SoCalCreditDamage.com Blog

Friends, Romans & Countrymen,

A good friend of mine happens to be a Certified Mortgage Planning Specialist. He’s also a genius, literally, so it’s worth reading what he has to write. He read my blog entries on credit report “pulls” and had the following comments:

“Good blogs! One point that you might want to clarify is that when someone is shopping for a mortgage (if they are too ignorant just to call me and get the deal done properly), I have been told that credit bureaus treat multiple pulls within a certain period, typically 45 days, as one pull. Some unethical loan officers try to sow fear in their prospects by telling them not to shop and get their credit checked by different lending sources, but in today’s pricing environment, we *have* to know the credit score before we can give a good faith estimate because rates vary greatly depending on credit score.

“Also, dealing with mortgage brokers instead of direct funding lenders can result in more pulls because brokers might have to shop the deal to multiple lenders, each of whom pull credit again when they process loans.”

Thanks for reading & hope this helps you.

Bob Brennan

I’m continuing to get calls from people who believe they have had their identities stolen or who may have been the subject of one of the big “data thefts” that have afflicted so many companies. These cases likely are not yet ripe for handling through litigation because there are really no serious damages at the point where the consumer learns his or her identity has been stolen. The cases we handle are those where the consumer has had his or her credit damaged by the identity theft situation and has been unsuccessful in getting it straightened out.

Nonetheless, here are the steps you need to take, and take at once, if you believe your identity has been stolen or your personal information has been stolen or compromised:

1. Immediately file a police report, and get a copy. Make several copies because you will need several copies. Several means as many as two dozen, and you may have to make more as the situation progresses.
2. Not all police agencies want to take identity theft reports. If you run into a police officer or a sheriff who will not take your report, ask to speak to his or her supervisor. Eventually you will find someone who will take your report.
3. It is not necessary if you have filed a police report, but you can also file an identity theft report with the Federal Trade Commission at www.ftc.gov. If your local police station positively will not take a police report, then file your report with the FTC and make several copies.
4. Immediately contact all three major credit bureaus (Experian, Equifax and TransUnion) and request an extended fraud alert. A regular fraud alert is good for only about 90 days and is effectively useless, since many current identity thieves will deliberately wait 120 days or so after the identity theft to attempt to use your identity, knowing of the 90-day fraud alerts. You need to get the longer, extended fraud alert. The fraud alert will mean that any creditor will have to call you at a specified number before extending credit in your name.
5. Contact any involved creditors and provide them with copies of the police reports. They should reverse any identity theft charges or accounts once you provide them with a copy of the police report. If they will not, then you contact my firm about possible representation.
6. If you think you know where your identity was stolen, contact that location and ask to speak with a manager about it, as the employees may be employed by an identity theft ring and you would want the manager (who hopefully is not involved with the identity theft ring) to know about the situation so he or she can contact the police privately.
7. Monitor your credit reports at least quarterly. Promptly dispute any false or inaccurate information on your credit reports, whether or not it relates to the identity theft. If you cannot get false or inaccurate information removed after a reasonable period of time, contact my firm about possible representation.
8. Obviously contact any banks, insurance companies or investment houses where you maintain accounts and let them know of the possible identity theft situation. They should be alerted to notify you if anyone tries to make any large withdrawals from any of your accounts.

If you do these things, it’s likely you will not lose anything other than your time to the identity thief. That’s a whole lot better than losing your life savings.

I hope this short article has been of use to you. Thanks for taking the time to read it.

Bob Brennan

Hi Folks,

Here is a recent email correspondence between a potential client and myself on the issue of “hard” vs. “soft” pulls on a credit report. I have litigated the issue against Experian and, well, my client and I were both happy, so it warrants your attention to know the difference between “hard” and “soft” pulls, or inquiries. Here’s the exchange:

QUESTION: “Mr. Brennan,

“here is the story with Wells Fargo:

“1) I applied for debt consolidation account at the Santa Monica branch,
my (Experian) credit was pulled with my permission (Wells Fargo Bank, Las Vegas,NV) .
The application was rejected but transferred to Wells Fargo Financial.

“2) Wells Fargo Financial called me and pulled my (Experian) credit again with my permission (Sioux Falls, SD).
They also rejected me.
Since they want my car lease included in this deal I’ll come back to them later, after 10 months but
for now, this application is not approved. Application disapproved, case closed (I thought).

“3) 2 days after this phone conversation my (Experian) credit was pulled again by
Wells Fargo Financial without my permission (Chester, PA)

“I called them about this extra credit pull and they were asking - amongst many other things - whether it was soft or hard pull (I do not know).
Finally I got their dispute address and fax number.

“I know that these different pulls can be seen differently with each bureau but

“my question is:

“Does it matter whether it was soft or hard pull in regard to the permissible purpose proof request I am about to ask from them ?
“Could that pull be impermissible access ?”

ANSWER: “Interesting question. In general, a “soft pull” is in connection with an account review for existing creditors, originated by the creditor or sometimes by the bureaus. A hard pull normally occurs when you apply for credit. Too many hard pulls in a short period can lower your score. If you already have an account with WF, WF will argue that it has a right to make a soft pull. The bureaus keep track of whether pulls are hard or soft and list them in different sections of your cred report. I think 3X “hard” pulls by different WF entities, undoubtedly using different subscriber codes, would be excessive, particularly if it lowered your score. Dispute it if it’s hard pulls. If it’s soft, leave it alone, because soft pulls do not affect your credit score per the FICO scoring model. Your credit report will tell you whether it’s hard or soft and the bureaus should respond if any of the “hard” pulls were unauthorized. If you cannot get any positive action, of course you always have rights under the Fair Credit Reporting Act and we may be interested in helping you with your case. Hope this helps.”

Definition: “zombie debt”: debt so old you have literally forgotten how you incurred it, if you even did, yet now some debt collector is trying to collect it from you. It’s like being chased by zombies in one of those “Night of the Living Dead” movies. Only this time, the movie title is, “Night of the Living Debt”.

The “zombie debt” epidemic is reaching new highs, thanks to Wall Street’s practice of bundling consumer debts into large portfolios which are then used by investors as collateral, or security, for a new round (or multiple new rounds) of consumer lending. This process, known as “securitization”, means that a bank or financier holding a consumer debt no longer considers it as an individual asset anymore. Rather, the bank or finance company considers the debt just another ear of corn to throw into the “securitization” hopper, to be bundled and sold as a security to some investor somewhere who has his or her own ideas of what to do with the bundled debts as a security.

Using too many big words here? Sorry about that. The simple and plain truth of it all is as follows: if you have consumer debt with a credit card company or any kind of finance company, that credit card company or finance company looks at your loan obligation as nothing more than something to be bundled into a larger security. Obviously, better-performing loans create a more valuable security, but the bad news to consumers is that there is at least some market for all kinds of consumer loans.

Loans in default 20 years old? Why not? They’re bundled, used as security for some other loan and then the new owners, to make the loans perform, hire debt collectors to pursue collection of these ancient and musty debts. They’re well past the statute of limitations and well past the credit reporting period, but hey, we consumers have no right to say no to Wall Street, right? That would be un-American. Just ask the current administration.

So, don’t be surprised if you start being haunted by “zombie debt”, debt so old you have to rack your brains just to figure out what it is. Like most of us remember all the charge accounts we had back in high school or junior college, right? However, the “junk debt buyers” will buy this debt just the same and try to collect it.

The simplest answer to any debt collector collecting on any debt more than 4 or 5 years old is, simply, “No.” (Check the statute of limitations in the state in which you live. In California, where I practice law, it’s 4 years on most consumer debts based on written credit applications.)

However, the more insidious process occurs where junk debt buyers, or collectors, try to credit report “zombie debt” by “re-aging” the debt–reporting it as initially delinquent when they buy it, not when you were first delinquent. Credit reporting laws permit the credit bureaus and collectors to report debts for 7 years and 6 months after date of first delinquency. Debt collectors have no right to “re-start” the clock.

So, if you’re being chased by “zombie debt”, hold firm and contact my firm at once if you’re in California and if any collector has “re-aged” your consumer debts.

I hope this short article is of use to you. Thanks for reading.

Hello all, sorry I haven’t written for a while.

My next big credit damages trial comes up in April against HSBC, formerly known as “Household Bank”. I suppose they formerly called themselves “Household” because that’s what they would grab, in its entirety, whenever you were late on a payment to them.

Our current case indeed shows their rapacious ways. It turns out HSBC is the actual credit card retailer and provider behind several retail stores, which HSBC does not disclose to the stores’ customers. In the current case, it was the former electronics store The Good Guys! HSBC was the actual credit card provider, and owned all of the credit accounts, for all of The Good Guys! customers.

My client, Stewart, had an established relationship with The Good Guys! in purchasing electronics on a “same as cash/no monthly payments” basis, and in fact had made four such previous purchases and had never defaulted on any of his obligations. On his fifth and final transaction with The Good Guys!, however, The Good Guys! clerk offered him the exact same terms but entered the purchase into The Good Guys!/HSBC’s system as “same as cash/minimum monthly payments required.” One month later, HSBC send my client a bill for a monthly payment, using The Good Guys! letterhead on the bill. There is no mention whatsoever of HSBC. My client disputes it, but rather than risk damage to his credit, he pays off the entire credit account, in full, figuring that would take care of it.

But Stewart did not realize which bank he was dealing with. Rather than accept the payment in full of the entire account, HSBC accelerated the entire account (Stewart had not finished paying off two of his previous transactions, as the time for final payment had not yet arrived) and charged him a hefty late fee. HSBC also dinged his credit. HSBC then adopted the terrorist tactic of “refusing to negotiate”. Stewart had to hire me to get anywhere with them.

HSBC’s defense, which I’m confident a jury would love, is that a “bill stuffer” which HSBC had sent around to its customers contained a whole bunch of small-print terms & conditions which essentially stripped Stewart, along with every other HSBC account holder, of all of his rights. Stewart never had to read and sign this bill stuffer (which identified itself as having come from HSBC, not The Good Guys!, further concealing HSBC’s role in this rip-off), because the bill-stuffer declared that if he’d used his card for any reason, or made a payment, following the mailing of the bill-stuffer, this was the same as signing off on the agreement. The bill-stuffer is about 14 pages long and has tiny, tiny print. It would take a trained lawyer a half-day to read it. Like we all have a half-day to read this crap when all we’re doing is buying some electronics?

Anyway, HSBC filed a bunch of motions to have the case thrown out of court, but the San Diego Superior Court said that Stewart gets a trial in this case. Trial is set for early April. Should be interesting. I’ll keep all & everyone updated on the progress of the case. Hopefully, a jury will see it our way & teach HSBC a good lesson about this kind of anti-consumer conduct.

Thanks for reading & hope you’re doing well.

Hello,

For some time, my clients have known that my firm consistently opposes efforts by big corporations, car dealers, credit card companies and the like to deprive consumers of their rights to have their disputes decided in a court of law with “binding arbitration agreements” often hidden in consumer finance and purchase contracts. You rarely see the binding arbitration agreement in anything you sign; in fact, sometimes big corporations trick consumers into “signing” binding arbitration agreements by putting them into fine-print bill-stuffers so they’re not read. These “agreements” provide that you have agreed to binding arbitration and a waiver of any class action remedies if you even use your credit card after having received the bill-stuffer for a single charge. Fair? Hardly.

Big corporations have for years argued that binding arbitration is really fair, and that’s why big corporations are really doing everyone a favor by depriving them of their right to choose to go to court. Mind you, my firm is not opposed to choice: if a consumer wants to go to binding arbitration with a single arbitrator or retired judge, and wants to go there voluntarily, we’re happy to go that route, but we always insist that the client should have the choice.

Binding arbitration agreements deprive consumers of the choice to go to court. That’s precisely what they’re designed to do, and that’s why big corporations, car dealers, etc. hide them in small print in the midst of the multi-page consumer contracts that they force people to sign.

Some of my clients, however, have posed the question to me: what is unfair about binding arbitration? The arbitrator is supposed to be fair, right? Well, the answer is no. Corporations usually use captive arbitration providers, such as JAMS, NAF (National Arbitration Forum) or AAA (American Arbitration Association), where the corporation, NOT the consumer, is the repeat customer. The judges know that their paychecks and their repeat business comes from the corporations, not from the consumers, so these forums are hardly impartial.

If you have any remaining doubts about whether these forums are impartial, consider one of their biggest proponents: Dick Cheney. Our venerable Vice President has done pretty much everything within his power, and quite a few things very much outside of his power, to make a mockery of our system of justice. His recent refusal to comply with legal and congressional subpoenas is but a “tip of the Cheney iceberg,” towards which our ship of state is sadly headed.

Cheney’s distaste for pesky little things like constitutional guarantees, the Bill of Rights and due process of law date back to his Halliburton days, if not before. In the 1990’s, when Cheney was CEO of Halliburton, he tricked all of the employees of Halliburton and its subsidiaries into “signing” binding arbitration agreements simply by showing up to work. In other words, the company sent out a fine-print notice indicating that by the simple act of showing up to work, you had consented to waive your right to trial by jury and consented to having any disputes against Halliburton decided by in a binding arbitration. Halliburton has a long history of terminating workers who have filed worker’s comp claims and has a reputation of firing or laying off “the old, the sick and the halt,” so it’s little wonder Halliburton decided that none of its employees deserved any right to a jury trial.

Fast forward to 2005, and Jamie Leigh Jones, an employee of Halliburton subsidiary KBR, goes to Iraq and encounters a slightly upsetting employment situation: she is drugged and gang-raped by her fellow employees, who then lock her in a shipping container and warn her that if she tries to go for medical treatment, she’d be fired. The US Embassy eventually had to free her from the shipping container. Jamie had evidently managed to contact her father, who, after having no luck pursuing her daughter’s protection or safety with KBR or Halliburton, called his US Representative, Ted Poe. Representative Poe similarly had no luck with calling the company, so Rep. Poe had to involve the US Embassy. Obviously, there are embassy witnesses to the allegations.

When Ms. Jones tried to sue in court…SURPRISE!!! Halliburton invoked its binding arbitration clause, and Ms. Jones cannot pursue her claims against her employer in a court of law.

All thanks to Dick Cheney.

So, if you ever ask me in the future why I oppose involuntary binding arbitration, or if I detect that you might be buying the corporate PR messages about how wonderful it is, I’ll simply respond: would you want your consumer dispute against a corporation decided by Dick Cheney?

I would certainly hope not.

Have a wonderful Christmas and you’ll hear from me in the New Year.

Bob Brennan

I often write my own posts to this blog but my clients and contacts often write their own. This is just in from Arizona:

“I am not writing to you seeking advice as I live in Arizona and have consulted an attorney here. My son has been sued by Arrow Financial Services. Nevermind the details of his debt, but they have named as a defendant in the lawsuit. My guess is that either they think I am his spouse or they are extending scare tactics in my direction. I am not a cosigner/ joint holder on this account. I’m sure they were annoyed when I wouldn’t give the process servers Eric’s address. I was annoyed with process servers that identified themselves as “employees of the State of Arizona” that could not produce supporting ID.

“Anyway, I just want to tell you that I couldn’t agree more with the following statement that you had made and that I found while researching AFS cases:

“’America no longer creates any new products. All it creates any more is debt. The key product of our economy is debt, plain and simple, and the debt collectors and major banks use debt to control, and destroy, our entire lives. I’m picking up more and more discontent from consumers because of this debt-driven economy and how we’re all hamsters in hamster-wheels working our tails off just to pay interest to debt collectors and big banks. One day, it’s all gonna break and it just might be a good thing when it does.’”

“I am truly disgusted by this whole junk debt buying industry. This week I am in the middle of final exams, but when they are finished I plan to find out how I can become more involved in this issue. Although I don’t have credit issues, I do have a lot of debt and nothing has been more motivating to me to pay it off than what I see this industry has done to young people, their parents and this country.

“Thank you for doing what you do.”

If any of you, my faithful readers, out there would like to write up something to put onto my blog, write it to me at rbrennan@brennanlaw.com. If it’s appropriate, I’ll put it up & leave your name out unless you specify that you’d like it up there.

Thanks for reading!!!

Bob Brennan

Dear Readers,

Thanks again for tuning in to this channel. I hope each of you had a wonderful Thanksgiving. Now it’s Christmas time, the time when families most go into debt during the year.

Here’s my Christmas wish for each of you:

1. Avoid going any more into debt than whatever debt load you already have.
2. If your kids want something that it would be tough for you to afford, sit them down and explain to them that you don’t have the money. Believe you me, you will not “scar” them. Many, many great men and women in this country came from modest means, and had to develop the fortitude to stand up to their more financially fortunate friends. It’s part of character.
3. Know in your heart that many of your kids’ “more financially fortunate friends” only appear that way because they are taking on MASSIVE amounts of debt to maintain a false appearance. Sure, there are some rich and fortunate people in this culture, but they are growing more scarce with each passing week as banks and finance companies hire business school graduates to do nothing but sit around 14 hours a day to dream up ways to get honest working people to take on more debt.
4. You declare that, beginning NOW (not on January 1st), you are going to be an exception. You are not going to let the debt vultures run your life any more. Period.
5. You then rearrange your life and your spending habits so you can actually afford your lifestyle. If your kids object, tell them to get a job. That certainly will not hurt them. They’re young kids? Well, can they babysit or help the neighbors with yardwork?
6. About the greatest gift you can give your kids this Christmas is the gift of financial responsibility. Have them read, “The Richest Man in Babylon,” which is inexpensive and available in any major bookstore. Teach them about a budget. Sure, some kids out there might have a pout on their faces when they don’t get their X-Box under the tree, but believe me, that pout will turn into an anguished wail over time if they don’t learn to put tough and dedicated controls in on their own finances.

Here’s a little message I received today from a lady I helped out with a simple referral. I dare say her little message applies to just about all of us:

“Thanks Robert for all the assistance with referrals…I have scoured the Internet and people like you and your colleagues are tough to find and no doubt very busy in your practice.

“Waking up from a 7 year semi-comatose state and looking at the reality of my life has been an “eye” opener in many regards. For many many years I worked overtime, became a slave to debt and wanting to do the “right” thing as I created the debt, but became exhausted just trying to keep up with the demands of paying credit cards and student loans; scared of the phone calls and what other people would say if they only ‘knew” what was really going on behind the facade–cutting myself from friends and family and feeling like a criminal. I now have the wherewithal and confidence not to be intimated, but it came out of my own painful journey and I now understand many people’s plight–I appreciate people like you that take on the the institutional “machines” that can grind people right into the ground physically, mentally, emotionally and most of all spiritually.”

Thanks for reading. Have a truly wonderful Christmas season.

Bob Brennan

13 November 2007

The biggest single commodity in our country is no longer oil or gold. It’s debt. There is a seemingly never-ending market for debt.

For those of you who are not familiar with this, let’s go over just a few facts to support my observation. Mortgages are “debt instruments”, i.e. ultimately these are security for paying a debt. Mortgage brokers who initially get approval for loans are never the ones who actually hold the mortgages and service them. The brokers pass mortgages off to banks and other big lenders, which in turn “securitize” them into big pools of mortgage loans which in turn are traded amongst the Wall Street giants like blocks of stock in any major corporation.

That’s just mortgage debt. Essentially the same activity can occur with credit card debt, car loans, student loans, medical debts or any other kind of debt out there. Debt equals cash flow, or, in other words, stream of income. The ability to collect a debt equals the ability to raise cash and increase the value of a portfolio of debt.

Obviously, debt has different “grades”, and Wall Street recognizes this. First mortgages would have a higher “grade” to a potential investor than, say, old medical bills. At the very least, a mortgage is secured by the collateral of real property somewhere, so there’s a far greater chance that the owner of the property will continue to pay on the debt, i.e. continue to create that cash flow for the owner of the debt instrument. For an old medical debt, the owner of the debt faces the possibility that the consumer will declare bankruptcy and either discharge the debt (eliminate or cancel it in bankruptcy proceedings) or have it reduced substantially under a “Chapter 13” debt repayment arrangement.

The competition for debt has become one of the biggest financial features of our current economy. So-called “junk debt buyers” will buy absolutely anything out there. Thus, we are getting more and more calls from persons being subjected to debt collection efforts by debt collectors who have purchased 20-year old debt, as outrageous as this seems.

However, the truly outrageous situation is where the junk debt buyers buy debt which has been discharged in bankruptcy. I know, that’s against the law. However, it is not stopping the junk debt buyers from buying this debt and attempting to collect it. They’re even credit-reporting it. After all, the consumer frequently declares bankruptcy only as a last resort, after years of financial stress and struggle, and with the specific intention of finally buying some peace and “starting over”. Well, with the new Bush-backed bankruptcy bill coupled with junk debt buyers buying up any debt they can lay their hands on, there is no more “starting over” in this economy, unless you’re a big corporation.

IF YOU ARE A CONSUMER WHO HAS DISCHARGED A DEBT IN BANKRUPTCY PROCEEDINGS AND A DEBT COLLECTOR IS NOW ATTEMPTING TO COLLECT ON THAT DEBT, WE ARE INTERESTED IN REPRESENTING YOU. First things first: provide the debt collector with a copy of the bankruptcy schedule, showing that the debt is discharged. If that does not stop collection proceedings, or if they continue to credit-report the debt on you, then call us promptly. Not only will we put an end to the collection proceedings but we’re also pretty confident we’ll be able to get you a judgment or settlement for your damages as well, plus our fees would be paid by the debt collector.

Thanks for reading. Pass this article around to your friends.

Bob Brennan

Hi all,

It’s a glorious day for consumer protection not only in the Western states but throughout the country! The Ninth Circuit Court of Appeals, which is the Federal Court of Appeals for California and for some other western states, decided Dennis v. Experian yesterday strongly in favor of consumer rights under the Fair Credit Reporting Act.

I know that this may sound a bit legal at this point, but hey, I’m a lawyer, but I’ll try to describe this in non-legal language. Dennis v. Beh was a decision rendered by the Ninth Circuit about six months ago or so. Among other things, Dennis v. Beh held that a credit bureau, such as Experian, had a complete right to rely strictly on the information being provided to it by the credit information furnisher without having to conduct its own independent investigation of the facts.

Dennis, the tenant, reached a settlement agreement with Beh, his landlord, over unpaid rent on an apartment. The settlement agreement included that the landlord would not enter a judgment against Dennis. Experian credit-reported that Beh had a judgment against Dennis, and Dennis disputed with Experian, repeatedly, by providing them with documents showing that the settlement agreement called for no judgment to be entered. Experian, however, had had its court checking service go to the courthouse, where there was an erroneous entry about a judgment which was later corrected. No matter. Experian positively refused to change the credit-reporting, and thereby damaged Dennis’ credit report and credit score.

In the first Dennis case of about six months ago, the Court of Appeals had ruled that Experian was allowed to rely on its court check service and on Beh, and did not have to conduct its own independent investigation of disputed credit items. This obviously would be a huge windfall for Experian and a huge defeat for consumers, for it would have allowed Experian and all other credit bureaus to completely disclaim responsibility for the contents of their credit reports, even if demonstrably false and damaging.

However, the latest Dennis decision positively reverses on a credit bureaus’ obligations to conduct its own independent investigations of disputed credit information. No longer can credit bureaus sit back, with utterly no responsibility, while false and damaging credit information builds up in their files. A credit bureau has a positive duty to conduct a reasonable investigation.

What is a reasonable investigation? I would not leave it to chance. If you’re disputing information in your credit report, include copies of any and all information which would help the credit bureau do the right thing. This could include copies of court papers or judgments, declarations from your creditors, any documentation to show the credit bureau that your dispute is sincere. Obviously send copies only, not originals, and keep a copy of anything you send. If you have to hire our firm later on to help you remove the false credit information, having copies of what you’ve sent to the credit bureaus is often the most important part of any case.

Thanks for reading!

Bob Brennan