Metro 2 is a credit reporting software system, and it is important to understand it so you know what goes on behind the scene of your credit report.

Businesses in the collection and credit industries who report consumer credit histories to the four credit report agencies must use the Metro 2 credit format. It was originally created in 1997 by the Consumer Data Industry Association (CDIA).

Metro 2 is designed to meet all the requirements of the Fair Credit Reporting Act (FCRA), the Fair Credit Billing Act (FBCA), the Equal Credit Opportunity Act (ECOA) and the Fair Debt Collections Practices Act (FDCPA).

Metro 2 provides a standard format to report all consumer information. The software performs validity checks on the accounts, insuring that the information entered is accurate, complete and compliant. It allows the collection or credit business to report information on consumers that cannot be located. Metro 2 makes provisions for the reporting of deferred payments and the transfer or sale of debt.

Metro 2 format software can be catered to specific industries and used by a business that has more than one industry. Businesses in the credit and collection industry must have their Metro 2 software tested and approved by each of the credit agencies that they report to. Accounts are submitted on a monthly basis and it is important that the software be kept up to date.

A third party consumer and business credit reporting service may be used by many businesses that carry accounts, such as jewelry stores or auto dealers. The credit reporting service will use Metro 2 to process the data into the correct format before submitting it to the credit report agency for the smaller business.

It’s important to remember that Metro 2 reduces everything to a 2-digit code.  If you have a dispute with anything on your credit report, the entire letter you send in support of that dispute is reduced to 2 digits.  If those digits are improperly entered then your dispute will be incorrect.  Say a lot in your dispute, plead your case, offer proof . . . it all comes down to 2 digits.

There is a sudden, renewed sense of urgency in the debt collection efforts of banks and credit card companies.

In this time of increased foreclosures, rising unemployment and a rocky economy, more consumers are defaulting on their credit card payments. According to the Wall Street Journal, the percentage of bank credit-card accounts that are delinquent rose to 4.51% in the first quarter and they expect the problems to get worse.

Credit card companies and banks are responding by stepping up their debt collection efforts. They are pursuing past due accounts more aggressively and starting collection practices earlier rather than waiting for accounts to go more seriously past due.

It is not uncommon to get a phone call from a debt collector when you’re just a few days behind on payments, as opposed to a few weeks as was previously the case.

Creditors are also turning delinquent accounts over to third party, collection agencies sooner. The debt collection agencies may not be as easy to deal with as the original creditor. These agencies are also subject to the Fair Debt Collection Practices Act.

So what are people doing? They’re ignoring those phone calls in droves.

InsideARM.com reports that Gwenn Bezard, research director for Aite Group, is noting that creditor and collector efforts are falling short of the mark.

Some financial institutions are becoming more creative in their attempt to reach borrowers. They might offer a free phone card or gift card that can only be activated when they call the company. Call to redeem your card and you’re faced with a barrage of payment plans, waived fees, lower payments and flexible interest rates. Citigroup is even offering settlement programs to those who are extremely behind on their payments.

Illegal? Deceptive? I think so, but it depends on the way you’re approached. If you get a letter from a debt collector promising you a free gift and not clearly disclosing that the letter is an attempt to collect a debt, it may be in violation of federal law.

Consumers may find that credit card companies and banks will be more willing to help if they communicate sooner and work with lenders to make payments.

You may also find yourself the target of repeated attempts to scare you or trick you into payment. As always, if you think you’re being misled it’s best to call on an experienced consumer protection lawyer to review your situation.

The Fair Debt Collection Practices Act (FDCPA) is a set of rules governing debt collection and how collectors should behave. This Act sets requirements and prohibits any unfair or disrespectful act against you by debt collectors, such as phone harassment or debt collection letters laced with threats of lawsuits.

As it turns out, however, the FDCPA does not treat all debts equally. The distinction arises from its own definition of “debt”. As stated under the Definitions section of the FDCPA:

(5) The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes…

In other words, the FDCPA covers only consumer debt. If you used your credit card for private purposes, such as paying for medical expenses or to purchase a new car, your debt is covered by FDCPA benefits. On the other hand, if you use your credit card to finance a business, that expense is considered business debt and falls outside of the FDCPA. If you do incur such debts and are unable to pay them, you may be vulnerable to unsavory collection tactics. It is not uncommon to be woken up by a late night phone call to be told by a collector that you are facing immediate arrest for late payments on your credit card debt.

Plan out your strategy carefully before using your credit card to fund your business. Be also aware of your state laws governing debt collection. If you’re already being harassed by debt collectors, contact me to discuss what they can’t do to you and what you can do about them.

Debt collection harassment can lead people to do odd things. Recently a New Jersey consumer landed in a hospital after setting himself n fire at a Rent-A-Center store in protest of the volume of late payment notices and collection calls he’d received from the chain.

The man went to the retailer to speak with a manager about the collection letters and calls he had been receiving regarding missed payments on furniture rentals. When he was told a manager was not available, he doused himself with lighter fluid and lit the fluid with a cigarette lighter, setting himself on fire in front of customers and employees of the store.

The consumer was in critical condition after the incident, but it clearly shows how debt collection abuse can trigger mental issues. Of course, it’s easy to think that he brought it on himself, but consider this: the retailer has been accused in the past of unfair business practices concerning its credit granting and debt collection tactics. In 2006, the state of California reached a $7.75 million settlement with the company for what regulators said was a failure to “disclose the true cost of its rent-to-own program.”

Source: InsideARM.com

If you have an attorney, the debt collector must contact the attorney unless the attorney cannot be contacted readily. If you do not have an attorney, a collector may contact other people but only to find out where you live, what your phone number is and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money. That’s why your family members may get a message that tells them to ask you to call Mr. X regarding an “important personal matter.”