Gregory Starkey, Attorney at Law


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Debtor's prison worsened by difficultly with credit reports

In a previous post we examined the still ever-existing debtor's prison suffered by many Americans, only to see that this can be worsened by the difficultly of correcting an individual's credit report. Credit card debt that is not paid and ultimately sent to collections can shape and influence your credit rating; a rating that will affect your ability to get good interest rates for future credit cards, mortgages and automobile loans.

An individual out of Birmingham, Alabama, believed that he was up to date with his deductibles, when he took his son into the hospital for a weeklong stay of testing. However, he was wrong and owed $200.00 from a previous bill. His first time hearing of this debt was from a debt-collection agency demanding payment. The following day, after confirming the debt with the hospital, the individual made a payment over the phone to satisfy the entire debt. The collection agency then included this paid collection amount of $200.00 on his credit report. The individual could not convince the debt collection agency to remove this entry from his report, even though it was misleading.

Lawsuits against collection agencies for similarly situated individuals fall under the Fair Credit Reporting Act and have been increasing recently. The Fair Credit Reporting Act was enacted in order to promote accuracy, fairness and privacy of your file with the consumer reporting agencies. As a consumer, among other rights, you can dispute incomplete or inaccurate information, and consumer reporting agencies must correct or delete inaccurate, incomplete or unverifiable information. However, correcting your credit report can be a daunting process for an individual.

Credit card debt or other debt, while it has the ability to aid an individual in building good credit, can also negatively impact a person's life. According to the SESLOC Federal Credit Union, nearly 70 percent of all credit reports contain one error. Such errors can have a profound impact on future ability to get decent rates for various important loans, and can add stress when an individual tries to remove misleading reported debts.

Source: The Street, "Credit Where Credit's Due-But Only If You're Lucky," Aug. 31, 2012

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