If you make the effort to pursue an economic damage claim on behalf of a client, be sure to follow the necessary steps that ensure the claim is admissible in court.
By Georg Finder, Credit Damage Evaluator
Including credit reputation harm to economic damage recovery can result in a substantially higher economic recovery – from adding tens of thousands of dollars more, to as much as a million in some cases. The key is ensuring that the assessment is correct and that the foundational documents used to support the claim are acceptable to the court.
The Initial Assessment
There are some basic, yet highly effective steps you can add to the intake conference with a client that will give you a clear perspective on whether or not this aspect is worth pursuing.
- Confirm the client’s credit status.
The three general types of accounts to investigate during this step are those for which your client is a(n):
- Authorized User – This applies to accounts where the credit card is solely in the other spouse’s name, but your client is permitted to use the card. The fact that your client is not the cardholder does not necessarily diminish his or her ability to use it for damages, since loss of authorization results in loss of credit.
- Co-borrower – This applies to accounts for which your client has equal responsibility for payments as his or her spouse.
- Solo Account Holder – This, obviously, applies to accounts that are in your client’s name only.
A common mistake is to ask the client to provide a copy of his or her own credit report. The kind of credit report available to a client is wrong for many reasons, including accuracy, but most importantly because a consumer credit report is inadmissible in court. If a credit report obtained by the client is used as a foundational document, your credit damage demand will be dismissed.
- Confirm the amount of approved credit capacity granted per client.
Once you have established the types of accounts your client has or is party to, you must determine the credit limit available for each account, including:
- Solo Accounts
- Joint Accounts
- Personal or Business Accounts
Doing this will tell you whether the aggregate amount of credit limit at the time of the economic injury was sufficient to warrant inclusion in the damage demand. The amount of credit often has a very limited value relationship to the credit damage value. Yet there must be enough credit available or in use to confirm an individual level of creditworthiness recognition. The amount for unsecured credit should be approximately $12,000. Please note that I am not referring to the extent of the damage nor to an amount that may be part of the damage demand, such as the amount misused.
- Assess the nature of the inflicted credit damage.
It is possible to determine the extent of credit harm or damage within just a few minutes. An overview of the specific economic harms inflicted on the client can be readily revealed by asking less than ten simple true or false questions that address the nature of harms that have already been inflicted and are very specific as to the damage suffered (whether it is compensable or not).
The following areas should be addressed:
- New Derogatory Account Remarks – For example, late payments, and accounts that have moved forward to collections.
- Added Public Records – Including bankruptcies, judgments, and liens.
- Account Closures – Accounts that have been closed for non-payment.
- Application Denial(s) – Refusal of credit.
The answers to these questions, along with knowledge of the amount of active approved credit, can guide you in assessing whether a claim for damages can and should be made.
What Makes an Economic Damage Claim Admissible in Court?
All of the information gathered using the steps above takes only a few minutes and is valuable in determining whether there has been economic damage to your client’s credit reputation, but only in general terms. There are four specific steps that must be taken to ensure the claim is admissible in court.
- Present the proper foundational documents. As previously mentioned, a subscriber credit report is admissible, the (free) consumer disclosure credit report is inadmissible – even if you have to pay for it. For businesses a totally different type of credit report is required. There are up to 11 different standard documents that may be required to prove your economic damage demand.
- Confirm the validity of documents that may be obtained through discovery if they are not in the client’s possession, such as account records, application review notes, and so on. Verify the sources from which the documents were obtained.
- Refer to proper authoritative citations for guidance, when possible. The caveat here is “when possible” – it is very rare for there to be an appeal regarding credit damage, so there are few case citations (for obvious reasons). However, sometimes an established citation can have a new application or implication.
- Provide a bench-worthy credit damage report of economic damage valuation findings. This step is, perhaps, the most challenging aspect of the entire process, because the raw numbers do not equate to an accurate or acceptable credit damage valuation – which is what the court will require. If you are not familiar with how to evaluate your client’s actual economic damage, it is worthwhile to consult a credit reputation damage expert to assess the matter for you, preferably providing you with a credit damage score. Such expert findings will help ensure a successful compensation result for your client.
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 25 years experience evaluating credit reports and appearing for both plaintiff and defense. Mr. Finder has authored numerous articles, including his upcoming ebook, Be Credit Smarter, Not Credit Out-smarted in your divorce. He is a MCLE provider on credit report issues and credit reputation damage valuation. www.creditdamageexpert.com