Archive for the ‘Credit reporting’ Category

Calls for an Unpaid Medical Debt by CMRE, but Physician’s Office Said No Outstanding Bills

Thursday, February 14th, 2013

Question: I started receiving calls on an unpaid medical debt. The caller ID shows CMRE, which I found online as a debt collection agency in California that collects medical bills for hospitals and physicians. I did not receive anything in writing from them and when I get one of these calls, they immediately ask for my SSN, then hang up when I refused. I have now learned that CMRE shows on my credit report for a few hundred dollars. What can I do to get the calls to stop and the item off my credit, as I have perfect credit? Can I ever get my good credit restored?

My response:
CMRE is a large debt collection agency that collects unpaid medical bills, either because the bill was not covered by the patient’s insurance, the unpaid insurance co-pay, or the patient had no insurance coverage and did not qualify for indigent care. I have dealt with this debt collection agency’s collection efforts against my clients and sometimes had to defend my clients in court from a debt collection lawsuit filed by CMRE’s attorneys.

As a consumer, never reveal your SSN, DOB, or DLN to anyone who calls you, not even to your own bank or broker, because there is too much identity theft and you don’t want to add yourself as another victim of a phone scam. Caller ID’s are convenient, but they do not guarantee the identity of the caller, because identity thieves and other hackers know how to spoof a caller ID. Even hackers may use a caller ID of the police, sheriff, IRS or FBI. The agencies will not call you and ask for your SSN or other information. If you are called and asked to give out your personal numbers, you should check independently that this is a representative of the company that you are doing business with, such as by hanging up, then calling their legitimate number and getting to the extension of the representative.

Start by sending a letter by U.S. Certified Mail to both the physician’s office and CMRE, which address should appear on your credit report. Your letter should be in the form of my free sample letter #1.1, Notice of Dispute and Request for Verification, which I’d send to the debt collection agency. The CMRE letter should state that you never received anything in writing from them.

Your Certified letter to the physician’s office should confirm the conversation that you had with the office manager or billing assistant that they saw no outstanding bills under your name and add a sentence asking that they send you a copy of the bill that they assigned to CMRE. Also, ask them why the bill was not submitted to your insurance company or what the status of the insurance payment is. Be sure to keep a photocopy of the signed letters.

Your dispute letters serve several purposes, including forcing CMRE to indicate the account is disputed with the credit reporting agencies, which should exclude the account from affecting your credit scores. If CMRE does not verify the debt in writing, then they should also stop reporting the account to the credit reporting agencies, or be at risk for violating your rights as a consumer under the Fair Debt Collection Practices Act (FDCPA). Such violations can result in damages and your attorney’s fees being awarded, if you prevail in court.

Your letters also make it clear that their failure to send you the letter required by law does not mean that you will wait for it to arrive some day and not proactively document the situation to protect your rights. In my years of dealing with debt collection agencies, if they fail to provide you with documentation promptly, either they are trying to get you to pay money on an account where there is a problem or their records are so badly screwed up that you will not know if they do anything correctly. Either way, the consumer should not tolerate their credit being harmed and annoying phone calls. Putting your position in writing, with the use of my sample letters, will let you sleep better now that you have firmly put the burden on them to respond in writing and provide you with written documentation.

Robert Stempler
Twitter @RStempler


Identity Theft Victim Exploring Credit Protection Alerts

Wednesday, December 5th, 2012

Question: I am the victim of identity theft of a credit card that I had no idea was opened using my name and Social Security Number. I cannot believe how many hours I have spent trying to resolve this and it is still far from over. I found out about it when my wages were being garnished by the Sheriff, who was ordered to do it by the Superior Court of the State of California. A judgment was entered several years ago, but I had no idea and I was never served with the papers or even made aware of it by the debt collection lawyers who sued me. I cannot believe how much of a hassle this is, making many phone calls to rude debt collectors, who repeat the same mantra: You must pay your debts. I have and I do. What should I have done differently? Would I have been able to stop this, had I subscribed to Lifelock or another company that is supposed to warn me of changes to my credit and protect me?

My response:
You could probably have found this on to your credit and take protective measures yourself a long time ago. In Consumer Reports magazine, their January 2013 issue, page 13 advises consumers “Don’t get taken guarding your ID.” The article explains that American consumers spent $3.5 billion a year for identity theft products, but suggests that DIY measures are as effective, and can be done for free or very little. In comparison, a paid monitoring service runs from $120 to $300 per year and the marketing hype “can be deceptive” for these ID theft products. Also, be aware of the fine print warnings that come with such services.

First, as explained in the Consumer Reports’ article, this type of ID theft, “new account fraud,” is uncommon. Though I have represented a number of consumers who were the victim of new account fraud, the number is small compared with how many consumers I have represented on debts that they recall opening and charging.

Second, the article states that the credit monitoring is flawed in two key ways. One flaw is false warnings to the consumer, such as emails or text messages to the consumer more often than needed. The other flaw is that it can take too long to appear on your credit, such that a consumer would not be aware of it for weeks or months after the fact.

In my blog posting from a while back (Make Your New Year Bright), I suggested visiting at the start of the new year and check their credit for free, then dispute errors found. I also have a legal guide on for victims of identity theft, which also included checking credit as an initial step and suggests a security freeze, if the consumer learns that their credit has been compromised. The article in Consumer Reports recommends a security freeze and going to three times a year, and get only one of the three credit reports at each visit, such that you end up with a different free credit report with each visit, to cover you throughout the year, at intervals of four months. That’s a great idea and totally free, no subscription, though it does require keeping track and having reminders when to make a new request and which credit report to obtain from Experian, Equifax, or Trans Union.

Consumers Reports proposes one other alternative to high-priced subscription services: a monthly alert for $5 at At $60 per year, it is not an excessive price, and perhaps they have periodic sale prices or discount coupons for signing up for a long term, but for some people is still too expensive, given how low the risk of new account fraud.

Many creditors and financial institutions will be (if they are not already covered) required by the Federal Trade Commission to put into place protections to prevent identity theft “red flags,” in particular to spot suspicious activity and prevent escalation into a “costly episode.” Here’s the link to the proposed regulation, recently issued by the FTC:

The most important thing a consumer can do is to check their credit at least once a year and examine each credit report closely for errors and inquiries of their credit reports that they did not initiate or are unrelated to their legitimate creditors or debt collection agencies collecting on unpaid legitimate accounts, then complete the dispute process, preferably in writing.

The other thing that Consumer Reports did not mention in this article, but other articles suggest at, is to be proactive in protecting your passwords and sensitive personal information from persons who should not have access to it. shred all papers with a cross cut or confetti shredder, and protect yourself from online and telephone scams. The site has more information on this as does my friend, attorney Mari Frank’s web site:

Robert Stempler
Twitter @RStempler

How much should I offer to settle a debt collection lawsuit?

Friday, August 10th, 2012

Question: I’ve never been sued before, this is all new. I read your Settlement Guide #1 on, which explained many of my questions. I’m sure that I will read your other two Settlement Guides, once I know how much to offer to settle. Should I offer 10% of the amount stated in the lawsuit?  Bankruptcy is something I want to avoid.  I have a home with some equity in it, but not much. The lawsuit is not by the bank, but filed by a debt collection agency, so shouldn’t they be willing to settle for much less?

My response:
How much to offer is probably the top question on everyone’s mind.  First, understand the debt collection agent’s perspective.  The goal of the collection attorney and their agents is to maximize the recovery from each case and turn a profit for a particular portfolio of debts.

Time is money, so the sooner the funds are received, the less costly a settlement proposal can be.  If you can pay the settlement funds soon (such as within 30 to 90 days), that will usually make the settlement a lower dollar amount.  Settlements can often be approved with payments for 12 to 36 months, sometimes longer. Some companies will agree to waive interest, so long as the payments are received timely and don’t bounce.  Some debt collection agencies insist on full payment of the principal amount, if the settlement payments are made over a year or more.

Then, there are those debt collection agencies who like to squeeze everyone, because they believe they have the upper hand over unrepresented consumers.  They squeeze the debtor consumer into paying every cent, even obnoxious rates of interest and attorney’s fees.  Why bother settling if there is almost no difference between what would be the result if you go to trial and lose and making settlement payments of the full amount plus interest, etc?

The risk of heavy-handed debt collection practices is that when push comes to shove, people will learn their options (see the first video on my website’s home page).  Once they know their options, if the debtor cannot get a reasonable, affordable settlement, they may reject settlement and see if the judgment will be enforced, file bankruptcy, or hire an attorney to defend them in the collection lawsuit and likely negotiate fairer settlement terms.

Ten percent up to half of the amount in the lawsuit might be accepted by the collection company, if the debtor can show at least one good reason why the company risks get nothing and wasting its time and money in the case, if they don’t settle.  For instance, perhaps the lawsuit was filed too late, well past the statute of limitations, which should result in immediate dismissal if proven.  Perhaps the debtor has many debts and their income is such that they qualify for a Chapter 7 Bankruptcy, in which case if the debtor is faced with an unreasonable settlement posture, the bankruptcy option may be explored and the debt collection agency may get nothing.

Even if the debt collection agency purchased the debt for less than ten percent of the amount of the unpaid principal, unless the lawsuit was not filed timely or the debtor is a good candidate for bankruptcy, I would not expect the company to accept 10%. That is because they speak with debtors every day who are unable to pay.  In their view, they must turn enough accounts into a profit over the purchase price, or they will no longer have enough income to pay employees and other business expenses.

There really is no magic number to offer or that all debt collection agencies will find acceptable, each case can be negotiated, if a difficult situation is properly and accurately presented.

Robert Stempler
Twitter @RStempler

Financial Columnist’s Advice on Old Credit Card Debt May Mislead Money Talk Readers

Monday, July 16th, 2012

Q & A Posted on LA Times Money Talk Section on July 15, 2012: Link to Money Talk

My response:
This question concerns a credit card debt that was charged off in 2007. That means that it has not been paid since 2006 or 2007, because banks usually charge off accounts 180 days or earlier, after not receiving any payment.

I agree with the columnist, Liz Weston, that contacting the bank that issued the credit card would not be productive.  Within one year of default and lack of payment, banks almost universally sell the credit card account to a debt buyer or sue in their own name.

However, this debt has not been paid for more than four years, making it almost certain that the debt is well beyond the statute of limitations, thus discharged under California law.  See my blog on the Don’t Pay a Dime Strategy, using California law at this DPAD Link.

Ms. Weston’s response should have explained that the debt is most likely discharged, because the statute of limitations had long since expired, so that the consumer has the upper hand on this and should not offer to pay much at all and should be clear in his or her communications that this debt is discharged by the already-expired limitations period.

My concern is that the consumer may contact the debt collector and offer in writing to pay the debt. Some debt collectors may potentially try to use this written offer or actual payment to claim that the consumer has revived the statute of limitations period on the unpaid balance, giving them another four years to file a debt collection lawsuit. I disagree with that possible position.

Some debt collectors incorrectly believe that they can report any payment received as “last activity” on the consumer’s credit, thus renewing the 7.5 year period for credit reporting.  I disagree with that possible position.

Thus, I hope that the LA Times removes this posting, so its readers would not be mislead.

Robert Stempler
Twitter @RStempler

Options following Entry of A Default Judgment by Credit Card Bank

Friday, July 6th, 2012

I was sued by Capital One on an outstanding credit card debt.  The debt collection attorney filed a request to enter default judgment for $7000. The Court granted a judgment and I believe that they are now trying to get into our bank account.  What are my options at this stage of the case?  We have no real estate or assets, except for Social Security.  What happens to this on our credit report if we don’t file bankruptcy and are unable to pay it?

My Response:
The picture that you have painted, so far, is someone whom experienced lawyers would likely term “judgment proof,” with sufficiently low income to qualify for a Chapter 7 Bankruptcy.

Following entry of this default judgment, here are your options:
a. Promptly file motion to set aside the default judgment within the proper time limits, to be able to defend the court case on its merits. The Courts insist that the defendant file this motion soon after learning of the default judgment, if they had not been served or had actual notice.
b. May a large payment or several payments towards the default judgment, until they file a satisfaction of judgment. Borrow the settlement funds, if needed. You may should have an understanding in writing of how much in settlement payments or a fixed sum this would be, or you may end with a misunderstanding of how much it will cost to satisfy this judgment in full.
c. Do nothing, which would let them to try enforcing their judgment against whatever they can find to lien, that is not exempt, though it does appear to me that your bank account is exempt if it is only from Social Security benefit deposits.
d. File bankruptcy.  If you qualify for a Chapter 7, then this and your other unsecured debts would be discharged.  If you don’t qualify for a Chapter 7 for whatever reasons, then you could file a Chapter 13 Repayment Plan Petition and make payments through the trustee and pay it off over several years, interest free.

The benefits of resolving this judgment soon are that you don’t want this $7000 judgment sitting out there gaining (accruing) interest at the rate of 10% per year, which is $700 every year in your case, plus possible other costs and attorney’s fees, as applicable to the judgment.

Also, if they enforce this judgment by levying your bank account, it can be very embarrassing to have your checks bounce and to go to the store with a debt card that is refused, if they enforce a levy and the bank accepts it.  You may be entitled to all your money back, by filing a claim of exemption, but having bounced checks is considerably damaging to your reputation. Plus, and unpaid judgment can be appear on your personal credit reports until paid.

Robert Stempler
Twitter @RStempler

Credit Reporting of Non Existent Small Claims Court Money Judgment

Tuesday, May 15th, 2012

My credit report shows a money judgment from small claims court, but that debt collection case was dismissed when we settled before the case was called.  I have a document showing dismissed and I am applying for a job that may want to check my credit records.

My response:
You probably had a local company sue you in small claims court to collect its own debt, because debt collectors typically are not permitted to enforce in small claims court debts that were assigned to them.  (Cal. Code of Civil Procedure, Section 116.420, subd. (a).)

Please check the small claims court’s record of that case to verify it was dismissed.  Then send a copy of the case record (showing no money judgment, dismissed) with a cover letter to dispute this on your credit report. My Firm’s web site’s ( sample letter 3.1 would be a good form to follow and already has the addresses for the big three credit reporting agencies. If you only need to dispute with one of them, then remove the other addresses and send it to the one that is reporting this money judgment. Please also be sure that you follow the letter writing tips, such as keep a copy for your records and send by U.S. Certified Mail, return receipt requested. Once disputed, the agencies by law must investigate or remove within 30 days of receipt.

If you find that the court mistakenly entered a money judgment in the collection case in small claims court, then before you can dispute this on your credit reports, you must get the court’s record corrected and the judgment reversed (vacated, set aside).  You may need to file a motion with the court to set aside an invalid default judgment.  See Cal. Code of Civil Procedure, Section 116.740, for the procedures to vacate an improperly entered default judgment.  However, it sounds as though you were properly served and appeared at the hearing, so that you may need to file in Superior Court a separate complaint in equity and have a trial to vacate the improper default judgment, taken without your consent.  This is a complex proceeding and you would be well advised to consult and retain experienced legal counsel to ensure that the case and law are properly presented, or the court may not grant the relief that you need.

Robert Stempler
Twitter @RStempler

Default Money Judgment Entered Over Two Years Ago

Sunday, March 18th, 2012

I just learned from reviewing my credit report that a default money judgment was entered against me in California Superior Court on an old credit card debt. I was never served. I checked online with the court for this case file. The judgment was granted over two years ago.  Is it too late for me to do anything to reverse this default judgment or is my only option to try to settle this judgment, with it remaining on my credit for several more years?

My response:
It becomes increasingly difficult to set aside a default judgment as months and years pass. The longer a default judgment remains on file without a proper motion to set aside being filed in the case, the more judges express reluctance to grant a motion to set aside, even when filed soon after the defendant learns of it.

Two years is one of the key milestones, because California Code of Civil Procedure, Section 473.5 provides a two-year window to set aside a default judgment that was not served on the defendant and the defendant did not have time to file a response in court before the default was entered.  In this case, the two years have expired, so this particular statute does not apply. Thus, it may not be used as grounds for a motion to set aside, after the two years have expired.

Though Section 473.5 is not available to you, it is still possible to set aside the default judgment, using the Common Law rules of Equity, which are preserved by the Constitution. This can be done either by a motion in the case or a new case being filed to challenge the default judgment. It is often preferable to file a motion, rather than file a new case, but if the motion fails, there are court cases that state the new case can be filed to set aside the default.

Many judges are aware of the separate complaint to set aside an old default judgment, and not as many are aware that a motion to set aside can be filed after two years, because there is no court of appeal case which states this cannot be done, using the Common Law rules of Equity. Thus, some judges mistakenly deny the motion, when they see it was filed more than two years after the default judgment date.

There are no easy forms to set aside a default judgment. Thus, trying to settle and have a satisfaction of judgment filed is always available. If you do not work in a job or industry that has special rules against having a money judgment against you, it may be simpler to try and settle without the extra paperwork and risk of trying to set aside the default judgment. The downside to this approach is that the plaintiff debt collection attorneys and their clients often will demand more to settle, if they have an outstanding judgment hanging over the defendant.

Once the case is settled and a satisfaction of judgment filed with the court, you can ask to have your credit report updated to show the satisfaction of judgment. Also, the account should now show a zero balance due, if you have settled the debt and make the payments required.
Robert Stempler
Twitter @RStempler

Sued on a Credit Card Debt and Worried About Credit Score

Sunday, March 4th, 2012

Question: I have been served with a credit card lawsuit on an unpaid credit card that I could not afford to keep paying the minimum every month. I am especially worried that this will lower my credit score.

My response:

If you manage to successfully resolve this lawsuit without having a money judgment entered against you, then the filing of a lawsuit should not reduce your credit scores at all.  However, I have gotten many calls over the years from people who tried defending a debt collection lawsuit by themselves, using ideas from a law book, an inexperienced attorney, or comments read online.  Some people convince themselves that in few hours of research, they can learn the secrets to be able outmaneuver an experienced debt collection lawyer.  Some web sites tout that mailing a couple of well-worded documents to the attorney and voila!, the judge will order the case dismissed. Not so. Not even close.

Were it that easy, why would debt collection agencies and national banks bother with hiring a lawyer and paying hundreds of dollars to a court for filing the case , then pay a process server to personally deliver the lawsuit?  Indeed, why would anyone file bankruptcy, if they could easily win a debt collection lawsuit with inexpensive “legal” forms, available online?

One more word of caution: don’t delay in dealing with this case, as that is a sure way that a judgment will be entered, which will show up on your credit report and harm your scores. See my prior blog posting on the four most common ways that a judgment can be obtained.

The most effective way to prevent harm to your credit score is with knowledgeable debt collection defense and understanding what is feasible, to prevent a money judgment from being entered against you. As Shakespeare wrote long ago, “First thing’s first.”  Resolving the credit card lawsuit without a judgment is how to prevent further reductions in personal credit scores.
Robert Stempler
Twitter @RStempler

Debt Collectors Checking Your Credit Reports Without a Court Judgment

Saturday, April 2nd, 2011

Can a zombie debt buyer or debt collection lawyers pull my credit reports, when they don’t have a credit card judgment on the original debt? Can they pull during the course their debt collection lawsuit against the consumer, before they have obtained a judgment for money?

Yes. Until the case is settled in full or paid in full or discharged in bankruptcy or discharged by operation of law (such as past the statute of limitations or dismissed with prejudice in court), the creditor and its assignees and agents can view the consumer’s credit report for purposes of collecting the debt.

The Fair Credit Reporting Act, 15 U.S.C. Sec. 1681b determines the situations when a company can view a consumer credit report, including debt collection agencies and their attorneys. Even without getting a judgment, they can view the debtor’s credit report because it is “in connection with . . . collection of an account of the consumer.” There are other parts of the statute which also give a creditor or debt collector the ability to review credit reports, if the debt is unpaid and remains a viable debt.

If you believe that someone has obtained your credit report without a legitimate purpose, as specified under the above section, then you should send them my sample letter 3.3 (link to free letters) by U.S. Certified Mail, return receipt requested. Please be sure to keep a copy and send the letter to the address on your credit report for the company listed under inquires, which you believe had no legitimate reason to obtain your report. Please also note that there is a statute of limitations, so stay on top of this or there will be nothing you can do about it in court, if you wait too long or find out about it too late.

Robert Stempler

Freebies that Make Your New Year Bright

Friday, December 17th, 2010

The best thing you can do to ensure that you are not the victim of identity theft and that there are no bogus default judgments filed against you by debt collection lawyers in the court system is to check your credit report.  Now is a great time to get your credit report, because it will help you start the coming year by cleaning your financial slate.

Anyone with a television or a radio knows how to get a credit report, because the advertisers want you to believe it is free and memorize their jingle.  Free credit reports do not pay for expensive TV commercials and radio spots. Charging you an annual subscription and other fees is how they “get ya” to help them make a profit.  Besides, a report that merges the big three credit reporting agencies into one, mish-mashed report can be difficult to decipher who is reporting what.

Instead, I advocate people order every 12 months their annual credit report from, which is a web site set up by Experian, Equifax, and Trans Union to comply with federal law that requires them to provide every consumer with a free credit report once per year.  Here is a link to the Federal Trade Commission that has more information about the annual free report: At this site, you can order one credit report at a time from each of the big three agencies.  For your privacy and protection, you must answer correctly some questions, such as your monthly mortgage payment, the name of the lender on your home mortgage, or how much was the original loan balance. The system allows you to print or save the report to your hard drive. If you save it, then you may print or view it on screen as many times as you like. If you exit without printing or saving the report, then the system will not let you view it for another 12 months for free.

To find out if there are any debt collection lawsuit default judgments against you, view the area on the report that shows public records.   Public records are court judgments, tax lien filings, and bankruptcy filings.  Some credit reports also show certain debt collections in this area.  There are other ways to see if a court has any judgments or cases against you, which is the subject of a legal guide I have on and another blog posting.

If the report contains any judgments, accounts, or inquiries by companies with whom you never had a credit relationship nor have authorized them to review your credit reports for an application for credit, employment, or insurance, then you may be the victim of identity theft or an attempt to steal your personal information and illegally use your credit. I prepared for a legal guide on how to protect yourself from identity theft, which is at this link:

My other web site has a free sample letter that you can send by Certified Mail to companies that you do not recognize on your credit report under the inquires section.  See sample letter 4.1 at:

Happy New Year,
Robert Stempler