Turning the Tables on Debt Buyers—
Using Arbitration as a Defense to a Collection Lawsuit
Arbitration clauses in consumer contracts are the result of legal evil geniuses’ perversion of the law to defeat consumer rights, to avoid litigation, and to prevent culpable companies from being held liable for damages on a class-wide basis. Courts unfortunately have sanctified this perversion making consumers all across worse off and more vulnerable to harm from corporations, big finance, and big business. This article suggests how an individual consumer like you can use this legal perversion to her advantage as a defense to a lawsuit filed by a debt buyer.[1]
Most debt-buyer[2] lawsuits are attempts to collect charged-off credit card debts. In turn, most of the underlying credit card agreements in these lawsuits contain mandatory arbitration clauses. These are the agreements that you can use against the debt buyers to compel the debt buyer to arbitrate its claim against you. But before getting to the mechanics of compelling arbitration, you may ask why arbitrate?
I. Why Arbitrate?
There are several very good reasons to want to take your debt-collection to arbitration:
- Arbitration greatly increases the cost of collection for debt buyers.
- Arbitration is informal process, allowing you to more easily represent yourself.
- Debt buyer counsel is not familiar to the arbitrators.
- An arbitration award does not appear in the public-record section of your credit report.
- Increasing Cost of Collection
Bringing a debt-collection lawsuit in Kentucky is cheap and ridiculously effective. Typically, the costs for filing a collection lawsuit in a Kentucky District Court is $125.00 or less and filing a collection lawsuit in a Kentucky Circuit Court is $150.00 or less.[3] In something like 95% of these cases, the defendant never appears and the debt collector is able to get a default judgment against the consumer with no additional court costs. But not so in arbitration.
An arbitration is carried out by a private arbitrator. Under most credit card arbitration agreements, the debt buyer has to pay all of the arbitration fees, which can run from $2,000.00 to $4,000.00. Moreover, unlike in a court case, the debt buyer cannot recover its court costs in the arbitration award. So in an arbitration, the debt buyer has to pay much more and cannot shift these costs to the consumer. Many times, the debt buyer will do the math and elect not to pursue the arbitration based on a simple cost-benefit analysis.
Additionally, the increased costs of arbitration gives you the consumer a great deal of leverage should you wish to settle the debt.[4] That is, the debt buyer, or debt-buyer’s counsel, will be much more open to reasonable settlement offers. If you do settle, there are two things you must make conditions of the settlement: do not sign an agreed judgment and require the debt buyer to delete the trade line from your credit report.
- Informal Process
Taking a collection action out of the court system is HUGE advantage for most collection defendants.
First of all, the arbitration process is not subject to court rules of procedure or evidence. Debt collectors use the legal system to their utmost advantage by using their knowledge of court rules to intimidate and roll over consumers who have no knowledge or experience with these rules. In particular, debt collectors use discovery to trap defendants into inadvertently admitting liability and summary procedures to deny the defendant his day in court. The debt buyer loses all those advantages in an arbitration. Instead of rules and procedures, each side gets to make his or her case to the arbitrator in an informal proceeding, usually a telephonic conference.
- No Familiarity with Arbitrators
Counsel for debt collectors appear in the court system in front of the same judges day after day. Judges and debt collection counsel know each other and often friendly. This is not meant to impugn the integrity of judges, but familiarity does breed bias in the debt-buyer’s counsel’s favor, especially in the absence of a defense or against unknown, unrepresented consumer. Debt buyers lose this advantage in an arbitration. The arbitrators are randomly selected. Further, because debt buyers arbitrate so few cases the opportunity for such familiarity simply does not arise.
- No Public Record
In an arbitration, the debt buyer loses the ability to turn its junk debt into a super debt. Debt buyers bring suit for purposes of obtaining a default judgment against the consumer. Judgments are super debts, subject to a long statute of limitations, and which allow the debt buyer to use the force of government to seize your assets.
The statute of limitations for a judgment is ten years under Kentucky law. But the debt collector can easily reset the limitation period by making any attempt to execute on the judgment. So for intents and purposes there is no statute of limitations on judgments in Kentucky.
And armed with a judgment, a debt buyer can garnish 25% of your wages and wipe out your bank accounts. A debt buyer can also file a judgment lien that attaches to any real property you own. This makes selling or buying any property problematic.
Finally, a judgment appears on the public-record section of your credit report. This can result in a reduction in your credit score of 40-60 points. But an arbitration award against you does not appear on your credit report. One word of caution, a successful claimant in an arbitration case can reduce the award to a judgment. Of course, you have the right to pay or settle an arbitration award before it is reduced to judgment.
II. Compelling Arbitration
Moving to compel arbitration occurs inside the debt-collection lawsuit. So you it requires the use of court rules of procedure and evidence. I am very familiar with this process and have been successful in moving to compel arbitration in several cases. I can represent you and bring the motion on your behalf for a very reasonable fee. I can also draft the motion for you to file and argue yourself for even less.
If you’ve been sued by a debt collector, please call or email me today.
[1] Disclaimer: This article is not intended to provide legal advice. The information contained herein (legaleze so that you know I’m serious) is for informational purposes only.
[2] There are several active debt buyers in Kentucky that regularly file suit to collect debts, including: Midland Funding, LLC; Portfolio Recovery, LLC; Calvary SPV I, LLC; and LVNV Funding, LLC.
[3] These costs are so cheap because public tax dollars subsidize and fund the court system.
[4] The two main reasons you may want to settle the debt are to (1) pay your debts, and (2) clean up your credit report.
LVNV Funding Garnishing your Pay or Bank Account?
/in Uncategorized /by Hays LawsonHas LVNV Funding, LLC garnished your wages or bank account? If so, chances are very good that LVNV has taken money from you that it has no legal right to recover from you. We can help you get that money back in addition to up to $1,000.00 in statutory damages.
LVNV Funding, LLC is a third-party debt collector. LVNV buys old debt, often charged-off credit card debt, for pennies on the dollar. LVNV often collects debt through its collection servicer Resurgent Capital Services LP. LVNV and Resurgent are both subsidiaries of Sherman Financial Group. In turn, Sherman Financial is at the center of a web of related financial entities, including Credit One Bank, N.A. Credit One is in the business of issuing credit cards to consumers with bad credit ratings. The cards are loaded with fees and interest rate traps that often lead the consumers to default. After charge off, these debts are “sold” to LVNV, which often places them with Resurgent for collection.
LVNV is subject to the Fair Debt Collection Practices Act (“FDCPA”). It is an express violation of the FDCPA for a debt collector to collect more on a debt than is legally owed on the debt. If LVNV violated the FDCPA by garnishing your wages or bank account, we can sue LVNV under the FDCPA on your behalf at no cost to you. We can represent you for no cost because under the FDCPA, LVNV has to pay our fees and costs if we win or settle with LVNV. We are so confident of our ability to get a judgment or settlement against LVNV and at least $1,000.00 for you, that we are happy to take this risk.
Please call or email us today to see if we can help you recover what LVNV took from you illegally.
Turning the Tables on Debt Buyers—Using Arbitration as a Defense to a Collection Lawsuit
/in Debt Collector Abuse /by Hays LawsonTurning the Tables on Debt Buyers—
Using Arbitration as a Defense to a Collection Lawsuit
Arbitration clauses in consumer contracts are the result of legal evil geniuses’ perversion of the law to defeat consumer rights, to avoid litigation, and to prevent culpable companies from being held liable for damages on a class-wide basis. Courts unfortunately have sanctified this perversion making consumers all across worse off and more vulnerable to harm from corporations, big finance, and big business. This article suggests how an individual consumer like you can use this legal perversion to her advantage as a defense to a lawsuit filed by a debt buyer.[1]
Most debt-buyer[2] lawsuits are attempts to collect charged-off credit card debts. In turn, most of the underlying credit card agreements in these lawsuits contain mandatory arbitration clauses. These are the agreements that you can use against the debt buyers to compel the debt buyer to arbitrate its claim against you. But before getting to the mechanics of compelling arbitration, you may ask why arbitrate?
I. Why Arbitrate?
There are several very good reasons to want to take your debt-collection to arbitration:
Bringing a debt-collection lawsuit in Kentucky is cheap and ridiculously effective. Typically, the costs for filing a collection lawsuit in a Kentucky District Court is $125.00 or less and filing a collection lawsuit in a Kentucky Circuit Court is $150.00 or less.[3] In something like 95% of these cases, the defendant never appears and the debt collector is able to get a default judgment against the consumer with no additional court costs. But not so in arbitration.
An arbitration is carried out by a private arbitrator. Under most credit card arbitration agreements, the debt buyer has to pay all of the arbitration fees, which can run from $2,000.00 to $4,000.00. Moreover, unlike in a court case, the debt buyer cannot recover its court costs in the arbitration award. So in an arbitration, the debt buyer has to pay much more and cannot shift these costs to the consumer. Many times, the debt buyer will do the math and elect not to pursue the arbitration based on a simple cost-benefit analysis.
Additionally, the increased costs of arbitration gives you the consumer a great deal of leverage should you wish to settle the debt.[4] That is, the debt buyer, or debt-buyer’s counsel, will be much more open to reasonable settlement offers. If you do settle, there are two things you must make conditions of the settlement: do not sign an agreed judgment and require the debt buyer to delete the trade line from your credit report.
Taking a collection action out of the court system is HUGE advantage for most collection defendants.
First of all, the arbitration process is not subject to court rules of procedure or evidence. Debt collectors use the legal system to their utmost advantage by using their knowledge of court rules to intimidate and roll over consumers who have no knowledge or experience with these rules. In particular, debt collectors use discovery to trap defendants into inadvertently admitting liability and summary procedures to deny the defendant his day in court. The debt buyer loses all those advantages in an arbitration. Instead of rules and procedures, each side gets to make his or her case to the arbitrator in an informal proceeding, usually a telephonic conference.
Counsel for debt collectors appear in the court system in front of the same judges day after day. Judges and debt collection counsel know each other and often friendly. This is not meant to impugn the integrity of judges, but familiarity does breed bias in the debt-buyer’s counsel’s favor, especially in the absence of a defense or against unknown, unrepresented consumer. Debt buyers lose this advantage in an arbitration. The arbitrators are randomly selected. Further, because debt buyers arbitrate so few cases the opportunity for such familiarity simply does not arise.
In an arbitration, the debt buyer loses the ability to turn its junk debt into a super debt. Debt buyers bring suit for purposes of obtaining a default judgment against the consumer. Judgments are super debts, subject to a long statute of limitations, and which allow the debt buyer to use the force of government to seize your assets.
The statute of limitations for a judgment is ten years under Kentucky law. But the debt collector can easily reset the limitation period by making any attempt to execute on the judgment. So for intents and purposes there is no statute of limitations on judgments in Kentucky.
And armed with a judgment, a debt buyer can garnish 25% of your wages and wipe out your bank accounts. A debt buyer can also file a judgment lien that attaches to any real property you own. This makes selling or buying any property problematic.
Finally, a judgment appears on the public-record section of your credit report. This can result in a reduction in your credit score of 40-60 points. But an arbitration award against you does not appear on your credit report. One word of caution, a successful claimant in an arbitration case can reduce the award to a judgment. Of course, you have the right to pay or settle an arbitration award before it is reduced to judgment.
II. Compelling Arbitration
Moving to compel arbitration occurs inside the debt-collection lawsuit. So you it requires the use of court rules of procedure and evidence. I am very familiar with this process and have been successful in moving to compel arbitration in several cases. I can represent you and bring the motion on your behalf for a very reasonable fee. I can also draft the motion for you to file and argue yourself for even less.
If you’ve been sued by a debt collector, please call or email me today.
[1] Disclaimer: This article is not intended to provide legal advice. The information contained herein (legaleze so that you know I’m serious) is for informational purposes only.
[2] There are several active debt buyers in Kentucky that regularly file suit to collect debts, including: Midland Funding, LLC; Portfolio Recovery, LLC; Calvary SPV I, LLC; and LVNV Funding, LLC.
[3] These costs are so cheap because public tax dollars subsidize and fund the court system.
[4] The two main reasons you may want to settle the debt are to (1) pay your debts, and (2) clean up your credit report.
New News (to me anyway)
/in Uncategorized /by Hays LawsonHere are some recent stories I found interesting that intersect with practice:
ID Theft is on the Rise
The FTC received 490,000 Identity Theft complaints in 2015. This represents a “47 percent increase over the prior year, and the Department of Justice estimates that 17.6 million Americans were victims of identity theft in 2014.”
College Students and ID Theft
According to IDT911, here are three types of Identity Theft that College Students are particularly vulnerable to:
The Rich are more Worried about ID Theft than Terrorism or Illness
Nearly three-fourths of high net worth investors are worried about identity theft, ranking it higher than terrorism (65 percent) or a major illness (56 percent), according to a new Morgan Stanley Investor Pulse Poll.
Has Unifund Garnished you? We can help you fight back.
/in Uncategorized /by Hays LawsonHas Unifund CCR Partners or First Resolution Investment Corporation (“FRIC”)[1] garnished your wages or bank account? If so, chances are very good that Unifund has taken money from you that it has no legal right to recover from you. We can help you get that money back in addition to up to $1,000.00 in statutory damages.
Unifund is a third-party “debt buyer.” It does not lend money or originate credit like credit card companies and banks. It doesn’t make or produce anything. Instead, it buys defaulted accounts from original creditors like Bank of America, FIA card services, Capital One, Chase, Providian, Synchrony Bank and other creditors. Debt buyers are also considered debt collectors and have to comply with the federal Fair Debt Collection Practices Act (FDCPA). Unifund is very active in the Commonwealth of Kentucky. We have recently discovered that Unifund has a pattern and practice of adding fees and costs to garnishments that it has no legal right to recover. And Unifund still garnishes and enforces judgments with usurious interest of 24% or more. This is unlawful.
It is an express violation of the FDCPA for a debt collector to collect more on a debt than is legally owed on the debt. If Unifund violated the FDCPA by garnishing your wages or bank account, we can sue Unifund under the FDCPA on your behalf at no cost to you. We can represent you for no cost because under the FDCPA, Unifund has to pay our fees and costs if we win or settle with Unifund. We are so confident of our ability to get a judgment or settlement against Unifund and at least $1,000.00 for you, that we are happy to take this risk.
Please call or email us today to see if we can help you recover what Unifund or FRIC took from you illegally plus $1,000.00 in statutory damages.
[1] Unifund purchased all of FRIC’s assets in 2015.
ABC Breaking News | Latest News Videos
Are Judgments or Tax Liens Hurting your Credit Score?
/in Credit Reporting Issues /by Hays LawsonJudgments and tax liens on your credit report are some of the worst negative items on your credit report. “It’s estimated that each judgment and collection account entry can reduce a FICO score from 15 to 40 points. The severest detrimental effects come from entries that involve public records, such as judgments, and information from an original creditor, such as tradeline information.”[1] “[A]dverse public records, which include [judgments] are considered by the FICO score. Your score can be affected by the mere presence of an adverse public record, whether paid or not.”[2] As for tax liens, these “are considered very negative and can remain on your credit report longer than any other item. Unpaid tax liens remain part of your credit report for 10 years, and paid tax liens remain for seven years, so it definitely is important that you get it removed if it does not belong to you.”[3] While paying off a judgment or tax lien will only have a small incremental increase in your credit score, many creditors will not extend your credit as long as a judgment or tax liens remains unpaid regardless of the judgment’s or tax lien’s effect on your credit score.[4]
Despite the severe consequences of unpaid judgments and tax liens on credit reports and the ill effects on a consumer’s ability to obtain credit, the Credit Reporting Agencies have a demonstrated pattern and practice of failing to update consumer credit reports to reflect that judgements and tax liens have been satisfied and paid. This is a particular problem for Equifax and Trans Union. In fact, both Equifax and Trans Union recently resolved class actions against them in Virginia over this very issue. Equifax paid three million dollars[5] to settle and Trans Union paid over 1.4 million dollars to settle.[6]
False information as to the status of judgments on your credit report could be hurting your credit score and your ability to get credit. If you suspect that this might be happening to you, please call or email us today for a free credit report analysis and review.
[1] http://www.bestcredit.com/credit-ratings-advanced-strategies-for-fico-scoring/
[2] http://www.myfico.com/crediteducation/questions/public-records.aspx
[3] http://www.experian.com/blogs/ask-experian/tax-liens-and-credit-scores/
[4]http://www.answers.com/Q/How_many_points_on_your_credit_score_is_paying_off_a_judgment_worth
[5]https://topclassactions.com/lawsuit-settlements/lawsuit-news/256019-equifax-reaches-settlement-in-fcra-class-action-lawsuit/ (“Equifax agreed to a $3 million class action settlement that would resolve claims that the company violated the Fair Credit Reporting Act. As part of the settlement, Equifax will remove any judgments from Virginia state court from its consumer database.”)
[6] https://topclassactions.com/lawsuit-settlements/lawsuit-news/10036-trans-union-reaches-class-action-settlement-inaccurate-credit-reports/ (“Trans Union, LLC has agreed to pay up to $1.4 million to consumers who obtained a credit report with incorrect information that may have impacted their financial options as part of a class action lawsuit settlement.”)
PRA Garnishing your pay or your bank account?
/in Uncategorized /by Hays LawsonHas Portfolio Recovery Associates, LLC (“PRA”) garnished your wages or bank account? If so, chances are very good that PRA has taken money from you that it has no legal right to recover from you. We can help you get that money back in addition to up to $1,000.00 in statutory damages.
PRA is the second biggest, publicly-traded third-party “debt buyer” and debt collector. PRA does not lend money or originate credit like some credit card companies. Instead, it buys defaulted accounts from original creditors like Citibank, Synchrony Bank, Bank of America, FIA, Capital One, Chase, or other creditors. Debt buyers are also considered debt collectors and have to comply with the federal Fair Debt Collection Practices Act (FDCPA). PRA is very active in the Commonwealth of Kentucky, bringing thousands of lawsuits a year.
The Consumer Financial Protection Bureau found that PRA
We at Lawson at Law, PLLC have recently discovered that PRA has a pattern and practice of adding fees and costs to garnishments that it has no legal right to recover.
It is an express violation of theFDCPA for a debt collector to collect more on a debt than is legally owed on the debt. If PRA violated the FDCPA by garnishing your wages or bank account, we can sue PRA under the FDCPA on your behalf at no cost to you. We can represent you for no cost because under the FDCPA, Midland has to pay our fees and costs if we win or settle with PRA. We are so confident of our ability to get a judgment or settlement against LVNV Funding and at least $1,000.00 for you, that we are happy to take this risk.
Please call or email us today to see if we can help you recover what Portfolio Recovery Associates, LLC took from you illegally plus $1,000.00 in statutory damages.
LVNV Funding, LLC Garnishing your pay or your bank account?
/in Uncategorized /by Hays LawsonHas LVNV Funding, LLC garnished your wages or bank account? If so, chances are very good that LVNV Funding has taken money from you that it has no legal right to recover from you. We can help you get that money back in addition to up to $1,000.00 in statutory damages.
LVNV Funding is a third-party “debt buyer.” It does not lend money or originate credit like some credit card companies. Instead, it buys defaulted accounts from original creditors like Bank of America, FIA, Capital One, Chase, or other creditors. Debt buyers are also considered debt collectors and have to comply with the federal Fair Debt Collection Practices Act (FDCPA). LVNV Funding is very active in the Commonwealth of Kentucky, bringing thousands of lawsuits a year. We have recently discovered that LVNV has a pattern and practice of adding fees and costs to garnishments that it has no legal right to recover.
It is an express violation of the FDCPA for a debt collector to collect more on a debt than is legally owed on the debt. If LVNV Funding violated the FDCPA by garnishing your wages or bank account, we can sue LVNV Funding under the FDCPA on your behalf at no cost to you. We can represent you for no cost because under the FDCPA, LVNV Funding has to pay our fees and costs if we win or settle with LVNV Funding. We are so confident of our ability to get a judgment or settlement against LVNV Funding and at least $1,000.00 for you, that we are happy to take this risk.
Please call or email us today to see if we can help you recover what LVNV Funding, LLC took from you illegally plus $1,000.00 in statutory damages.
Midland Funding Garnishing your Pay or Bank Account?
/in Uncategorized /by Hays LawsonHas Midland Funding, LLC garnished your wages or bank account? If so, chances are very good that Midland has taken money from you that it has no legal right to recover from you. We can help you get that money back in addition to up to $1,000.00 in statutory damages.
Midland Funding, LLC is a third-party debt collector. Midland buys old debt, often charged-off credit card debt, for pennies on the dollar. Midland Funding is part of the Encore Capital Group, Inc., which is a publically-traded company and one of the largest debt collectors and debt buyers in the world. According to a recent Consent Order that Encore Capital reached with the Consumer Financial Protection Bureau, Encore receives and “an average of 30,000 written disputes and complaints and 10,000 oral disputes and complaints directly from Consumers in a typical month relating to Encore’s Debt collection and credit reporting,” and another “100,000 Consumer disputes” made with consumer reporting agencies.
As a debt collector, Midland is subject to the Fair Debt Collection Practices Act (“FDCPA”). It is an express violation of the FDCPA for a debt collector to collect more on a debt than is legally owed on the debt. If Midland violated the FDCPA by garnishing your wages or bank account, we can sue Midland under the FDCPA on your behalf at no cost to you. We can represent you for no cost because under the FDCPA, Midland has to pay our fees and costs if we win or settle with Midland. We are so confident of our ability to get a judgment or settlement against Midland and at least $1,000.00 for you, that we are happy to take this risk.
Please call or email us today to see if we can help you recover what Midland took from you illegally.
Free Credit Report Review
/in Uncategorized /by Hays LawsonWe help fix credit report errors. We are not a credit repair agency. Rather, our free credit report review is designed to locate actual errors on your credit report and to offer proven solutions as to how to correct these errors. In particular, with your help, we review credit reports for errors resulting from:
Please call or email us today to set up your free credit report review.
Tips for Increasing your Credit Score
/in Credit Reporting Issues /by Hays LawsonThese tips for increasing your credit score are provided for information purposes only and is not intended to be legal advice.
Why your Credit Score is Important
Your credit scores determine whether you can finance a car or a house, get an apartment and possibly whether you will be hired for your next job. If you do qualify for a loan, your credit score will determine how much interest you’ll pay. And insurance companies, cable companies and even utility providers use your credit score to determine the rates or deposit amounts to charge you.
Things you can do to Increase your Credit Score
How these Steps Improve your Credit Score
Stop Using Credit Cards/Increase Payment Amounts
Stop using credit cards and paying more lowers your credit utilization rates. Your credit utilization is a critical factor in determining your credit score. As explained by Credit Karma:
A sure way to decrease your credit utilization (and hence increase your credit score) is to stop credit card purchases and continue or increase regular payments on your credit cards.
Payoff Your Credit Purchases in Full Each Month
Notwithstanding the advice above, you can improve your credit score by making small credit card purchases and promptly and timely paying off the full amount each month. As explained by Credit.com:
Raising your credit score is one of the best ways to gain a greater sense of financial stability in your life. Taking the necessary steps and following through on your commitments can make your credit score jump up even quicker than you may think is possible. Setting payment reminders on your phone, computer, or other devices helps to remind you to make payments on time.
Review Your Credit Reports Regularly
Regularly reviewing your credit report is a good way to track the progress of your efforts to improve your credit score, including keeping a track on the credit utilization and payment histories. Regular credit report reviews helps you catch false or incorrect information on credit report early. Credit vigilance is particularly important as you prepare for applying for credit for important purchases such as a home or a car.
You have the right to one free credit report each year from the big three credit reporting agencies: Equifax, Experian, and Trans Union. You can get these reports here: www.annualcreditreport.com. Trans Union allows you to access your Trans Union and Equifax anytime you want for free at www.creditkarma.com. Experian allows you to access your Experian credit report at www.freecreditreport.com. You can also get credit report information and credit scores at www.wallethub.com.
Don’t Close Your Accounts
Many people don’t know this: Closing credit card accounts can hurt your credit score. As explained by Bankrate.com, closing credit card accounts:
(1) negatively impacts your credit-utilization rate (less available credit means a greater credit usage rate even if you don’t increase your credit usage);
(2) reduces the length of your credit history, which is another factor that goes into the computation of your credit score; and
(3) changes your credit-usage mix. FICO credit scores consider your mix of credit types; the more diverse, the better for your score. Mix of credit contributes 10 percent to your overall credit score.
Don’t Apply for Credit Needlessly
Applying for credit can lower your credit score. Credit applications result in credit inquiries that show up on your credit reports and are visible when a lender pulls your credit report. These are called “hard inquiries.” According to MyFico.com, each hard inquiry can decrease your credit score by a little less than five points each. So keep those credit applications to a minimum.
Take Out a Secured Loan or Credit Card
Here’s another piece of advice that is seemingly contrary to the advice it follows. But the truth is, you have to have credit in order to improve your credit score. With secured loan or a credit card, you borrow from yourself to build a positive credit history. With a loan, the loan goes straight into a savings account, and you make monthly payments until the loan is paid in full. Then you get your money back, minus a small amount of interest. Some credit unions offer this product to members, calling it a Savings Secure loan. With a secured credit card, you deposit money in a bank and get a card with a limit up to the amount you deposit. You pay the credit just like you would with an unsecured credit card.
An Austin startup, www.selflender.com, launched its version in March 2016, in partnership with Austin Capital Bank. You get a $1,100 loan with an interest rate of about 11 percent, which goes into an FDIC-insured one-year certificate of deposit in your name. You pay $12 to get the loan and, a month later, start paying $97 a month. Those payments get reported to the major credit bureaus. At the end of the year, you’ve paid off your loan and the CD has matured. So you’ve paid $1,176 and gotten back $1,101.10 (you earn a little interest on the CD), which means you’ve paid about $75 to Self Lender.com.
Take Out a Micro Loan
Lenny (www.getlenny.com) is a mobile lending app that targets consumers between the ages of 22 and 35. It is a sort of microlender that reports your payments to two of the three major credit bureaus, Lenny can help you build your credit score and can be a cheaper way to get emergency funds than going to a payday lender or getting hit with multiple overdraft fees.
For members, who pay $2 a month, Lenny can make loans from $100 to $10,000 in three minutes. You can then transfer the money to your bank account or send it to a friend who uses Lenny. If the loan is paid back within 30 days, there is no interest charge. The app has lots of prompts to alert you when you’re doing something that could hurt your credit score, such as getting too close to a payment date while having drawn down 30 percent or more of your credit line.
We offer free credit report reviews. We can put together a solid plan for fixing the errors on your credit report. If you’d like us to take a look at your credit report, please call (502-473-6525) or email (james@kyconsumerlaw.com) us today.