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Wednesday, December 18 2013

Okay, here's the final bit of advice on what to do if you have a delinquency or judgment on your personal credit report and you can't get it off by using the first 2 techniques I was telling you about over the course of the past several days.

You can use something called "Restrictive Endorsement."  It's a very powerful tool that a lot of people know nothing about.

Here's the deal in a nutshell:

You notify your creditor by mail that you will be sending $X amount for XXXX account in 14 days from today's date.  You will also be writing on the back of the check that the creditor understands and agrees that by cashing the check, they agree that the account XXXX has been financially satisfied as payment in full and that the account will be updated as such.

In 14 days, you will mail the check.  Make sure that you write on the back in the endorsement section:  "By cashing this check for $[DOLLAR AMOUNT], [NAME OF CREDITOR] agrees that account [NUMBER] is paid in full, is fully satisfied, and will be immediately updated to reflect this."

If it's a collection agency for another creditor, you'll write:  "By cashing this check for $[DOLLAR AMOUNT], [NAME OF COLLECTION AGENCY] agrees that [ORIGINAL CREDIT] account [NUMBER] has been paid in full, is fully satisfied, and will be immediately updated to reflect this."
Please note that your account will be updated to show "paid" or "settled" but will not be removed.  It will improve your credit score and will stop all collection activity but isn't as great as having something completely removed.  (Sometimes you have to make sacrifices if all else fails.)

Also note that the dollar amount you send to them must be reasonable.  Don't offer a $5 restrictive endorsement check when you owe the creditor $5,000.  That's not reasonable.  Reasonable is between 5% and 10% of the original debt.

Furthermore, I strongly recommend you don't send a check out of your own bank account otherwise if they want to be jerks, they can lien your bank account with the proper court judgment.  Don't give them your banking information to make this easy for them to do.  

Instead, give them a cashier's check (from a different bank you don't normally bank with) or, even better, a postal money order.

Once the money order is cashed, make sure you get a copy of it with the restrictive endorsement on the back so you have a record to have it removed.

Some important things to know:

1)  Restrictive endorsement is not legal in all 50 states.  It's not legal in New York, Ohio, South Dakota, and West Virginia.  This means that if you reside in any of those states, you can't use restrictive endorsement.  If the creditor is located in that state, they may claim that it's not legal.  However, according to credit and banking laws, all creditors and lenders must abide by all states they operate and do business in.  So, even if they are located in New York, for example and you're located in California, for example, they are still required to abide by California state law if you reside there, even if they are based in New York otherwise they are not allowed legally to lend money or credit in any individual state where a customer may reside if they aren't willing to conform to the state laws in that individual state.  

Therefore, don't fall for the whole, "We aren't a restrictive endorsement state."  Especially if you don't reside in a non-restrictive endorsement state as mentioned above.

2)  Each state has different ways and requirements in which to use restrictive endorsement so make sure you check before doing it.  Some require a letter to the creditor before sending the check.  Others do not.  Some require a longer time than 14 days for a legal notice beforehand.  Make sure you check before doing it.

3)  As already mentioned, don't write a check out of your own personal bank account.  Consider a business checking account, a friend's bank account, a spouse's bank account (who isn't on the original credit account) or a Postal Money Order.

4)  Make sure you write what's indicated above in the endorsement section of the check.  Be sure to refer to the exact account number and the creditor account you are paying off.  Also indicate that by cashing (not "signing" but "cashing"...since most companies never sign a check anyway).

5)  Make sure that you send the notification letter with some trackable type of mail to prove when the creditor received the letter in case it is challenged later.

Once you send your letter (with date proof of when they received it via USPS tracking) to the credit bureaus along with a copy of the cashed check, you'll wait a few weeks to see if they've updated your credit reports.  If they haven't then you simply send a copy of the letter, the cashed check clearly showing what the endorsement section shows, and it should be updated as a "paid" account as long as your state laws reflect that this is legal in your home state.

I have one more credit secret...

I'll reveal that in a couple of days.

See you at the top!

Your mentor,
Monica Main
www.MonicaMain.com 
 

Posted by: Monica Main AT 10:11 am   |  Permalink   |  Email
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