Blog Archive for July 2009
Wednesday, July 08, 2009
Credit Limit Myths
I heard that it is important to take your credit card up to the limit once, then keep your balance low, is this true, is there any benefit
Wednesday, July 08, 2009
Class Action Lawsuit Against Credit Bureaus Dismissed
The following article was originally published by Greenville Online and was written by Eric Connor
An Upstate judge has tossed out a class action lawsuit against the nation's top three credit reporting agencies — a legal action that the judge said had involved a request for as much as $4 billion in damages.
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U.S. District Judge Ross Anderson's dismissal ended — at least for now — a three-year legal battle over whether Equifax Information Services, Experian and TransUnion wrongly allowed a credit provider's accounting practices to raise the cost of borrowing money for millions of people.
In his order, Anderson wrote that the class of 4 million plaintiffs that stretched from West Virginia to South Carolina couldn't prove that they were harmed by the practice or to what extent. The suit had sought $1,000 for each plaintiff, Anderson wrote.
“Had we not been successful, the result would have been devastating to the defendants,” former 4th U.S. Circuit Court of Appeals Chief Judge Billy Wilkins, who represented the agencies, said Wednesday.
James Ledlie, an attorney for the plaintiffs, said Wednesday his team is studying Anderson's decision and will decide what to do next. However, Ledlie said that forthcoming federal regulations governing reporting of credit limits could achieve the lawsuit's original purpose.
In nearly identical complaints filed in Greenville district federal court, the plaintiffs alleged that beginning in at least 2004, the agencies issued inaccurate information by failing to force one of the nation's largest credit providers, Capital One Financial Corp., to report credit limits on individual credit card accounts.
The information that credit reporting agencies gather is used to determine a credit score, which lenders use to determine the likelihood that a borrower can repay a loan.
At issue was how the credit reporting agencies would leave blank or report as $0 the "credit limit" entry for Capital One accounts provided in their reports. The lack of information caused credit scoring software to reflect an artificially lower credit limit, the complaints alleged, misrepresenting exactly how much available credit a cardholder had actually used.
Tuesday, July 07, 2009
The Credit Expert Witness, the next step in your credit career
Few people are in more demand but less in supply than the consumer credit expert witness. These individuals possess a truly unique understanding of credit reporting, credit scoring, credit damage, identity theft, and the various credit laws, which govern how lenders and credit bureaus access and use our personal data. This issue of this month’s CreditCRM monthly newsletter will be dedicated to a “who, what, where, when, to what extent, and why” conversation with a seasoned credit expert witness, John Ulzheimer, who founded www.creditexpertwitness.com and in September will begin training a small number of credit industry professionals on how to leverage their knowledge into becoming an expert witness.
The first question that must be answered is who can serve as an expert witness and what qualifications must they possess? “This is a very common question from someone who would like to perform expert witness work but has never done so and assumes that the lack of witness experience somehow disqualifies them”, Ulzheimer says. “This is simply not true. All experts have his or her first case. I had mine roughly five years ago when I served as an expert witness for the Credit Bureau of Baton Rouge in a case where a consumer was suing them.”
The Federal Rules of Evidence (FRE 702) requires that an expert witness be “qualified…by knowledge, skill, experience, training, or education.” The determination of whether a witness is qualified to serve is part of the Court’s “gate keeping” function. Whether or not an expert is qualified is judged with respect to the subject matter of the witness’s testimony. Having said that, Rule 702 is not so rigid as to demand an intimate level of familiarity with every component as a prerequisite to offering expert testimony.
According to Ulzheimer, “what this means is if you have a firm understanding of credit either through your work, your education, or knowledge gained through research then you’ll likely make for an effective credit expert witness. In fact, I’ve served as an expert in cases where the adversarial experts have never worked one day in any part of the credit industry. I’ve also gone up against an expert, several times, whose career in the credit industry ended almost two decades ago.” The point is that if you have a demonstrable understanding of the credit industry it’s going to be hard to argue that you are not qualified to serve as an expert witness. “You don’t have to have a PhD in credit to be a credit expert witness.”
The next question is exactly what does an expert witness do? Again, according to Ulzheimer, “your primary role is to offer your opinion on several issues. Among other topics, for example, were the actions of your client reasonable? Another could be whether or not a low credit score was truly caused by negligence or was it self-inflicted? Yet another example would be to offer an opinion as to whether or not damages sought by a plaintiff are inflated or in line. You also spend a great deal of time acting as a consultant for your client, whether it’s the plaintiff or the defense. I also spend a great amount of time assisting my clients with discovery requests.”
Does the expert have to live in the same state where the lawsuit has been filed? “Absolutely not”, says Ulzheimer who lives in Atlanta. “I’m on my 26th case and only one of them was filed in a Georgia court. I’ve got clients in two dozen states and do 95% of my work from my home office. The only time I need to travel is when I’m being deposed or testifying in court. One of the more common myths about serving as an expert is that you have to live in the same state where the case is filed, which is simply not true.”
When is your work as an expert performed? “From the expert’s perspective each case has a chronology of events that generally occurs sequentially. The complaint is filed by the plaintiff, a response is filed by the defendant, the plaintiff might file an amended complaint, documents are produced by both sides, one side discloses who their expert is, the other side hires and discloses their expert, an expert report is filed giving an opinion, the opposing side will have their expert submit their expert report challenging the other’s sides report, you go through a deposition, and then the case either goes to court or is settled”, according to Ulzheimer. “Obviously there’s more to it than that but as the expert you are involved in only certain aspects of the case, not all of them.”
How involved do you get with your client? “Every client is different and every lawsuit is different. I’ve had some cases where I did only a few hours of consulting work and then my work was done. On the other hand I’ve had some cases where I’ve been their expert for years and have done well over one hundred hours of work” says Ulzheimer. “The attorney will direct your work. He or she has a well thought out strategy and knows where they will plug in your expertise.”
Why is an expert witness needed in a credit related lawsuit? “I used to ask myself that very question until I read my first expert report, which was filed by a man who was a very popular expert witness who always represented consumers over lenders” says Ulzheimer. His report was full of so much false information about credit scores and what influences credit scores. I knew right then and there that I was brought in to offer balance to his assertions. I’ve also been a part of lawsuits where nobody involved understood how information was generally corrected on a credit report and the process involved with doing so. My opinion is that one side hires an expert to ensure that the other side doesn’t embellish or unintentionally fabricate facts about the industry or the tools used in the credit industry.”
Do you always represent one side or the other (a consumer versus or industry player)? Ulzheimer quickly fires back, “absolutely not and anyone who does can’t genuinely call themselves fair and balanced.” When pressed for more about his answer he gives his reasons. “Look, lenders and credit bureaus mess up, everyone knows this. Does that mean they are always wrong when they’re sued? No, it doesn’t. I am a firm believer in only taking on cases where I feel like I’m representing an argument that is fair and accurate, regardless of whom my client is. I sleep very well at night knowing that I haven’t sold out to one side or the other. Trust me, I’ve seen my share of garbage lawsuits where a consumer was dead wrong but was trying to shake down a lender, collection agency or a credit bureau. I also hate to lose, which drives me to do the best job I possibly can for my client regardless of whether it’s a consumer or a company from the credit industry.”
Why are you training people to become expert? Aren’t you hiring your future competition? “I don’t look at it that way. If I was worried about other experts then I wouldn’t have started doing expert work.” Ulzheimer continues, “I can’t keep up with the work and I turn away a lot of potential clients because of conflicts or I don’t want to argue their side because I don’t agree with them. But that doesn’t mean that they don’t deserve a great expert to passionately represent them. There were 5422 consumer credit lawsuits filed between 1/1/06 and 11/29/07. I predicted a sharp increase at the beginning of 2009 and I nailed it. So far in 2009 there have been over 4000 filed already, and over 500 in June alone. There’s simply too much work to be done and not enough good credit experts to do it. I think the credit industry would benefit from there being more qualified experts to serve it.”
Can you talk about the expert training in September? “Sure, we’re inviting a small number of credit industry professionals to go through three days of credit expert witness training. Knowing what I know now about the demand and the financial benefits of being an expert witness I wish there would have been something like this when I was getting started. I could have ramped up my case volume much more quickly. I also could have saved a ton of money by skipping the poor expert placement services.”
What is the normal hourly rate for an expert and how much time do you spend on each case? “Are you trying to politely ask me how much you can make as an expert witness” Ulzheimer asks. “I’ve had some cases where I’ve made as little as a few thousand dollars because they only needed a few hours of work. I’ve also got cases where I’ve made over $100,000 because of how long the case lasted and the amount of work I was asked to perform. Look, if you go into this because you want to become the next John Ulzheimer then you’re looking at this all wrong. You should have the attitude that you’re going to kick my tail, become the next great credit expert witness and fight off clients with a stick.”
Does the fact that you’re on television help you get work? “I can honestly tell you that I haven’t gotten one client because of my television or media work”, according to Ulzheimer. “Remember, I started doing this years before I did my first interview or visit my first television studio. Lawyers don’t hire you because you’ve been on T.V. They hire you to be an expert witness because they think you’ll help them win their case. Lawyers also don’t watch T.V to find their expert witness. They use other methods, which we’ll discuss at the training in September.”
If you’re interested in learning more about how to become a credit expert witness then please contact Garett Overstreet at Garett@creditcrm.com.
Sunday, July 05, 2009
IRAs and Bankruptcy
Someone I know is filing chapter 7 bankruptcy and he owes me money. My question is this.. is an IRA considered an asset that can be tapped to pay his debts?
Sunday, July 05, 2009
Short sales and deed in lieu credit reporting
Sunday, July 05, 2009
Credit Card Problems
Having serious issues with Bank of America and Chase with regards to my credit cards. Bank of America closed all of my credit card accounts the end of December. Chase has increased my interest rate to 27% on the credit card I have with them and everything that I have been reading online has said that Chase is increasing its minimum payments by nearly 250% effective August 1, 2009. It comes as no suprise that I have yet to receive an opt-out notification. I have never defaulted on anything in my life. I obtained a copy of my credit report approximately 10 days ago and have ZERO 30 day lates, no public records information, and scores above 700. Granted, I do have high balances on all of my credit cards, but I have never been in default and make my payments like a good upstanding citizen. I have a mortgage and HELOC with BofA/Countrywide that is about $100k+ more than my house is worth. I feel it is absolutely absurd to treat people the way that I have been treated. I am a recent college graduate (2nd degree), currently an accountant with a very large international firm. I also worked in the banking/insurance industry for 5 years prior to becoming an accountant. Needless to say, I'm well educated. I don't know where to turn for some relief. Any advice is welcomed and greatly appreciated. Thank you for your time and effort.
This article should not be interpreted as legal advice or testimony. It does not represent any conclusive opinion of the author or any of the credit experts from ExpertCreditWitness.com.