If you depend on regular paychecks to pay your bills, unemployment can render you unable to keep up with your financial obligations --- leaving you struggling with unmanageable debts. Unfortunately, if you don't have dependable income coming in, unemployment by itself is not a valid reason for disputing debts.
How It Works
The Fair Credit Reporting Act, or FCRA, allows you to dispute debts you don't recognize as your own on your credit report. You can file your dispute either with the credit bureaus themselves or with the creditor reporting the incorrect information. After a 30-day investigation period, the credit bureaus delete the creditor's trade line from your credit report if the creditor can't prove that you owe the debt.
The Fair Debt Collection Practices Act, or FDCPA, provides consumers with another form of dispute known as "debt validation." Through debt validation, you can demand that a third-party company, such as a collection agency, send you written proof of a debt's legitimacy.
Dispute Limitations
The FCRA provides consumers with the right to dispute debts that appear on their credit reports in the interest of helping every individual maintain accurate credit reports and credit ratings. These disputes are reserved for consumers who find actual errors within their credit files. Although unemployment may leave you unable to afford payments on your overdue debts, it doesn't render your debts invalid. Thus, your unemployment doesn't provide you with a legitimate reason to dispute the debts on your credit report.
Checking for Errors
Although you can't dispute a debt simply because you're unemployed, you can dispute a debt if your creditor fails to report correct information to the credit bureaus. Incorrect information the FCRA allows you to dispute includes: the date you opened the account, the amount you owe or your payment history on the debt. Before you can locate and dispute errors, however, you must obtain a copy of your credit report.
If you have already accessed your annual free credit report, applying for unemployment benefits entitles you to an additional free copy --- allowing you to review the most recent information creditors have provided about you and determine if your credit file contains any legitimate errors.
Solving Debt Problems
Because the FCRA allows employers to check your credit during the hiring process, unemployment places you in a particularly dangerous situation. The longer you leave your debts unpaid, the worse your credit becomes --- making it more difficult for you to find a job if a potential employer reviews your credit history. Fortunately, even though your unemployment doesn't carry any weight with the credit bureaus, that doesn't mean that your creditors won't take your financial hardships into consideration and work with you by temporarily lowering your interest rates and monthly payments.
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