Paying Off debt: Lump sum or Instalments?

Question

I have 3 defaulted accounts, but unfortunately they have been sold already to collectors, some of them have been sold twice. For this reason I couldn’t reach any agreements about clear records from my debt file after payment, but I manage to pay around 50% though. As I’m still interested in improving my credit rating: should I pay off a lump sum or instalments would make a better picture and add me some points after, let say a year?

Answer 1

which ever choice you chose, do get it in writing, you will find that you can bargain them removing it from your credit with your payment in full - again get it in writing - once the transaction is complete, make copies and forward them to the three credit reporting agencies to be sure it is removed from your credit file. Paying a collection does not remove it - will show a zero balance and continue reporting for seven years. Also keep copies of the payments that they have cashed.

Secondly- if they have been sold - you need to dispute the original accounts with the three credit reporting agencies, indicate name and account number reason for dispute, transferred or sold - if it was HSBC or GEMB they are likely to fall off

Answer 2

1.When a debt goes to default status the ENTIRE balance due is payable immediately.

2. The credit report will show the entire balance due. Monthly payment arrangements will not change the the fact that the entire balance is due daily.

3. Paying it off in a lump sum would be the wise move. The creditor remains on your credit report for 7 years AFTER the debt is paid.

Answer 3

You are not held by law to pay any of the companies that Buy or Assume your Defaults. The damage has already been done t your credit, Save your Money and Learn from the Past. However, Never pay a company that buys your past debt, they have no legal binding agreement with you. They will try to Force you in believing you do... But You Don't!

Answer 4

Pay it off in a lump sum and get it out of the way. "Paid after charge off" or collection accounts with a zero balance look better to creditors than "charged off, making payments" or collections with lower than the original amount. At least if we see you've paid it off, we can see you are taking the responsibility to pay off your debts. Be aware, though, that paying it off won't erase it from your credit file, it will make it lok better for someone who's viewing the actual file and not just the score, though.

Answer 5

Since these accounts have already been sold to collectors, it will make no difference to your score which way you pay.

My advice is to work out a deal with these collectors to get them to reduce the total amount as much as possible. Get that agreement in writing that after that amount is paid, the accounts are considered paid in full, and then send them the check to do so.

It's important to get that deal in writing first. I've heard too many horror stories about mysterious fees being added to people who have thought they paid the debt off.

Answer 6

Lump sums are by far better. I have not defaulted on anything. Pay my bills on time, and pay more then the minimum every month. Yet my credit rating is only decent. I have student loans, since those have outrageous interest it brings my credit rating down. The quicker you get something paid off the better.

Answer 7

My humble suggestion is to just pay off a lump sum - to get it over with and move on. I'm not sure if using installments will really give you more credit points... is that so? In any case - at least if you pay it off with a lump sum then after that you can breathe easier.

Answer 8

Pay off the lump sum. Installments on a debt that has been sold won't help your credit at all.

Answer 9

Make sure you have everything in writting....!!

If it had been sold or even if it was with the same collection agancy it doesn't really matter if you pay it off all at once or over time. As to looking better on your end.

Your credit rating will go up faster the faster you do pay it off.

Answer 10

If you have overdue or stale accounts you always should pay in full if possible. The bad mark on your credit is already there. You shouldn't string it out longer even if your payments would now all be on time. The simple fact is...you've already broken the agreement by letting them become overdue. Pay 'em off.