Credit repair lawyer

There are 3 ways that people create a new credit file ...

One of the biggest challenges of living in the Information Age is sorting out what's valid and what's not. The world is full of "experts" who are all too ready to explain how to do something - from repairing a small appliance to repairing a credit file. Sometimes their information is good, but often it's not. And when it's not, the consumer is at risk.

The Credit Repair Organizations Act was meant to protect consumers from con artists who promised to clean up their credit report and help them quickly become able to obtain credit, and to a significant degree, it has worked. But beyond the scope of the Act are the people who publish books, pamphlets, and videos offering instructions on how to repair a bad credit rating and get new credit. Some of these publications are valid, some are only slightly flawed; but many promote outright fraud.

Whether you are a lawyer or an agency, whether you represent debtors or creditors, you'll be more effective if you know what's out there in the way of this type of information. So we responded to some ads and evaluated the material they sent. Here's what we found:

Credit Secrets the Credit Bureaus Don't Want You to Know!!! This booklet was ordered in response to an unsolicited bulk e-mail from Mitchell Enterprises in Colton, California. The cost was $25 for 54 pages of poorlyreproduced material without any author credit at all. The opening sentence reads, "There's only one way that people are freeing themselves from the shackles of bad credit and that is to create a new credit file on themselves within the credit bureau's computer system."

The booklet goes on to explain, "There are 3 ways that people create a new credit file. One is to use their same name with different personal information. Another is to use the same personal information with a different first or last name. And last of all, they use an alias name with the same or different personal information. ... I'll show you how easy it is to get a drivers license or State ID card to match the name and personal information a person uses to create his new credit file! ... Your social security number is the most important factor that has to be 'adjusted' before creating a new credit file! ...When changing your social security number all you have to do is substitute your first 3 numbers or state code with those of another State."

In the section on creating employment references, this unidentified author writes, "[I]f you're unemployed, my company will be an employment reference for you (write me if your [sic] interested) or if you know anyone personally that owns a business, you can ask them if they will be an employment reference for you. ... It might work best if you give the person some money as an incentive for helping you. You can also give the appearance that you are working when you are really unemployed by getting a business phone line placed in a friends [sic] home with an answering service attached. Then you can have it listed in the phone book because creditors do check to see if businesses are listed sometimes.... Sometimes creditors ask to see a check stub from your job. This is an easy thing to get around. All you have to do is open a business account and order the checks that have the most businesslike check stubs." Of course, there's nothing in this publication about the cost involved in installing a business telephone line or the documentation banks require before they'll open a business account.

The booklet also includes: information on how to get bank loans secured with savings accounts: how to obtain secured credit cards: advice on asking friends to add you to their accounts so those positive reports show up on the new credit file you've created; a bewildering section on foundations and some brief instructions on how to apply for grants; a list of ".rah Money Sources"; instructions on how to form your own corporation, invest in real estate (especially with seller financing), and start your own credit union; a list of countries with which the United States does not have extradition treaties; and pages of additional - and mostly ludicrous - information.

When David Gamacche, with Newman, Goldfarb, Freyman& Klein, PC in St. Louis, reviewed this booklet, he pointed out that much of the advice, if followed as presented, could be considered fraud, and added, "You are not doing a friend any favor involving them in schemes designed to induce creditors to extend credit based upon providing false employment information."

11 Secrets To Restore Your Credit Rating Yourself Your Creditors Don't Want You To Know! This 16-page booklet was marketed via unsolicited e-mail by Tom Wolfe of RE/MAX Properties in LaGrange, Illinois, and sells for $9.95 plus $3 shipping and handling. Though the overall quality is superior to the "Credit Secrets" pamphlet described above, it is still somewhat amateurish in its general presentation.

The so-called "secrets" are not exactly secret. They include: getting your credit report for free; researching the information on your credit report: getting erroneous information corrected: paying off collection accounts: filing bankruptcy: settling judgments: getting new credit cards: using alternative credit (accounts, such as utilities, that do not typically appear on credit reports) to get favorable information in your credit file; getting a personal loan using a savings account for security; what creditors consider "late": and purchasing a home. account for security; what creditors consider "late; and purchasing a home.

Bob Bernstein. with Bernstein Bernstein and Strickland P.C. in Pittsburgh, said the booklet contains a few relatively minor inaccuracies. For example, it says that a bankruptcy can remain on a credit report for 15 years; the correct period is 10 years. Wolfe also writes, "'[W]hen an account is with a collections company, they only need to get back fifty percent of the balance. The rest is a bonus for them. (That is my understanding of how they work.)" While Wolfe qualifies his statement with the caveat that this is just his understanding, Bernstein called the information "misleading," because creditor/agency agreements can vary substantially and most agencies keep a percentage of what they collect, not the amount placed. Wolfe also writes that late payments to local utilities will not show up on a credit report; Bernstein said that is not always true.

Even so, some consumers may benefit from this information. "The booklet does a reasonable job of pointing out ways to check the accuracy of your credit report and ways to improve your credit standing," Bernstein said. "I have suggested some of the same things to people."

Because Wolfe is in the real estate business, and the information in the book appears driven by the ultimate goal of qualifying for a home mortgage, it's likely that he decided to consolidate advice he gives to prospective home buyers into this booklet and turn it into a profit center of its own. To his credit, Wolfe included a handwritten note on the receipt with his e-mail address, inviting correspondence.

Second Chance Credit. This was the third booklet we purchased that was marketed through unsolicited e-mail. The one we purchased was marketed by ACE at a street address in Orangeburg, South Carolina, for $19.95 plus $3.35 for shipping and handling. The same ad copy with a different subject line promised the same information from DWC at a post office box in Phoenix. The material itself consisted of six photocopied pages in a plastic report cover.

It explained how to apply for and use

Why do you need to know about credit repair scams?

At first glance, the problem of credit repair scams appears to be primarily a consumer issue. Typically, it's con artists taking advantage of people who are desperate, selling them advice that is often unethical and sometimes even illegal. Why do creditors, lawyers and agencies need to know what's happening in this area of consumer fraud?

"Any lawyer who deals with credit is fundamentally malpracticing if she or he does not know how the credit reporting system works, whether you're representing a merchant, a collection agency. or a consumer," said Stephen Gardener. a Dallas lawyer. "People are driven to credit repair organizations almost entirely because they don't know what to do or where to turn. They're looking for a solution and they don't know how to get it. If the lawyers do their job, the clients won't take advantage of this type of material."

"Lawyers need to be able to tell clients that this stuff doesn't work,' said Steve Baker, director of the Federal Trade Commission's Chicago Regional Office. But if a client has been victimized hy such advice. Baker added, lawyers can sue under the Credit Repair Organizations Act and recover fees plus punitive damages -- assuming, of course, that the culprit can be located.