriate judgment.
This is a general overview of how to file a case in a small claims court. You can also ask the clerk for help with the filing procedures if you are going through the process on your own. However, it is always recommended that file your lawsuit with the help of a consumer attorney.
We have said that it is difficult to sue your creditor but that does not mean that it is impossible. If they report your credit history to the credit bureau incorrectly or inaccurately, you can file a case for defamation and financial injury. You can also file a case against them if they do not report a debt you disputed to the credit bureaus as disputed. This is a violation of Section 623 of the Fair Credit Reporting Act (FCRA). If you find out that a creditor has pulled your credit file without permissible purpose, they are violating Section 604 (A) (3). You can also sue them for injuring your credit report and lowering your credit score.
You can collect $1,000 or more depending in punitive damages depending on the discretion of the courts in case you win your lawsuit.
Far too often, it is the collection agency, not the original creditor, who makes the lives of debtors miserable. If they commit excesses, however, then it is time to seek relief from the courts. Should the debt collector misrepresent himself or present misleading information about the debt in any way, they are in violation of the provisions of the Fair Debt Collection Practices Act. You can sue them on this ground. If you dispute a debt they are trying to collect and they fail to report the debt to the credit bureau as disputed, they are violating the provisions of Section 807 (8) of the FDCPA. You can also sue them in the event that they do not heed your request for debt validation and yet still continue to file for judgments, contact you, or report it to the credit bureaus. This is a violation of Section 809 (b) of the FDCPA.
Under the consumer protection clauses of the FDCPA, you can sue a debt collector if they continue to call even if you have sent them a cease and desist letter; if they call you before 8 in the morning or after 9 in the evening; if they contact a third party (e.g. friends or neighbors) about your debt; if they use any form of harassment or abuse in their collection efforts; and if they call you at your workplace if they know or have reason to know that your employer bars employees from receiving such calls. You can also file suit if you found out that the collection agency is both the “purchaser” and the “assignee” of the debt in question. They can only be one or the other.
In addition, you may also sue a collection agency if they cash a post-dated check before the date you specified therein, cost you money by making you accept collect calls, or take or threaten to take your property without a court judgment. They cannot even claim to have the power to garnish your wages, have you arrested or seize any of your properties if you fail to pay the debt. Finally, you can only be sued in the place where you originally signed the contract or where you are living at the time the lawsuit was filed. If the lawsuit is slapped in another state other than these two, you can file a counter claim since they have violated Section 811 (a) (2) of the FDCPA. In the event that they already had a judgment issued against you in another state, you have grounds for getting it vacated.
Most of these lawsuits carry $1,000 in punitive damages for the collection agency.
In case any of the credit bureaus refuse to delete a derogatory item from your credit report even if you have already given them proof of your claim, you can sue them for defamation and willful injury. They can also be sued if they reinsert an item that has already been removed from your credit report without giving you written notification within 5 business days. This violates Part (A) (5) (B) (ii) of the FCRA. You can also file a lawsuit against the credit bureaus if they fail to respond to your written disputes in 30 to 45 days.
You can collect at least $1,000 in damages from the credit bureau. Should you win your defamation and willful injury case against them, the judge will decide how much to award you based on the damage you have incurred.
Finally, always remember that you can sue the creditor, the collection agency, or the credit bureau if you find that they have “re-aged” your account. In re-aging, the date of last activity in your credit report is updated so that the derogatory information stays longer or won’t fall under the statute of limitations yet. This is a violation of the FCRA Section 605 (c).