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Credit Damage: Can You Sue Over Ruined Credit?

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Comcast sent Karen to collections for a bill she didn’t owe, and it took her several months to clear it up. She’s angry and wants to take them to court to sue them for damaging her credit. She wants to know how much she can ask for.

Here’s how Karen described it in an email to us:

Comcast had me in collection for 4 months or so knowing the whole time I did not owe them one dime. Everyone from the local office to corporate headquarters agreed I had returned all of my equipment from them within the 30 day trial period and I had the paperwork to prove it if need be. Still it took them over 4 months to remedy their mistake.

I want to collect damages from them by sending a demand letter for starters (hoping to avoid small claims court) and I wondered if you might have an idea what I should ask them to pay me for those damages?

How does one figure something like this out and is there a formula or precedent-setting cases?

First Things First

The first thing consumers who believe their credit may have been damaged need to do is get a full credit file disclosure, says William Howard founder and managing partner of the consumer protection division at Morgan & Morgan. That’s different than getting your credit report from AnnualCreditReport.com, he says, because it may contain additional information. He provided a sample letter consumers can send to the credit reporting agencies for this purpose.

After you receive the disclosure, you must dispute mistakes with the credit reporting agencies that are reporting the wrong information. That’s true even if you know that the lender (called the “furnisher” in the Fair Credit Reporting Act) is the source of the mistake. Otherwise, you cannot sue under the FCRA.

“If (a lender) puts a bankruptcy on your credit and it’s wrong, you can dispute it with (the lender) until the cows come home but you can’t sue them,” warns Howard. “You are required to dispute it with the credit reporting agencies.”

Chi Chi Wu, staff attorney with the National Consumer Law Center concurs. “Under the Fair Credit Report Act the only time when the consumer has a private remedy is when they file a dispute with the credit reporting agency. If you send a dispute just to the furnisher and they don’t properly investigate then you have no recourse.” She also adds that, “You can’t sue the furnisher under the FCRA for the initial reporting of information.”

If Karen finds the collection account listed on her credit reports, then she needs to dispute that. “Send a certified letter that says, ‘Attached is my credit report and you are reporting this mistake,'” recommends Howard. If you dispute a mistake and can’t get it corrected, then a lawsuit may be required to set the record straight.

How Much is Credit Damage Worth?

Assuming that you have found a legitimate mistake and can’t get it fixed through the usual dispute channels, how much can you sue for?

Under the FCRA, consumers can sue for:

  • Statutory damages of $100 – $1000 per violation
  • Actual damages for injury the consumer suffered
  • Emotional damages for stress or physical ailments resulting from the ordeal
  • Punitive damages to punish the violator for their actions

In Karen’s case, she had recently bought a home, which is why she had recently set up cable service through Comcast. She cancelled the service during the free trial period because it didn’t work properly and the service technician sent to her home couldn’t fix it to her satisfaction. But Comcast billed her anyway, despite the fact that she had proof she was well within the time frame to cancel without being charged.

While all that was going on, she was trying to remodel her home and the collection account prevented her from getting the credit she needed to proceed. “It was a mess,” she says.

While that was a lousy experience, it’s probably good if she wants to pursue a credit damage case. “The best way to be able to show actual damages is to show you were turned down for credit,” says Howard. “If you were turned down multiple times for credit or you were forced to pay a higher interest rate on something,” then you would be able to demonstrate actual damages.

And in the case of emotional and punitive damages, the figures can go quite high in some situations. “There have been some multi-million dollar verdicts in these cases when they include punitive damages,” Howard explains.

But trying to go it alone as Karen wants to do may prove challenging.

Wu warns, “These are not easy lawsuits. If you can find an experienced lawyer, that’s always best.”

Howard agrees and says that attorneys who regularly take these kinds of cases will typically take them at no cost to the consumer if they believe there is a strong case, since the attorney will recover his or her fees from the other party. “If you are charged an upfront fee (in a credit damage case), that’s a sign you have the wrong lawyer,” he insists.

Image: Robert S. Donovan, via Flickr

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  • Harry John Davis

    I am Mr. Davis and I have been out of worked since Sept.12,2012 and I have been tryiong our best to handle our payments each month, but now we are in a complete stone away of maybe have to file B/K and we do not want to do this, we do not have alot of bills, but what we do have if I or we can get something to come in and help out to see what we have and try to handle our finances for us, till we get all in better ordeal, if you know how and see and get someone to come out to talk to me this would make me easy for us

    • Reynaldo

      Uhhh…what?

  • confused

    i am really confused. 5 years ago my lender was court ordered to fix my credit and never followed through with the order. do i have a case?

    • http://www.Credit.com/ Gerri Detweiler

      It sounds like it to me. Did you have an attorney at the time? Have you checked with him or her?

  • Jpark

    Someone’s bankruptcy landed on my credit score. Turns out it had been on my account since 2012, almost 3 years. I found out that it was on my account when applying for a wedding ring. And was turned down. I did some research and it turned out transunion had a 3100 dollar judgement on my account. I called up the lender and they quickly agreed that it was not mine. I contacted the bankruptcy court and they stated that I never had a bankruptcy. I contacted transunion and they said that it was mine even after I sent them my drivers license, SSN, credit report with the error, bankruptcy court letter stating it wasn’t mine, lender stating it wasn’t mine, transunion still had the nerve to say it was mine. The other two credit bureaus even stated I had no judgement or bankruptcy on my credit score. Finally after months of arguing, even my bank got involved since I had applied for a mortgage, they stated it wasn’t mine. They removed it off my score. However, the damage is done. I’m still unable to get a mortgage because of residual damages on my credit score. I have contacted over 7 attorneys. 1 only specialized in this and he wanted me to pay per hour and said my case would actually cost me more than what I would get in return. I literally can not find a lawyer in Utah who is trained in this field. I now have to pay a higher interest rate (housing market interest rates were raised) and that’s even if I could get a mortgage loan. I’m exhausted fighting. I’ve lost 2 homes already and lost earnest money. I also had to pay for an appraisal because my loan didn’t go through. If there’s anyone who could help me find an attorney to bring justice, please let me know. I need all the help I can get.

    J park
    Utah

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