Tips for Tenants #4: Can the Landlord Hurt My Credit? What Do I Do?
You bet he can. And he will. Landlords are pulling the trigger on tenants’ credit faster than ever. And the consequences to those tenants who have credit to lose can be as bad as or worse than a money judgment.
How does it usually happen? I see it happening in two ways. The first instance is one in which the landlord obtains a forcible detainer (eviction) judgment granting him possession as well as an award for rent due, late fees, attorney’s fees and costs. That judgment goes right to the debt collector. The second instance is the one described in the last Tips For Tenants where the landlord waits until you leave and then hits you with a huge bill for purported damages. Even though there is no judgment supporting the landlord’s claim, he or she sends the tenant a single notice about the “debt" and then ships it to the collection agency, which starts dunning you regularly, reports you to the credit reporting agencies and perhaps the landlord information networks, and eventually sues you to get a judgment it can enforce in different ways.
If you do not have a basis for disputing the landlord’s claim, there is nothing to do but work out a payment arrangement. However, many of the tenants who come to us do have a basis for dispute. In the case of an eviction judgment, the tenant may not have received the required 5-day notice or notice of the eviction hearing, or maybe she made partial payment to the landlord who took it. In the case of the post-vacancy damage claim, the landlord may have failed to provide a move-in inspection list or a timely (within 14 days) notice of the alleged damages, or the tenants may have proof (and hopefully photos) showing that the alleged damages are non-existent.
The first thing to remember is that, if it comes down to your word versus the landlord’s word, you will likely lose because the judge who has to decide is used to seeing one deadbeat tenant after another. So from the time you smell a dispute, do everything in writing, and take photos at every key moment (especially moving in and moving out). If you dispute the claim, you will have to substantiate that dispute eventually.
But you cannot wait around until you get to court to decide your dispute, because the landlord is already killing your credit by allowing his agent – property management company or realtor or collection agency – to report you and harass you with phone calls and letters. How can you stop it?
You go to an attorney who is familiar with the two federal laws – the Fair Debt Collections Practices Act and the Fair Credit Reporting Act – which give you at least a measure of protection. These laws protect you against the most obnoxious of the collection tactics whether you have a legitimate dispute or not. But more importantly, they give some real credit protection to those who have a genuine dispute. A properly written dispute letter can suspend collection efforts, prohibit the collector from calling you directly, force the creditor to conduct a meaningful investigation of the supposed debt and report the result to you. A debt collector (which includes collection lawyers and property management companies) who pursues a debt that he cannot substantiate is liable under the federal laws, and debt collectors know it. They just rarely have to deal with an alleged debtor who knows the law.
Usually, the three big credit reporting agencies will publish any negative credit report they receive. If they are informed there is a dispute, they will leave the report up but add a line stating that the report is disputed. That, of course, does little good for the person who has been reported. We, however, send the creditor dispute letter to those three agencies, who would otherwise only learn the truth if the creditor told them, and how likely is that? We take the position under the FCRA that, once the agency has knowledge of the details of the dispute, it cannot leave the negative report up, even with the dispute qualification.