The REAL answer on paying off collection accounts?

Question

I have read that you should not pay these off, especially if they are close to coming off your report, becasue they will "re-age". Is this true? Also, can you have an entry for the original debt on your report AND the collection account at the same time, for the same debt?

Answer 1

Anything that is past the statute of limitations for your state of residence is uncollectible. It will fall off your credit record at 7 years from the date of the last activity; contrary to what another poster said it does NOT stay there until paid + 7 years!

If you get feeling guilty and contact the creditor trying to "make things right" they will re-age your debt (this IS legal!) and start collection efforts all over again. It will show up as a chargeoff with recent activity.

It's a dirty little secret that creditors sell of old chargeoffs to collection firms for as little as less than a penny on the dollar. This is great for the collection firms, as if they get a 10% response on any of their efforts, they make a TON of money! Imagine that you buy a $1 million in chargeoffs for $5,000.00. If you get 10% of the debtors feeling guilt enough to pay off their debt you just made a cool $95,000.00 profit. These firms buy these accounts in blocks of tens or even hundreds of millions of dollars. Do the math, it's an EXTREMELY lucrative venture!

Yeah, you can have both the original debt AND the collection agency's data on your record at the same time. Once the statute has expired, it's best to leave sleeping dogs lie. If they contact you by mail, just trash it. If they call you, just hang up. If you say anything at all, say, "Don't contact me again." and then hang up.

If your "moral compass" is giving you fits, make an equivalent charitable donation to a worthy cause and don't deduct it on your taxes.

Answer 2

First, stop and read the link that I've supplied below. You need to understand the differance between the Statute of Limitations on debt and the reporting time for credit report listings.

You were told correctly. If you pay (or offer to pay) a past debt prior to the expiration of the SOL, it will re-age the debt.

The practice of having duplicate reports for the same debt is currently being disputed. I personally recommend that you send a dispute to the credit bureau and demand they be deleted.

At the very least, carefully examine the reports to be sure the reporting date is the same. They can only report these items for 7 years, starting on the day of the delinquency. Many times, when a collection agency gets the account they will list the day the debt was charged off, or when they actually got the account. This is called "re-aging" the debt and it's illegal. If you can prove the delinquency date, and they fail to correct the error, you can sue them in small claims court for $1000 for doing it.

Answer 3

It's up to the individual if they want to pay when they are close or past their states statute of limitations (SOL) on the debts. If they are past the SOL for collecting, you do not legally have to pay.

If you want to pay, you should first send them a debt validation letter. Send it certified mail return receipt (CMRRR). Never do anything by phone, always create a papertrail.

After the collection agency properly validates the debt, send them a pay for delete letter (CMRRR). Request that they will delete any tradeline they have placed on your reports. Also request that they will not sell the debt, not sell the remainder of the debt (if they agree to accept a percentage as payment in full), not continue to try to collect the debt.

If you do not request those things, in writing, they probably will re-age your accounts, either sell the debt or continue to try and collect (even if you had paid the whole debt - they are scum)

Always request to pay a percentage of the debt. If they have been recently charged off and sold, the collection agency probably paid about 50% of the balance to purchase it. The older the account is from charge off, the more likely that a junk debt buyer owns it. JDB's pay pennies on the dollar and many times, pennies on the one hundred dollar for the debt.

Yes you can have an entry for the original creditor and the collection agency. But, you cannot have a collection agency who once owned the debt but had sold it to another. That agency needs to delete their listing.

Also, more times than not, both the original creditor and the collection agency's are violating your rights by "how" they report.

I would suggest going to the site that I've linked and do some reading on your rights, how to deal with collectors, how to properly do a pay for delete etc.

Answer 4

If the debt is about to come off and if it's been 7 years. The debt will come off. If the company you owe doesn't remove the item from your credit report. You'll need to contact the credit bureau to have the item disputed and removed. After 7 years it must come off. Some companies are slick by continuing to report a debt that's over 7 years.

However, if the items are recent debts. It's best to negotiate 1/3 of what you owe the company. Before paying the debt have them send you a written agreement regarding the payment/agreement saying they'll remove the debt from your credit report, once they have received the negotiated amount you agreed to pay. Do not send payment until they send you a written agreement. Most companies will be willing to settle. It just depends on who you get on the other end of the phone.

I'll send you an invoice in the morning! Good luck..

Answer 5

The debt stays on your report until you pay it off, and the time it stays (7 years) doesn't begin till it is paid in full. However there are legal means for having the record removed, but you need to hire a credit cleaner(for lack of better term). I have found them in the penny saver for about $300. They say there is something unconstitutional about the reporting method and sue the agencies to have it removed. You STILL will owe the debt but.... They can also help you stop the accumulation of fees due to the debt and work out a payment method. I have not personally used one so i can't tell you whether it is good or bad but it may be worth it if you are planning to buy something.

Answer 6

If they are beyond the statues of limitations for collection in your state (time period varies) then you can skip paying them, but I was told that as long as it is unpaid, its still a valid debt (could be wrong on that).

But....if you want to get any credit at all, paying OFF your debts looks a lot better than letting them rot.

And yes...they can report it multiple times, the original creditor and every darn agency that's held it. Seems unreasonable to me too.

Answer 7

there is a statue of limitations on how long a debt can be collected, it varies with each state. Research your state and if the statue of limitations is up or close, I would not pay it and after 7 years from your last payment, it falls off your credit report

Answer 8

having been a collections manager I am an terror to collectors. My line is thisI don't owe it to you and I am noy paying you. If they offer a settlement I offer 10 cents on the dollor ( more than they paid for it).

My next comment is mailing name and address of the company and a do not contact letter is sent

Answer 9

are you talking financially or morally? You should probably pay off your debts as that's money owed to other companies, it's not really yours to begin with

Answer 10

Pay em before they send someone out to baseball bat your kneecaps.