Fair Credit Reporting Act Protects Creditors As Much As Consumers

Although you would think the Fair Credit Reporting Act was written to protect consumers, it also has provisions that protect creditors. One specific requirement that insulates creditors, at least under federal law, from liability exposure, is the requirement that consumers dispute erroneous items on their credit reports and give the offending creditor 30 days to confirm or correct the reporting. This may seem fair at first glance, but what if the erroneous reporting was intentional or resulted from gross negligence, which is often the case. Why should creditors be insulated from liability when they cause a consumer to lose an opportunity to buy a house or a car? Why should consumers have to endure the humiliation of a credit denial without recourse when a creditor makes an obvious mistake? Why should creditors get a free pass when they injure a consumer? It doesn’t make sense. There is no doubt the credit industry lobbied long and hard for this provision in the FCRA. Luckily there are state laws that don’t recognize this requirement to dispute erroneous credit before action can be taken against the offending creditor.
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Reporting to the Credit Bureaus Is Debt Collection Activity

The courts have held that credit reporting is debt collection activity and this makes sense as the credit bureaus were established for one simply reason, creditors wanted to make sure that the money then lent would be repaid. The credit bureaus have two functions. First to make sure the money their members lend goes to people who are likely to pay it back. Secondly, if the debt isn’t repaid there is an effective way to force the debtor to pay it back. Since having good credit is critical today for home ownership, to rent an apartment, to get a car or finance large consumer items, most people will do just about anything to keep their credit clean. The reality is depriving someone of good credit is a more effective collection technique that dunning letters, harassing phone calls, or even threat of litigation. This is particularly true in Texas where the generous exempt property laws make collecting from the average citizen a hopeless endeavor. So, when creditor report on their customers after they file bankruptcy they must comply with the Fair Credit Reporting Act and it is imperative for consumers who file bankruptcy to make sure their creditors follow the dictates of the FCRA so their credit will come back as quickly as possible

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Don't Let Finances Destroy Your Marriage.

One of the most common refrains I hear from my bankruptcy clients is: "Why did I wait so long to file?" The problem is most people are optimistic and believe they will be able to turn things around. They hate to admit failure and don’t want to be saddled with the stigma of bankruptcy. So, they suffer unbearable stress and pain, year after year, struggling to make ends meet until their situation becomes unbearable. Few marriages can survive this trauma and as a result families are split apart.

 

The fact is, in our credit driven economy, bankruptcy is inevitable for a lot of consumers. A lost job, illness, business failure, or weakness for all the alluring products and services that are dangled out in front of us each day, can leave a consumer deeply in debt with no way out. In this situation, absent a rich uncle or a lottery win, these consumers will eventually have to face bankruptcy. I’m not saying consumers should take filing bankruptcy lightly, but if there is no realistic way to avoid it then sooner is better than later.

 

This was brought home to me early on in my career when I got a call from a widow of a man who had committed suicide because of his business failure. We put the business in chapter 11 and the man's brother turned it around in six months. The man had taken his life needlessly. So, it's always better to face the inevitable and file bankruptcy before the marriage is destroyed and family relationships irrevocably injured.

 

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Proving Mental Anguish Damages

If a bankruptcy filer prevails in a claim under the Fair Credit Reporting Act or in an adversary proceeding for a violation of the automatic stay or discharge injunction the most likely damages sought will be for mental anguish. After all a debtor expects to get a fresh start from their bankruptcy and when creditors continue to harass them after they have been granted a discharge, it is quite traumatic. So, it is important for bankruptcy filers, who are victims of abusive creditors, to keep a diary of the mental anguish they suffer on account of the unlawful actions of these creditors. This will allow the victim to testify in deposition or at trial fully and completely as to the suffering they have endured. And simply being upset or angry won’t cut it. To prove serious mental anguish damages a plaintiff must show physical symptoms like headache, insomnia, depression, nervousness, marital strife, or lack of concentration that effects their job or enjoyment of life. It isn’t necessary to have expert medical testimony to prove mental anguish but to convince a judge or jury that they have suffered serious mental anguish will require convincing testimony, so the more details, including dates, times and circumstances that can be provided the better.
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Mortgage Companies May Take Months or Years to Foreclose after Bbankruptcy.

When you surrender your home in bankruptcy the debt may be discharged but until the property is foreclosed you may still be liable for homeowners dues, home upkeep and property taxes. So, it is important to closely monitor your mortgage company because they can do serious damage to your credit while they are getting around to foreclosing. Often they will misreport your loan to the credit bureaus and illegally access your credit reports.  They will also continue to send you statements and notices until you tell them to stop. Luckily there are state and federal laws to protect you but you must go to court to enforce them.

 

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What Does It Cost To Protect Your Fresh Start?

Manchee & Manchee PC never charges its clients for its post bankruptcy compliance services. We believe bankruptcy filers shouldn't have to pay to get the fresh start guaranteed to them by the Bankruptcy Code. We make the creditors who are disobeying the law pay our attorney's fees. Even if we file a lawsuit and lose, we don't even make you pay our out of pocket costs.

Our first objective is to get the harassment stopped or the credit report corrected so you get the peace of mind and good credit you deserve. Next, of course, we would like to get paid. Finally, we always try to get a little money in your pocket for your trouble.
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What Should You Do If Creditors Continue Harassing You After Filing Bankruptcy

You would think if someone violated the bankruptcy court's discharge injunction or automatic stay that the court or the trustee would do something about it, but that's not how it works. The debtor must file a contempt motion or adversary proceeding to enforce the court's injunctions. Unfortunately, such actions can cost thousands of dollars and few consumers can afford it. It's unfair so that's why Manchee and Manchee, P.C. often take on these types of cases on a contingent fee basis. 

    If you are the victim of post-bankruptcy harassment be sure and keep any letters or email you receive, note the date and time of each phone call, their telephone number, the caller's name, the company he works for and find out which debt they are trying to collect. Get written verification if you can. 

    Once you have this information call your attorney, or, if you live in Texas, call us. For more information go to our website:  Manchee & Manchee PC