Getting Dispute Flags Taken Off may be Harder than You Think

Your client has just applied for a mortgage. The problem:  you have pulled her credit and there is a collection item that is flagged as “disputed”. These dispute flags give you pause. You know that you cannot get your client a mortgage with any item flagged as disputed. Then you ask your client about it and she righteously explains that the debt should have never gone into collection. She disputed it and, in turn, the debt collector correctly flagged the item as disputed.

So you think to yourself “No problem. You will send a letter to the credit bureaus and tell them that your customer no longer disputes this item. Imagine your surprise when the collection agency refuses to remove the dispute flag. What do you do now?

The Debt Collector’s Refusal to Remove a Dispute Flag is a violation of the Fair Debt Collection Practices Act.

We have had several cases just like this. The debt collector learns that the consumer is applying for a mortgage and knows that with its trade flagged as disputed, that the consumer cannot secure a mortgage. In short, the debt collector illegally presses its advantage and holds the consumer home as a hostage until the debt gets paid.

At this point, the consumer’s only option, if she wants to pursue the mortgage and not be held as a debt collector‘s prisoner, is to file a lawsuit under the Fair Credit Reporting Act.

Typically, these lawsuits are pretty quick and resolve the issue in short order. Once the debt collector is served with the lawsuit, it will usually obtain a lawyer who will explain to the debt collector that what it’s doing is illegal and costly.

We have seen a growing number of these cases. Are debt collectors getting more desperate?  Who knows? But what we do know is refusing to remove a dispute flag from a collection item is illegal. When this happens, we typically get our clients at least $1,000 in damages and make the debt collectors pay our fees and costs.

If you or your client’s mortgage loan has been held up by a debt collector, call me, Attorney Gary Nitzkin at Credit Repair Lawyers of America. Or email me at gary@crlam.com for a free, no obligation consultation.