Protect yourself: Get your deferment/forbearance deal in writing.
You are not alone. The economic downturn caused by the Corona virus shutdowns may have or will cause you to lose your job. This will force you to make some tough personal money decisions, like which bills to pay and which not.
Many lenders will be willing to “work with you” to help you get over this hopefully temporary rough patch. They will give you a chance to delay your monthly payments. If you must, of course accept the help.
Depending on the nature of your debt, e.g., car, credit card or mortgage, lenders will likely offer you one of two general types of deals: deferment or forbearance. We don’t need to discuss here the difference between them (Google it if you must know).
However, we must discuss a point that could have serious implications for your future financial situation: Will your deal, and your adherence to it, be correctly reported to credit bureaus?
Say you are allowed to postpone payment on your credit card for three months without being deemed late by the bank. After those three months, you begin and continue to pay your bills faithfully. Will your credit report show that you were always current or will it show you were 90 days late?
No way to tell. As one of my colleagues mentioned, there could be a big disconnect between your customer service representatives on the telephone and the computer system in the cloud. It could be as simple as bank executives honestly wanting to help folk like you, but the computer programmers just dropped the ball. The result could be an ugly stain, that shouldn’t be, on your credit report. So you must protect yourself from your creditor.
Avoiding this potential problem should be easy. Get the terms of whatever deal the lender gives you in writing. This may be easy for me to say but difficult for you to do, since those nice customer service representatives who spoke with you on the phone may not have the ability to shoot you an email or letter putting the deal in black and white. If you can get that written confirmation, you are done. Stop reading this note.
If not, then there is something you can still do. Take detailed notes of your conversations. The day may come when you will have to testify, under oath, for example at a deposition or at trial, as to what was said between the bank’s representatives and you. Rely on your memory at your peril.
I suggest that you must be able to look lawyers, judges or jurors in the eye and say: “I made a deal with my lender. I wrote down the deal’s terms. Here they are.” Then hand over the notes of your calls. Sure, you may need to explain some of the words you used, but nobody will be able to second-guess your understanding.
At a minimum, memorialize the day, time and length of your calls. Write down the numbers you called. If you used your cell phone, do not erase the record of the calls from the phone’s log. Make sure you get the name of the people with whom you speak. Perhaps even get some friendly chit-chat information about them, like where they are located, what the weather is like, etc.; in other words, get information that will show that your notes correctly reflect your interaction.
When it comes to the nitty-gritty terms of the deal, write them down like a transcript. Then read back your text and have the representative confirm it is correct.
Don’t rely on your lender’s automated “this call may be recorded” greeting message. Your calls may be recorded; that’s the operative word. If they are, great, your notes will squarely match the conversations. But if the lender does not record or loses the recordings, you will be left with only your memory of the transactions.
In passing, note that I am not suggesting that you record the calls. I was referring to your phone records, which show call data like phone number, date, time and call length. Call recording is a tricky legal area we’ll address in another post in this blog.
One practical reason for taking good notes is that lawyers like me will be more likely to take your credit misreporting case against the lender or the credit bureaus if you have notes. If you don’t, so that it will only be “your word” against the lender, we may pass. Not that we don’t believe you. It’s a matter of proof. We want the weight of the evidence to be on your side. Inked paper is heavier than human memory.
Keep your notes with your other account documents. Should there ever be a misreporting of your deferment/forbearance agreement to the credit bureaus, you will be in a much better position to challenge the inaccuracy, fix the problem, and restore your credit reputation.
