What are Actual Damages?

If you are successful in a case against a credit reporting agency or creditor you may be entitled to actual damages. These damages are permitted for successfully bringing a case for violations of the Fair Debt Collection Practices Act, California’s Rosenthal Act, the Federal Credit Reporting Act and the California Consumer Credit Reporting Act.

Actual damages are intended to compensate a plaintiff for the actual harm that they suffered from a defendant violating the law.

For example, consider a person who has a credit report with a collection account that does not belong to them. At that time their score is 650. They then dispute the item as being incorrect. The credit agencies conduct their 30 day investigation as they are supposed to. The result of their investigation is that the collection is not theirs so they remove it. The consumer’s credit score goes up to 700.

Well, at 700 the consumer can buy this house. So he calls a loan officer and obtains approval for a loan. The consumer then enters into a contract to buy the property but 20 days later, after contingencies are removed, the creditor re-reports the inaccurate collection account thus dropping the consumer’s credit score. The lender finds out about this, reruns the numbers and all of a sudden the consumer cannot afford the home.

Therefore, the consumer drops out of escrow and he loses his deposit. Further, the house the consumer was going to buy was worth $500,000 but since San Diego’s real property market skyrocketed since 2012 the house is now worth $550,000.

The $50,000 appreciation and the lost deposit can be considered actual damages, because they are damages that the consumer actually incurred as a result of the violations of the creditor that incorrectly reported the credit item. The consumer would also be entitled to be compensated for the emotional distress. Increased costs for mortgage insurance and interest might also be recoverable as well.

This information can help any homebuyer or any Realtor who has a client that this has happened to during the economic recovery. In this suit, the client could pursue the attorney’s fees, statutory damages (damages allowed by the statute) and the aforementioned damages.

California Debt Harassment Attorney can help you with these kinds of cases. Do not hesitate to sign up for a free consultation regarding inaccurate credit reporting.