Sidewinder; Don't get me wrong. I don't want anyone to think that I mean that paying debts is necessarily a bad thing. Just that sometimes, in some circumstances, it can reset the "age off" date and the thing may stay around longer. However, they do not always do that, just sometimes, and the down side is not always very big, especially if the listing isn't very old. Debts that are going to disappear in maybe a year or less are the ones where you might possibly lose more than you gain from paying them. Even then, you do not know whether the creditor will sell the debt to someone else, resulting in a new listing with a new 7 year clock. Point being that you can't ever be 100% certain the debt will go completely away even at the 7 year date.
And all this is NOT my opinion. I've had it happen to me, and I ran it by a law firm that specializes in just 2 things; debt elimination (through negotiation with creditors) and credit improvement (dealing with the credit bureaus on your behalf). Much to my dismay, they told me that it was legal. Apparently (and this IS conjecture on the part of a lawyer, but it makes sense) the Date of First Delinquency normally starts the 7 year clock because it would normally be after the Date Of Last Activity and it was assumed that in many if not most cases that date would be the last time anything happened with the account. BUT other things can happen which sort of reactivate the account, and which can justify changing the Date Of Last Activity which can legally be used to start the clock all over again. One of the things, I think unfairly, is if the creditor sells the account. Then the new owner gets 7 years. The original creditor's entry on your report will still go away when it should (This may be causing the confusion - I should have specifically mentioned this in the beginning.), but the account itself will still be there under the new owner. So even though the original listing on your report goes away, for all practical intents and purposes it is still there, hurting your credit. It just has someone else listed as the creditor. The most unfair thing about this is that, until the original creditor's listing expires, you have the same debt listed twice, and you get "credit" for two bad accounts when it's really just one.
Until a couple of months ago, I had 4 negative accounts, 2 of them from an original creditor (same creditor for both accounts, as it happens) and 2 of them from the people the original creditor sold them to (same new creditor for both accounts, too). The new owner was calling them collection accounts.
One of the original 2 accounts "aged off" my report, but the new owner's entry for that account was still there. I filed as dispute, saying that the expiration date for the original debt had passed, evidenced by the fact that the credit bureau had just deleted that original account, so the collection for that account should also be gone. The response I got was that a collection ages off at the same time as the original debt ONLY if the collector is working on behalf of the original creditor and the original creditor still owns the account. If, however, the original creditor sold the debt, and the collection company is the new owner, or is working on behalf of a new owner, there is a new 7 year clock which started when the original creditor sold the account to the new guys.
This leaves me with 3 bad account listings; 1 "original" listing and 2 "new owner" listings for what were really only 2 bad accounts. In August the second "original" listing will expire, and I'll be left with the 2 listings from the new guys. Those listings will not go away until sometime in 2009 (the accounts were sold in 2002). So as of September 2008 I will still have 2 bad accounts on my report, for debts whose delinquency date will at that time be more than 7 years ago.
There's even worse. I ran this past the lawyers, they confirmed it was legal, and then told me something even worse. Technically, the new owners can claim I "reactivated" the accounts by paying them off in October 2005, and can use that as a legal excuse to keep them on my report until September 2012. They told me that this doesn't happen very often but that it can legally be done if the creditor wants to bother.
Anyway, the whole point of this thing was simply to make sure people know that just paying off a debt does not always fix one's credit, and that there can even, sometimes, be a down side to paying.
And for anyone who thinks his creditors will not go for a deletion in return for full payment, you might be surprised. Most original creditors do not expect to collect the full amount due on bad accounts. If a creditor hasn't actually sued you over the debt, you do have some leverage. If the debt is more than a year or so old, the creditor probably expects to collect, at best, a part of the balance due. They expect to collect it by either offering you a settlement amount or by selling the debt to someone else. (There are numerous companies whose entire business consists of buying bad debts from original creditors and then collecting what they can on them.) In either case, settlement or sale, the creditor will get only a percentage of the balance.
This is your leverage. They want money. You offer them money. You make it clear you are not going to pay anything in a settlement type arrangement. You will pay all or nothing, and will pay the "all" only if they'll delete the thing from your reports. (Of course, if they ultimately do refuse any kind of deletion deal, you can still go back and pay a "settlement" amount.)
For some reason, this seems to work better with collection agencies than with original creditors. Maybe because the difference between the "full" payment and the "settlement" payment tends to be larger with collection companies than it usually is with original creditors. Maybe the people at the original creditor have some sort of ego investment in punishing you for having "cheated" their company. Who knows?
Whatever the reason, most if not all collection companies will do a deletion in return for full payment, while some original creditors will not. In EITHER case, however, be aware that the initial response may be "no". The people we get to talk with when we call in are almost never authorized to do this kind of thing. Many, perhaps even most, of them do not even know that such a thing can be done. I have been told, flat out, "No, our company does not do that under any circumstances.", I've been told, "No, it's not even possible to delete a debt once it has been reported to the credit bureau." Then, within a few days of that conversation, I've pulled a signed "deletion in return for full payment" agreement out of my fax. The trick is to get past the customer service operator and talk to someone who has the authority needed to make one of these agreements. If your main goal is to clean up your credit, the time and energy (AND the extra dollars) involved are more than worth it.
