If you’re like most people who come into our office for a consultation, you consider bankruptcy to be an option of last resort. Like you, these people have tried other approaches to getting their debt under control or improving their credit rating.
If you are trying to improve your credit score, you may have come across agencies that promise to “repair” your credit score. Before you pay someone, do your homework. You should also know about the Colorado Credit Services Organization Act which regulates these credit repair agencies.
The Act provides that:
Before you sign a credit repair agreement, the credit repair company must disclose to you in writing:
- How you can correct your credit report yourself under Colorado and federal law;
- Your right to cancel the agreement for any reason within five working days (a detachable cancellation form must be included);
- The total fee, conditions of payments, and a full and detailed description of the services to be performed; and
- A copy of your credit report, with the incorrect information indicated.
Note: The Federal Telemarketing Rule prohibits credit repair companies from collecting any advance fees other than those connected with the cost of obtaining credit reports.
Consumers should beware of the following credit repair practices:
- Promises to remove any negative information or bankruptcies from your credit report. This will occur only through the passage of time. Credit repair companies may be able to temporarily delete information, but once it is re-verified, it may again appear on your credit report.
- Requests for advance payment for services, including by post-dated checks. This is illegal under federal law and it is difficult to recover any money paid in advance.
- Promises to improve your credit standing by showing you how to obtain and use a tax identification number or a false social security number in place of your actual social security number. This may be illegal.
Some other reminders:
- You can correct any error in your credit report yourself, without paying a fee, by contacting the credit bureaus directly.
- Do not pay advance fees to a credit repair company.
- Do not contract with or send money to an out of state credit repair company. Because it is difficult to enforce Colorado law against out of state companies, it may be impossible to recover your money if problems arise.
- If you decide to use a credit repair company, keep a record of all payments you make by keeping the canceled checks, or getting receipts for payments by cash or money order.
If you have questions about what the benefits of bankruptcy are over other types of debt management approaches, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.
