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Credit damage measurement report

A Credit Damage Measurement Report is the topic of this blog post. This blog post is a guest post written by Georg Finder is one of a series of guest blog posts on credit damages.

An individual client’s credit does not have to be perfect to be eligible for compensation; however, there must be sufficient credit in use to be considered injured.

Whether the reader is an attorney or mediator, during all intake interviews, they should be sure to ask the client about loans, credit cards, and business guarantees. The questions to be asked should be:

Has the client been contacted by bill collectors?

Is the client facing bankruptcy, foreclosure, or repossessions?

If the credit harm is the result of spousal negligence or misconduct, in violation of a TRO or a settlement agreement, then recovery of the measured harm may be awarded.

In many cases the client can provide all the necessary initial documentation for this purpose such as:

Monthly statements

Collection demands

Rate adjustment letters

These forms are industry standard.

Documents that provide confirmation of the injury may include credit denial notices or collection letters. Each document must identify the sender, the date, and a dollar amount.

Credit documents are absolutely essential in establishing the client’s pre- and post-injury credit value.

Common forms of credit reputation harm are identified as:

An increase in credit interest rates

Loss of existing credit accounts

Denial of credit that would have lowered the cost of an existing loan such as refinancing a mortgage

Higher interest charges for future purchases

As a result of those increased costs, debt service becomes more expensive. When debt service becomes more expensive, the individual who has suffered credit damage loses the ability to continue to use credit in the way they did before the credit was adversely affected.

The economic damage is identified as the difference between pre-injury and post-injury harm and costs. As an example, assume that the injured party had a pre-injury aggregate credit card limit of $50,000, but after the violation, the injury reduced the aggregate credit card limit to $20,000. The injured party’s credit capacity was decreased by $30,000, and part of the decrease became collection accounts, which caused additional credit impairment.

The ability to borrow against the value of real property is also affected by credit reputation harm. Prior to suffering credit damage, for example, an injured party could borrow up to 90% of the value of the real property. After the injury occurred, the amount available was reduced to 70% of the value, reducing the amount of money that could be borrowed.

Another important factor to be considered is that, when credit is affected negatively, the injured party’s interest rate increases. So not only is the amount of credit available reduced in this example, but the cost of borrowing that amount has increased, making it more expensive to borrow against the value of the real property. Credit capacity was decreased by 20%, plus the property owner experienced increased borrowing costs.

Prior to injury, a person with excellent credit can often purchase a new car with little or no requirement for a down payment. After an injury to credit, that same person might have to make a down payment of 15% or more and be subject to a higher interest rate on the balance owed. This reduces the amount of credit available in addition to increasing the cost to manage the debt.

When a lawyer’s client has suffered credit damage it may be helpful to get in touch with an economic damage expert to conduct the necessary measurement. The nation’s pioneer in this area is Georg Finder.   Mr. Finder is the author of numerous books and has developed an easy to use credit Damage Measurement Report to help lawyers identify when credit damage may be at issue. In addition, he has developed the California State Bar’s first MCLE seminar on credit damage. Mr. Finder is available for consulting and expert witness services for lawyers. Consider contacting George Finder through his website: www.creditdamageexpert.com.

Copyright Georg Finder 2014, all rights reserved. Posted with the express permission of the author.

Georg Finder, an Orange County, CA, Credit Damage Evaluator (CDE), is an expert on credit reporting violations and credit damage measurement. He has more than 15 years experience evaluating credit reports and appearing for both plaintiff and defense. Mr. Finder has authored numerous articles, including his upcoming book, Divorce credit smarter, not credit out-smarted. He is an MCLE provider on credit report issues and credit reputation damage compensation. Learn more about Georg Finder and his services at: www.creditdamageexpert.com

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The owner of this blog, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for sale.

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