How Much Fixing Your Credit Will Cost & How We Get Paid
As your prospective law firm, we feel that is vitally important to be completely candid with you. While we do not charge you for our services out of your pocket, we do charge our fees and costs from the total recovery we obtain in your case. Sometimes, our clients get confused about the division of funds in these cases.
We want to disclose, as clearly as possible, what our fees and costs are and how the division of funds works. Like our Fee Agreement says, we want no surprises.
How Much Is It Going to Cost Me?
Under the law, we are able to charge our fees and costs to the Defendants that are reporting incorrect negative information about you in any successful action. Since we settle the majority of our cases rather than go to trial, when we settle on your behalf, we advise of how much we reasonably believe we can settle for. Our services are not going to cost you anything out of your pocket. However, you should know that we collect our fees and costs from settlements that we obtain on your behalf and only look to those settlements to get paid.
Objectives of Our Lawsuits for You
The objective of the Fair Credit Reporting Act (“FCRA” which is the statute that we use to get your credit report fixed), is to fix your credit, provide you with damages and an attorney at no out of pocket cost to you. Similarly, the objective of the Fair Debt Collection Practices Act (“FDCPA”) is the same. Since these laws provide for nominal damages of up to $1,000, no lawyer is going to take such a case on a contingency basis, no one is going to hire a lawyer on an hourly basis without such a fee shifting provision.
How to Tell whether you are entitled to actual or statutory damages.
Many cases involve “nominal damages.” These are damages to right a wrong and typically are up to $1,000. Cases that involve actual damages such one in which someone is charged more for credit, denied credit, loses sleep, appetite or has a preexisting condition that is aggravated by the Defendant, are entitled to more than nominal damages. We take both cases very seriously.
Before we file your case, an attorney from our office will review your case and advise you as to whether you have nominal or actual damages. The attorney will give you a ball park figure of what he or she believes we can obtain for you. Just know that in litigation, things can change so there is no way to know for certain, what you will end up with in your case. But we will give you the benefit of our expertise in evaluating your case.
If attorney and you agree on the monetary value of your case and the objectives of the litigation, we will proceed with filing your lawsuit.
The Majority of Our Cases Involve Nominal Damages – How to Tell Which Kind You Have
The overwhelming majority of cases involve “nominal damages.” These are damages to right a wrong and typically are no greater than $1,000. Chances are that your case is also a nominal damages case. If it is, read on. If your case is an actual damages case, then you can expect more than nominal damages. Either way, we will call you and discuss your damages before assessing the value of your case. We will also send you a sheet called “My Impression of Your Case” (hyperlink to a sample page) that will note whether you have a nominal damages case or an actual damages case. From there, we will agree as to the financial objectives of your case. If we do agree, we will proceed with representing you. If we cannot agree, then you will be better served with another law firm.
Fees We Charge to the Defendants
We Reimburse Ourselves for Our out of Pocket Costs
When we settle with a defendant, we typically settle for around $5,000 each. Sometimes more and sometimes, less. When we have settled with the last defendant in your case (many times there is more than 1 defendant), and collect that last check, your “settlement pot” is established. From your settlement pot, we reimburse ourselves for our out of pocket costs such as filing fees ($250 to $400 per case depending on where we file it) and service of process (typically $25 per defendant unless we have to pay to have the defendant personally served, then its more). We will also reimburse ourselves for the cost of any depositions, travel and parking costs.
Frequently Asked Questions About Our Credit Repair Services
Setting and Agreeing to Expectations at the Beginning of the Case Is Key to a Successful Relationship
We want to be your lawyer now, and in the future or any credit or collection related issues you may have. We know that trust is a key component to any Attorney/Client relationship which is why we want to make the financial objectives and machinations as clear to you as possible.
Where Can The Potential Controversy Happen?
After we take our costs and fees from the settlement pot, the rest is yours. As tantalizing as this sounds, in reality, our services and costs usually eat up most of the money in a statutory damages case. Frequently, we reduce our fees and costs to make sure that you get $1,000 in your case.
In cases where there are multiple defendants and settlements, people see a large dollar volume and want more of it than the damages that they are entitled to. We try to maximize your recovery and get you more than $1,000 in cases such as these, but it is not always possible. This is why we are crystal clear in our assessment of the value of your case before we file it.
Are Our Lawsuits The Same As Contingency Lawsuits?
The lawsuits that we bring on your behalf are not contingency cases. The attorneys’ fees are not determined by a percentage of what we collect. Rather, our fees and costs are shifted to the Defendants to pay which is why we track our time and expenses.
The lawsuits that we file to clean up your credit report or to stop debt collection harassment are usually for very nominal damages, usually $1,000 and to clean up of your credit report. If we can get you more, we are happy to do so, but it’s not usually something that you can count on.
If You Have a Nominal Damages Case, Can You Get More Than $1,000 for My Case?
Possibly, but not likely. Many times, our fees and costs will be greater than what we recover in a nominal damages case. In those instances, we reduce our fees to make sure that you, as our client, get some money from your case. Of course, we will not know what our fees are until after we have settled with the last defendant. Any money left over after our fees and costs belong to you. Just remember, that the overarching goal of these cases is to get your credit report clean or to stop a debt collector from harassing you, and provide you with a credit repair attorney.
If you have any questions or issues about your case, call or email me, Attorney Gary Nitzkin at [email protected] or (404) 591-6680.
Taxes You May Have To Pay
When we settle with a Defendant for an amount of $600, sometimes the defendant will issue an IRS 1099 form to both you, and to us on the same money. While we do not give tax advise, I will advise you of what I have learned.
While I do not give tax advice as I am not qualified to do so, I am happy to pass on to you what I have learned from a conference at the National Consumer Law Center (“NCLC”). NCLC is a non profit organization that advocates for consumers. Every year, they hold a seminar for Consumer Lawyers such as myself. In their 2021seminar, they addressed the 1099 issue as follows.
According to the NCLC, if you get a 1099, that does not mean that you necessarily have to pay tax on that money. You do have to report the receipt of that 1099 on your tax return. NCLC suggested that on the line for Misc. Income, you show each 1099 amount that you received. Also, on that line, explain that your attorney received the same 1099 and paid tax on that money. You then report the amount of money that you received from us and pay tax on that money. Hence, if you received a 1099 for $5,000 but only received $1,000 from us, you should pay tax only on the $1,000 according to the NCLC.
Again, I am not qualified to give tax advice, but am merely passing on to you what I have learned this year from my seminar at NCLC. You should check with your tax professional.
