Credit advise?

Question

I have been hearing about a pay-for-delete agreement?
What is this?
And I have also heard that if a collection is over 5 years old, don't try to pay it off because it will hurt your score rather than help it,
I;m trying to figure this out because my husband has some collections on his credit from years ago , before we were togther, and its hurting his credit, and now that we are toghter I want to try and clean his credit up. His score is a 545, and we need at least a 580 or better to get financing for a home. Would it be better to get a credit consouler?

Answer 1

First I would like to correct some misinformation that was posted.
Paying a collector on a charged off account "will not" re-age the reporting period and allow the account to report for a longer period than the original obsolescence date. (per the FCRA)

If a pay for delete is not requested or agreed to, upon payment the collector will "update" the account by reporting the payment. Updating the account will make it "look" newer than it actually is. Updating is not re-aging and the account will still legally have to fall off 7 years from the first time the account became 30 days late and never brought current leading to the charge off by the original creditor.

In one of your other questions you mentioned that you live in SC. If that is so then that account is past the collecting SOL as the SC collecting SOL is 3 years.

Because it is past the collecting SOL you can either pay or you have the legal right to to tell the collector that the alleged debt is time barred and no longer legally collectible. If the collector is reporting incorrectly on the credit reports, which they usually do, you have a legal right to dispute it and they must either correct or delete.

DO NOT ever let the collector know you are house hunting or thinking of it !!! In fact try to take care of this before you start house hunting. If the collector gets even the tiniest hint that you are planning on purchasing a house, any leverage you currently have, in working with them on a PFD or informing them the debt is SOL and then disputing their trade line, will be lost.

The PFD letter that is posted is a fairly standard one that can be found on many credit discussion boards. I would recommend that you make the letter your own.

When sending anything to collectors, never sign your signature to anything. Print your initials or type your name. Always send everything certified mail return receipt.

I would suggest before sending a PFD letter that you send a validation request first. Make sure that the collector actually has the account, that the amount they are requesting is the true amount and the date of default.
(there have been times where collectors may have had an account at one time but had since sold it to another, yet they took whatever money was offered. That put the debtor in the position of trying to recover the money and then to start negotiations, again, with the true debt holder)

Once you get validation then, if you want to try the PFD, you should include the fact that the debt has past the collecting SOL for your state, include the SOL statute, (I'll list the SC SOL statutes at the end) and that even though the alleged account is past the collecting SOL and you are not legally required to pay, that you will offer $x amount for total and permanant deletion from your credit reports. (by including the fact that "you" know it is past the collecting SOL, they may take any amount you offer)

I would also suggest including that by their agreement to accept the PFD they will consider the account as paid in full and will not attempt any continued collections which includes selling the remaining amount.

Never offer to pay the full amount on a time barred debt. You have the leverage of the law on your side, they legally cannot sue you. The only way they can legally be paid is by your offer to pay.

And like c0w60y mentioned, never send a personal check.

If you want to send a SOL letter then you would send the SOL letter (cert. return receipt) and when you get the green card back send disputes to the CRA's.

You might click on my profile and click on the last link I have listed to the free credit discussion board. You will be able to read how others have fared with their PFD's and find the link to a free SOL letter template.


SC SOL statute:

SECTION 15-3-530.
Within three years:
(1) an action upon a contract, obligation, or liability, express or implied, excepting those provided for in Section (2)15-3-520

edit++++

credit king

A score drop will happen if a person pays without a PFD agreement, whether the collector illegally reages the account or simply updates it to show as paid. (which I'm sure you already know)

And yes, I know that collectors do, at times, illegal reage accounts (among other violations).

Some of the people that I know of who had illegal reaging happen to them, even if they had a PFD agreement, went for simple deletion and others, who are more litigious minded, raked in the collectors dollars by suing on the reaging violation (plus getting deletion).

Answer 2

First of all, on an income of $75K, he should not have any problems paying back five thousand dollars, unless he is overstressed in other areas. Do not move the money, this is not your first option. The first option, is to call both companies and ask for a lower interest rate. Then, I would try a credit union (easier to borrow from than a bank) for a consolidation loan, get a second part time job and pay it off or curb his lifestyle and make some sacrifices to pay it off. You should under no circumstances, cosign for someone else's debt --- ever, especially if you are not married. Ask yourself, can I afford to pay this, if he stops. If the answer is no, then do not do it.

Answer 3

Credit King is right. This works most of the time. you see the original creditor of your husbands accounts gave up on him long ago and "charged-off" the debts. The current Collection Agent, a sleeze bag who bought the debt for two cents per dollar and then doubled the amount with fines & bogus fees. He'll settle for beer money. BUT! Get everything in writing first before you give these people any money. And please don't use a personal check, get a money order to pay them. Offer twenty cents to the dollar.

Answer 4

If the account is over 5yrs old in most cases is past the statue of limitation so there is nothing they can do except report to your credit. So you can pay them off and request a pay for deletion and should be cheep do to the fact that they have already decided they where out of luck.

If you don't get a pay for deletion (most people will disagree with me about this) the account will have recent date of activity and can remain on your report for another 7years. Not that it should but when the account is updated on your reports the credit agencies will report it for another 7years unless notified different.

Long story short if you want to pay them off and don't know much about the subject send them a settlement letter asking for a pay for deletion for 20% due to statue of limitation they will come back at 50% settel at 30%

Be credit strong

Here is a sample of what you want to say



Collection Agency
1212 Maple St
City, State Zip



Re: Collection Account for Original Creditor Account #: 00000xxxx



Amount: $25.00



To Whom It May Concern:



This letter is to inform you that the validity of this debt is disputed. I am not sure of the account number, as I have never heard from you regarding this account. The account number I have is the one listed on my Experian credit report – which omits the last few digits.



In the spirit of compromise, I am willing to pay this account IN FULL (or settlement percentage) if you agree to immediate deletion of this account from any and all credit reporting agencies (Equifax, Experian and TransUnion). The purpose of this settlement is merely to have this item removed from my credit files. It is not to be construed as an acknowledgment of liability for this debt in any form.



If you agree to the terms and accept this agreement, certified funds for the settlement amount of twenty-five dollars ($25.00) will be sent to Collection Agency in exchange for full deletion of ALL references regarding this account from my credit files and full satisfaction of the debt. As certified funds will be used for payment, there shall be no waiting period regarding the deletion of this account from the credit reporting agencies.



Collection Agency agrees to delete ALL information regarding this account from the credit reporting agencies WITHIN TEN CALENDAR (10) DAYS following receipt of payment as specified above and will not discuss the terms of this settlement with anyone, excluding your client on this account. If contacted by any third party, including credit-reporting agencies, Collection Agency will not acknowledge that any settlement offer was made, accepted or executed and will, in fact, deny knowledge of any such account.



If you agree to the above terms, please prepare a letter on your company letterhead explicity agreeing to the same terms as the above settlement offer and have it signed by an authorized representative of Collection Agency. It will be implied that this letter shall constitute a legally binding contract, enforceable under the laws of my state.



Your response must be postmarked no later than 15 days from your receipt of this settlement offer or this offer will be withdrawn and I will request full validation of this alleged debt, as provided for by the Fair Debt Collection Practices Act.



Please address all correspondence regarding this account to:



You
123 Any Street
City, State Zip

Echo

You are correct, But I have acctuly seen this happen when people have paid off collections. Their score drops and the date is reset. Now it was easly reversed but if they did not notify the lendor them self it would not have been done.

Have you ever heard or seen anything like that?

Answer 5

Definfitely don't do the Consumer Credit Counseling.. That hurts your credit more that a Bankruptcy does.. The accounts included in CCC actually show up that way on the credit bureaus and it looks really bad.
You're correct about paying off old debts.. They will fall off the bureau after 7 years. If you pay off a 5 year old debt now, it resets the clock as a "paid collection"(which is still negative on the bureau) and stays another 7 years.
If you can open up a credit card and put him on as an Authorized user, it will bring his score up after about 6 mos. Just don't run the Credit card up.. It should just be opened and activated, don't use it. In 6 mos -1 year, his score should be above the 580.

Answer 6

The best way to increase your credit score is to take out a small loan for 24 months and pay it off in 12 . If you have funds in a savings account, use that to guarantee the loan.

Answer 7

Buy the house in your name only vs jointly.

Answer 8

"Pay for Delete" is when you bargain that if you a pay a chunk of money towards the debt you will only do it if they remove the item from the credit history. It doesn't make the rest of the debt go away (cancelled debt is potentially taxable income).