How should I go about paying off debts to collection agencies?
After graduating from college I was unemployed for about six years. During this time I was unable to pay all my credit card bills so they went to collection agencies. I continued making payments on some of them, but on others the statute of limitations has run. I am now able to pay off these debts fairly quickly (I only owe about $4,000) and I would like to improve my credit score. I want to make sure that the payment information appears on my credit report when I pay off these accounts.
My problem is; I don’t know where to begin. I got my credit report online, but it doesn’t say when I last paid on any of them. I’d like advice from someone who works on this type of thing, but don’t know who to turn to. The credit counseling agencies that I have found only work with people who still owe with the credit card companies rather than collection agencies.
Don’t go the credit counseling route; don’t pay in full either. Professional arbitrators can likely get you out for 50 cents on the dollar or less. Keep some of that money in your pocket. Somethings are best left to the pros. Good luck.
Call them and pay them off…or make a payment plan with them. Good luck
First, call your creditors and see if you can work out some sort of settlement with them…which you must get IN WRITING from them before you send any money. When you pay, do it by money order or cashiers check only and send via certified mail.
After you do that, you can begin using a method that many financial advisers recommend, something often referred to as the "debt snowball."
The basic steps in the debt snowball method are as follows:
1. List all debts in ascending order from smallest balance to largest. This is the method’s most distinctive feature, in that the order is determined by amount owed, not the rate of interest charged. However, if two debts are very close in amount owed, then the debt with the higher interest rate would be moved above in the list.
2. Commit to pay the minimum payment on every debt.
3. Determine how much extra can be applied towards the smallest debt.
4. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
5. Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt.
6. Repeat until all debts are paid in full.
Those will stay on your credit for 7 years after the last payment and automatically come off your report. If you contact them that could renew the time status and be on there for another 7.
If you are trying to purchase something that requires this debt to be paid, then you better have the cash in hand to be able to bargain or settle for an amount that you can both agree on. I would suggest starting out by offering them half the amount you owe. Whatever is agreed upon, get it in writing BEFORE you pay.
Remember to follow up in a letter, and include in your negotiations the immediate removal of that debt on your credit report.
Good Luck
Dispute anything that negatively affects your credit (like late payments and the like). If they, the original lenders (i.e.credit card companies), don’t respond, the credit reporting agencies would have to remove it.
Note: Creditors only report information once a month. If the account has been inactive, it would show up as an "X" for that month.
If you want to pay off creditors whose debts haven’t run off the statute of limitations, then try calling them up. Their contact information should appear on your credit report. If their information is very vague, then chances are they won’t respond to the credit reporting agencies’ inquiries so it’s to your benefit to dispute these items.
Remember, the key here is to dispute, dispute, dispute!!!!!
First of all, never pay a collection agency unless you have no other option . They are all crooks.
You need to read up on your state laws and the FCRA and FDCPA.
Pull all three credit reports and compare them. Find any violations and document them for a lawsuit later. Free money.
Some dummy keeps saying that contacting CAs, or whoever will reset the seven year limit that a baddie stays on your report.
That is not true. Making a payment on a debt can reset the SOL, but, unless you bring the account current, the seven years starts from the date of delinquency where the account was never brought current afterwards +180 days.
You can also negotiate a PFD (Pay for delete) with the Collection Agencies. Make sure you get it in writing.
Educate yourself before you do anything!
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For your peace of mind, pay off your bills as soon as you can. As you have experienced, it is horrbilble to live in debt.
Figure out what you can afford to pay a month, then set it aside and take it one step at a time until you are out of debt….you have to start somewhere and making small payments is better than making no payments.
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It is true that it’s hard to live in debt, that’s why we need to pay for our actions and be responsible enough. Credit cards are good source of payment that’s why we need to use them appropriately.
Michelle
You can contact to the credit card company they will come to you and will collect all the payments from you.
Like Rick said… pay off your bills as soon as you can and you will be just fine
Some very good tips here. Getting things in writing is always the best approach. Try and contact the original company as well. Sometimes if you have a good explanation and can pay it off you can work directly with them, it depends if they have sold the debt on or not to the collection agency. Use it as a learning experience and put measures in place such as alerts and budgets to reduce chance of it happening again.
A payment plan is indeed the best option.
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thans a lot for this article
Always good to pay past debts, but be careful when paying debts that are way past due. As another poster above mentions, negative items stay on your report for 7 years and then drop off.
If your debts you are paying on are say, 6 years old, you may be better not paying and having them permanently drop from your report. If you pay on them, they may remain for another 7 years and negatively affect your report.
Also, there is a SOL on old debt I believe, so you may not have to pay depending on how long it has been.
My suggestion is to call up the collection agencies and set up payment arrangements. I think the easiest way for that is to set up automatic withdraws. Another suggestion is to set up an account that you can deposit money into on a regular basis. Use this account to pay off future credit card charges. Don’t charge something on a credit card unless you have the money to back up that charge.
It is always best to speak with a debt charity about helping with finding solutions to older debts as well as finding how to pay off the debts you have forgot about. If it is statue barred then it could still affect your credit rating.
eps in the debt snowball method are as follows:
1. List all debts in as
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