Posts Tagged ‘agency’

Lexington Law delivers on its promise: 600,000 negatives removed in one year!

August 21st, 2008

You may be working on your credit at this very moment or you may have done it in the past with some good results, but let’s talk about the success of Lexington Law Credit Repair Attorneys.

I’ve been around since Lexington laws’ inception online. I started out in the online credit arena in 1995 and that’s about the same time Lexington came on the “online scene”. I’ve seen many credit repair agencies come and go since then, most have gone, but one thing remained solid and that was Lexington law’s results.

I remember when they first arrived on the scene and there was a lot of buzz about what they could or could not do. They were especially hated by the credit industry and for good reason. They were a real threat. By having law degrees, these attorneys were free to brand credit repair in a whole new way. A sort of revolution that we hadn’t seen online before.

The credit bureaus and even collection agencies began a massive “words” campaign to combat Lexington’s offer of cleaning up your credit report. The net was buzzing with rumor that they’d be shut down by the credit bureaus and be banned by almost every advertiser.

Little did they know then, that none of that mattered. Lexington stayed true to its promise to help the forgotten consumer and never relied on advertisers for income, so there was no real way of stopping them.

Some figured they’d get a bad rap with the Better Business Bureau (BBB) or be investigated by the Federal Trade Commission (FTC). But alas, no such luck for those nay-sayers, as Lexington is thriving even stronger today. What those nay-sayers were banking on, was that Lexington would Pre-Charge millions of people for credit repair, which you cannot do.

Part of the CROA (Credit Repair Organization Act) states that you cannot charge for the work in advance before its complete. Lexington never worried about that, because they allowed people to pay on a monthly basis and cancel anytime.

Long gone were the archaic days of credit repair where you could be duped into a lengthy contract and have to fork over up to $1,000.00 per person for the work. Even then, there were no guarantees that the items disputed, would be removed. It was an expensive gamble and millions got taken.

Lexington’s rapid online and affordable system kiboshed both of those situations and the product became more defined and even more technological advanced, giving consumers online access to their progress.

I remember the old days of getting your credit reports, photocopying them, sending them back to the credit repair company by mail, then waiting on them to send out all your disputes and make you sit by the phone and mailbox waiting to “pretend” you sent them and basically do their job for them.

Lexington leveraged the FCRA section that states, we as consumers have a right to hire someone to help us with our credit, so Lexington doesn’t try to hide that they’re the machine behind the consumer. It’s the persons’ right and its perfectly legal.

I’m sure the credit bureaus cannot stand the sheer existence of Lexington Law but most of us credit experts cannot stand the existence of the credit bureaus, so the feeling is mutual.

Their credit report repair soon began to prove itself. As other credit repair businesses began to fold from either lack of business or multiple complaints, Lexington honed its method and used technology to its advantage, thus creating faster, more accurate disputes, which equaled faster removal of negative items.

Once they were able to prove that they were a real contender for the credit bureaus, faith in their product began to rise. Consumers started talking to one another on message boards and chat rooms and asking questions about success others had using Lexington law.

It was clear that Lexington was able to prove their results in writing and post real testimonials (Both are on their website and the deletions record can be downloaded in PDF).

This only strengthened Lexington laws’ brand and made them the leader in online credit repair. I’ve seen some really impressive “looking” websites that try to copy Lexington’s look and approach, but it’s one of those things that you feel in your gut, and you just know, most are copycat web sites looking to coast of Lexington’s good image.

I’ve also talked personally to a lot of consumers who have used them, and that’s whats important to me. When I add up the happy clients I’ve seen, the clear and perfect BBB record, the hundreds of thousands of deletions, and the fact that they’re not afraid of the credit bureaus, that equals a success few can match.

I’m all for consumers taking their credit into their own hands and doing the work themselves. Heck, I was one of the first to create and offer such a DIY program online in 1995, BUT, there simply are people out there who do not want that burden or don’t have the skills to embark on that credit journey. For them, I’m glad Lexington Law is such an impressive and respected outfit, because hopefully that will keep thousands of people from landing in the hands of a fly-by-night or shady company looking to take them for every penny they can.

There’s a lot of consumer experts or so called advocates out there that simply believe no one should ever enlist help in fixing their credit problems, but to them, I say, you are either having your pockets lined by the credit industry or you are out of touch.

Despite most of their claims, credit repair is desperately needed and necessary, not because all of us consumers are losers and flakes who ruin our credit, but because the credit industry is a disaster and its record keeping a shame. That’s why credit repair is in such high demand to begin with. Erroneous collection accounts, misreported trade lines, identity theft messes, duplicate inquiries, incorrect personal information,  and on and on. The credit bureaus are such a monopoly that consumers fear dealing with them.

I, unlike many credit experts, am not paid by the credit industry and I’ve lived the “credit of an American” nightmare and know firsthand how overwhelming and unsatisfying the whole credit system can be. To those people, firms like Lexington are a helpful avenue in a twisting, winding road. 

If I want to take my car to a mechanic, I will. if i want to change my own oil, I will. Same goes for my credit. If I want to pay for a service that I don’t want to have to bother with, then that’s my right, and the credit industry should spend less time worrying about money a credit repair agency makes and clean their own house.

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Affordable credit repair solutions

June 16th, 2008

Consumers are often overwhelmed by credit repair. The words alone send some consumers into denial. Most are afraid they’ll make their credit worse or they assume hiring someone to do it for them costs too much money.

That’s not always the case. With the advent of technology, streamlining credit repair is getting faster and better for consumers. About 10 years ago, it was a tedious process getting your credit reports to a credit repair agency and waiting for results.

Nowadays, it can be as easy as signing up online and sitting back waiting for the results. Don’t get me wrong, I think a lot of people have what it takes to do the task themselves but if you’re one of millions who find it overwhelming or simply don’t understand or have the time to fix your credit, then hiring a pro can be beneficial.

As always, as with any service, know who you are hiring. When seeking a credit repair company always look to their policy of refunds or guarantees. Make sure the company has a clean and clear BBB record (Better Business Bureau) and make a list of questions to ask before you sign up.

Once you’ve decided who you’ll hire then you can get on the road to better credit. Critics often say that credit repair is impossible. I don’t buy that at all. I’ve repaired many many credit reports. It’s possible and fortunately for us consumers, the bureaus and creditors make lots of mistakes.

I say make your credit the absolute best you can. Once you get there, keep it pristine.

A good source of FAQ about credit repair is DSI. Click here to read their FAQ on credit repair procedures, guarantees and more.

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Defendants in Debt Collection Scheme Aimed At Hispanics Agree to Settle FTC Charges

June 11th, 2008

Two defendants have agreed to settle Federal Trade Commission charges for allegedly victimizing Spanish-speaking consumers nationwide by posing as debt collectors seeking money the consumers did not owe. They and the corporate defendants they controlled have been barred from further violations of federal law involving debt collection.

According to the FTC’s complaint, Maria Oceguera, her daughter Dulce Rickards (aka Dulce Ugalde and Dulce Ruiz), and others sold an English-language course, “Inglés con Ritmo.” They advertised the course as free except for a shipping and handling fee.

Several years after the defendants stopped selling the course, they tried to collect money, typically $900, from consumers who had purchased or inquired about the course. An overwhelming majority of the consumers who were contacted owed nothing, and yet the defendants routinely engaged in a variety of deceptive debt collection practices. At the FTC’s request, in 2007 a federal judge stopped the operation and froze the defendants’ assets.

Under the settlement, the defendants are barred from violating the FTC Act by misrepresenting that they’re collecting on a valid debt, that they’re attorneys or represent attorneys, that they will take action they cannot take legally or do not intend to take, and that nonpayment of an alleged obligation will result in arrest, imprisonment, or loss of property or wages. The settlement prohibits the defendants from misrepresenting the consequences of paying or not paying a debt, making misrepresentations in order to collect a debt, and misrepresenting or omitting any fact material to a person’s decision to buy or use a product or service.

The defendants are banned from violating the Fair Debt Collection Practices Act (FDCPA) by using falsehood or deception to collect a debt, indicating that they’re attorneys or represent attorneys, and representing that nonpayment will result in arrest, imprisonment, or loss of property or wages unless the action is lawful and they intend to pursue such action. They are also prohibited from threatening to take an action unless it’s lawful and they intend to do so, and from using a business name other than the collector’s real name.

Oceguera and Rickards are also barred from violating the FDCPA by collecting an amount not expressly authorized by the agreement creating the debt or permitted by law;harassing consumers, including causing a telephone to ring or conversing with consumers to annoy or abuse them; and failing to notify consumers of their right to dispute and obtain verification of their debts and to obtain the name of the original creditor.

In addition, the court ordered the same permanent injunctive relief against the companies controlled by Oceguera and Rickards: Tono Publishing; Promo Music; and Tono Records, dba Tono Music; and Professional Legal Services.

The settlement with Oceguera and Rickards includes a $1,186,754 judgment, all but $50,934 of which is suspended based on their inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with the order.

By a 4-0 vote, the Commission approved the filing of the consent decree in the U.S. District Court for the Central District of California. On May 1, the court approved the FTC’s settlement with Oceguera and Rickards. On May 27, the court entered a separate final judgment and order for permanent injunction against the corporate defendants.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A consent decree requires approval by the court and has the force of law when signed by the judge.

Copies of the consent decree and order are available from the FTC’s Web site at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

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Credit score will determine what you pay: Insurance and Loans

June 4th, 2008

Need Credit or Insurance? Your Credit Score Helps Determine What You’ll Pay

Ever wonder how a lender decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you’d be a good risk for credit cards, auto loans, and mortgages. These days, many more types of businesses — including insurance companies and phone companies — are using credit scores to decide whether to approve you for a loan or service and on what terms. Auto and homeowners insurance companies are among the businesses that are using credit scores to help decide if you’d be a good risk for insurance. A higher credit score means you are likely less of a risk, and in turn, means you will be more likely to get credit or insurance — or pay less for it.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how credit scoring works.

What is credit scoring?
Credit scoring is a system creditors use to help determine whether to give you credit. It also may be used to help decide the terms you are offered or the rate you will pay for the loan.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, whether you pay your bills by the date they’re due, collection actions, outstanding debt, and the age of your accounts, is collected from your credit report. Using a statistical program, creditors compare this information to the loan repayment history of consumers with similar profiles. For example, a credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are — how likely it is that you will repay a loan and make the payments when they’re due.

Some insurance companies also use credit report information, along with other factors, to help predict your likelihood of filing an insurance claim and the amount of the claim. They may consider these factors when they decide whether to grant you insurance and the amount of the premium they charge. The credit scores insurance companies use sometimes are called “insurance scores” or “credit-based insurance scores.”

Credit scores and credit reports
Your credit report is a key part of many credit scoring systems. That’s why it is critical to make sure your credit report is accurate. Federal law gives you the right to get a free copy of your credit reports from each of the three national consumer reporting companies once every 12 months.

The Fair Credit Reporting Act (FCRA) also gives you the right to get your credit score from the national consumer reporting companies. They are allowed to charge a reasonable fee, generally around $8, for the score. When you buy your score, often you get information on how you can improve it.

To order your free annual report from one or all the national consumer reporting companies, and to purchase your credit score, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281. For more information, see Your Access to Free Credit Reports.

How is a credit scoring system developed?
To develop a credit scoring system or model, a creditor or insurance company selects a random sample of its customers, or a sample of similar customers, and analyzes it statistically to identify characteristics that relate to risk. Each of the characteristics then is assigned a weight based on how strong a predictor it is of who would be a good risk. Each company may use its own scoring model, different scoring models for different types of credit or insurance, or a generic model developed by a scoring company.

Under the Equal Credit Opportunity Act (ECOA), a creditor’s scoring system may not use certain characteristics — for example, race, sex, marital status, national origin, or religion — as factors. The law allows creditors to use age in properly designed scoring systems. But any credit scoring system that includes age must give equal treatment to elderly applicants.

What can I do to improve my score?
Credit scoring systems are complex and vary among creditors or insurance companies and for different types of credit or insurance. If one factor changes, your score may change — but improvement generally depends on how that factor relates to others the system considers. Only the business using the scoring knows what might improve your score under the particular model they use to evaluate your application.

Nevertheless, scoring models usually consider the following types of information in your credit report to help compute your credit score:

Have you paid your bills on time? You can count on payment history to be a significant factor. If your credit report indicates that you have paid bills late, had an account referred to collections, or declared bankruptcy, it is likely to affect your score negatively.
Are you maxed out? Many scoring systems evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it’s likely to have a negative effect on your score.

How long have you had credit? Generally, scoring systems consider the length of your credit track record. An insufficient credit history may affect your score negatively, but factors like timely payments and low balances can offset that.

Have you applied for new credit lately? Many scoring systems consider whether you have applied for credit recently by looking at “inquiries” on your credit report. If you have applied for too many new accounts recently, it could have a negative effect on your score. Every inquiry isn’t counted: for example, inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not considered liabilities.

How many credit accounts do you have and what kinds of accounts are they? Although it is generally considered a plus to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many scoring systems consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may have a negative effect on your credit score.

Scoring models may be based on more than the information in your credit report. When you are applying for a mortgage loan, for example, the system may consider the amount of your down payment, your total debt, and your income, among other things.

Improving your score significantly is likely to take some time, but it can be done. To improve your credit score under most systems, focus on paying your bills in a timely way, paying down any outstanding balances, and staying away from new debt.

Are credit scoring systems reliable?
Credit scoring systems enable creditors or insurance companies to evaluate millions of applicants consistently on many different characteristics. To be statistically valid, these systems must be based on a big enough sample. They generally vary among businesses that use them.

Properly designed, credit scoring systems generally enable faster, more accurate, and more impartial decisions than individual people can make. And some creditors design their systems so that some applicants — those with scores not high enough to pass easily or low enough to fail absolutely — are referred to a credit manager who decides whether the company or lender will extend credit. Referrals can result in discussion and negotiation between the credit manager and the would-be borrower.

What if I am denied credit or insurance, or don’t get the terms I want?
If you are denied credit, the ECOA requires that the creditor give you a notice with the specific reasons your application was rejected or the news that you have the right to learn the reasons if you ask within 60 days. Ask the creditor to be specific: Indefinite and vague reasons for denial are illegal. Acceptable reasons might be “your income was low” or “you haven’t been employed long enough.” Unacceptable reasons include “you didn’t meet our minimum standards” or “you didn’t receive enough points on our credit scoring system.”

Sometimes you can be denied credit or insurance — or initially be charged a higher premium — because of information in your credit report. In that case, the FCRA requires the creditor or insurance company to give you the name, address, and phone number of the consumer reporting company that supplied the information. Contact the company to find out what your report said. This information is free if you ask for it within 60 days of being turned down for credit or insurance. The consumer reporting company can tell you what’s in your report; only the creditor or insurance company can tell you why your application was denied.

If a creditor or insurance company says you were denied credit or insurance because you are too near your credit limits on your credit cards, you may want to reapply after paying down your balances. Because credit scores are based on credit report information, a score often changes when the information in the credit report changes.

If you’ve been denied credit or insurance or didn’t get the rate or terms you want, ask questions:

Ask the creditor or insurance company if a credit scoring system was used. If it was, ask what characteristics or factors were used in the system, and how you can improve your application. If you get the credit or insurance, ask the creditor or insurance company whether you are getting the best rate and terms available. If you’re not, ask why.

If you are denied credit or not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information with the consumer reporting company. To learn more about this right, see How to Dispute Credit Report Errors.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

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FTC Charges Home Buying Consulting Business with Credit Repair Violations

May 27th, 2008

A home-buying consulting business that offers credit repair and home-buying consulting services has agreed to settle with the Federal Trade Commission for alleged federal law violations, including illegally charging an advance fee for credit repair and falsely claiming that they can remove negative information from consumers’ credit reports, even if the information is accurate and timely. At the Commission’s request, the U.S. Department of Justice (DOJ) filed the FTC’s complaint and proposed settlement in federal court.

According to the complaint, consumers are led to Home Buyers Consulting Network, Inc. (HBCN), which is based in Raleigh, North Carolina, through its Web sites and by a company that sells lists of foreclosed properties and suggests that its customers call HBCN if they need credit repair or access to zero or low down-payment home financing. In sales pitches for its credit repair services alone, and in conjunction with pitches for its home-buying consulting services, HBCN makes claims such as: “Our program offers the ability to REPAIR, RESTORE, or ESTABLISH your credit so that you may be able to qualify for 100 % home financing, lower interest rates and better quality credit.” HBCN also offers a “money back guarantee . . . to increase your credit score by 50 to 100 points or delete six derogatory items (from a consumer’s credit report).” HBCN also promises consumers help with finding a home to buy, through a referral to its purported network of realtors and lenders, the complaint stated.

Before performing the promised credit repair services, HBCN’s representatives typically require advance payment of at least $99 for those services, and $399 for bundled credit repair and home-buying consulting services. They also require additional advance payments for credit repair services, typically ranging from $19 per week to $49 per month, and promise to refund all but a $99 fee if consumers do not receive the promised results, provided that the consumers work with them for a period ranging from six months to a year.

HBCN, d/b/a Home Buyers Network, Good Credit Company, GoodCredit.com, and 0downhomebuyers.com, and Douglas Andersen Moore a/k/a Douglas A. Moore, HBCN’s president, CEO, and majority shareholder, are charged with violating the Credit Repair Organizations Act (CROA) and the FTC Act by falsely representing that they can obtain permanent removal of derogatory information from consumers’ credit reports, including bankruptcies, even where the information is accurate and not obsolete. They also are charged with violating CROA by requiring advance payment for their credit repair services; not including on their consumer contracts conspicuous statements about the consumer’s right to cancel the contract without penalty or obligation at any time before the third business day after the consumer signed the contract; and not providing, before the contract was signed, the written statement of consumer credit file rights under state and federal law, and the written “Notice of Cancellation,” both required by CROA.

Under the proposed settlement, the defendants are barred from further CROA violations, and from further misrepresentations affecting a consumer’s decision to buy anything from them, including credit repair services. They also are barred from selling, renting, or otherwise disclosing personal information about anyone who was a client before the order is entered, and from using or benefitting from that information.

The settlement contains a $573,000 civil penalty that will be suspended, and, for consumer restitution, a $40,000 monetary judgment that will be suspended upon payment of $10,000. The full civil penalty and judgment amounts will be imposed if the defendants are found to have misrepresented their financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with its order.

This case was brought with assistance from the North Carolina Department of Justice, Office of the Attorney General, and the Better Business Bureau Serving Eastern North Carolina.

The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form. Other credit repair information is available at http://www.ftc.gov.

The Commission vote to authorize staff to refer the complaint and stipulated final order to the DOJ for filing was 5–0. The complaint and proposed stipulated consent order were filed in the U.S. District Court for the Southern District of New York on May 14, 2008, and are subject to court approval.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been
or is being violated, and it appears to the Commission that a proceeding is in the public interest.
The complaint is not a finding or ruling that the defendant has actually violated the law. This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

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The low down on credit repair scams

May 27th, 2008

Today I was researching the latest and not so greatest videos on Youtube about credit repair. Oh, there’s a million out there and most are nothing more than really really bad commercials for some low budget guy pushing his home based credit repair scam business. Nonetheless it got me thinking about just how misinformed consumers are. Not because of these cheap credit repair commercials but because of federal and state agencies like the BBB and even the FTC.

Sure, their intentions are good. They want to protect us all from scam artists but the truth is, they really don’t know what they’re talking about half the time. Take this video below. It’s a newscast of avoiding credit repair scams and making sure you know your legal rights. It’s very impressive because it’s on the news right?

Wrong. To someone like me, it’s very misleading because this video tells consumers that credit repair can be done for them for free by themselves which is true BUT no one talks about how much effort is involved in fixing your own credit. They act as if you mail off a few simple disputes and instantly, you have your credit back.

They also act as if the credit bureaus are our friends. not so much. The real truth that should be told in these news pieces is that you are in for the fight of your financial life when trying to deal with credit issues.

The video also acts as if nothing bad can be removed from your credit so don’t bother. Also not true. Luckily for us, the bureaus have their hands so full of consumer disputes and parsing millions of bits of data everyday that they’re ineffective at maintaining accurate data. That’s good for us because you can get lots of goodies removed this way. It’s not our fault the bureaus are flawed. It is what it is so use it to your advantage.

The video also tells you that there are plenty of good reliable credit counseling agencies out there that can help you. Really? I cant remember the last time a credit counseling (debt management) agency was able to help fix credit. The two are separate. There’s debt management (credit counseling) which can help you get out of debt and then there is credit repair. Two totally different issues.

This video leads innocent consumers who may not be educated in such issues to believe that a debt management plan can help you fix your credit. Yikes! That’s a nightmare in itself.

Truthfully I have gotten a TON of bad items removed from credit reports. Mostly because I can. I know what to do and how to do it. I don’t practice credit repair for others because the law (thanks to scammers) makes it so tough that it really isn’t worth my time. So, it leaves me one option and that’s to teach you what I know. They cant stop me from talking and fortunately I know a lot about this issue.

I’m not against the government trying to protect us. There are a lot of scams out there and these companies just love bilking innocent consumers out of millions. But, no one in our government talks about the middle of the road issues where people like me can help educate you with facts. They just continue with their warnings and alerts and that doesn’t help the majority of us.

True credit repair is simply taking advantage of flaws in the system and committing a lot of time to it. Once you understand reporting times, ratings and legal flaws, you can improve your credit. That is really all that a credit repair company does for you. They simply understand the system and use that to their advantage.

Of course, you still need to be cautious of who you use and diligent in checking their credentials but there are good companies out there that feel the same way I do about the choices left to us by the credit system itself. Always check their record and never prepay for credit repair. If the firm is legit, you can pay as you go and cancel anytime. It’s like any other service you would pay for.

Education is a big part of credit repair. Don’t underestimate the expertise of others and use it. The Internet is a free land mind of info and can really aid you in fixing up a sloppy credit report.

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CHARGED OFF (CANCELED) DEBTS AND THE IRS

May 11th, 2008

If your debt has been written off by a creditor then you may receive a 1099-c from the source. You must claims this amount as income on your taxes because you never paid it back- thus making it income. However if you “settle” this debt as “paid in full” with the creditor make sure you ask that they agree to the settled in full arrangement and not send the remainder as a loss to the IRS.

If the creditor willingly accepts “less than” as “full payment” then make sure they agree not to report remainder. The creditor can refuse but usually does not. See exceptions below for more information on excluded debts.

Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. You have no income from the canceled debt if it is intended as a gift to you. A debt includes any indebtedness for which you are liable or which attaches to property you hold.

If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. If it is a business debt, report the amount on Schedule C or Schedule C-EZ (Form 1040) (or on Schedule F, Profit or Loss From Farming (Form 1040), if you are a farmer).

Form 1099-C. If a federal government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. The amount of the canceled debt is shown in box 2.

Interest included in canceled debt. If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest will also be shown in box 3. Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible if you paid it. See Deductible debt, under Exceptions, later.

If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from box 2 of Form 1099-C. If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3).

Discounted mortgage loan. If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. You must include the canceled amount in your income.

Stockholder debt. If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is dividend income to you.

If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled.

Exceptions
There are several exceptions to the inclusion of canceled debt in income. These are explained next.

Nonrecourse debt. If you are not personally liable for the debt (nonrecourse debt), different rules apply. You may have a gain or loss if a nonrecourse debt is canceled or forgiven in conjunction with the foreclosure or repossession of property to which the debt attaches. See Publication 544 for more information.

Student loans. Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. To qualify, the loan must have been made by:

The federal government, a state or local government, or an instrumentality, agency, or subdivision thereof,
A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or
An educational institution:
Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or
As part of a program of the institution designed to encourage students to serve in occupations or areas with unmet needs and under which the services provided are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization.
Section 501(c)(3) organizations are defined in Publication 525.

A loan to refinance a qualified student loan will also qualify if it was made by an educational institution or a tax-exempt 501(a) organization under its program designed as described in (3)(b) above.

Deductible debt. You do not have income from the cancellation of a debt if your payment of the debt would be deductible. This exception applies only if you use the cash method of accounting. For more information, see chapter 5 of Publication 334, Tax Guide for Small Business.

Price reduced after purchase. Generally, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property.

Excluded debt. Do not include a canceled debt in your gross income in the following situations.

The debt is canceled in a bankruptcy case under title 11 of the U.S. Code. See Publication 908, Bankruptcy Tax Guide.
The debt is canceled when you are insolvent. However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. See Publication 908.
The debt is qualified farm debt and is canceled by a qualified person. See chapter 4 of Publication 225, Farmer’s Tax Guide.
The debt is qualified real property business debt. See chapter 5 of Publication 334.

Read the full text of the IRS statute: http://www.fourmilab.ch/ustax/www/t26-A-1-B-III-108.html

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