Paying Collections

[aman31]

I've heard unpaid/paid collection affect your credit the same. What is the advantage of paying them off if the CO will not do PFD. I am dealing with Midland Collections. The debt is from 2005, but it shows it being opened in Nov 2008 on my credit report. I am guess this is the day, Midland bought the account. I almost want to pay so this isnt sitting out there forever. My other thought is to wait and maybe MCM will sell the account to someone who is PFD friendly. Any advice would be great!

BTW: The debt is $555 so I doubt I will be sued for such a small amount.

[Anonymous]

What kind of debt?

Is the OC reporting?

What is the DOFD/DOLA?

Who owns the debt?

Are you sure that the debt was bought and not just assigned?

The CA is reporting an Open date of 2008: This is the date that they were assigned or bought the debt.

You stand a better chance of a CA accepting a PFD when you are past SOL.

Always DV  CMRRR  before a PIF or PFD.

Message Edited by HappyDays on 07-26-2009 02:22 PM

[aman31]

What kind of debt? Household Bank Credit Card

Is the OC reporting? Charged Off, zero balance

What is the DOFD/DOLA? June 2005

Who owns the debt? I believe MCM

Are you sure that the debt was bought and not just assigned? Not sure, how do I know?

I recently sent MCM a DV CMRR. I am waiting on this, but possilby thinking about paying if it will help me the future if keeping this from coming up again. I'm in kentucky. I believe the SOL is 7 years here.

[Anonymous]

To answer your first question....as far as the FICO scores go, yes....an UNPAID or PAID collection reports the same way.  No if you are applying for credit where a manual review is performed such as a mortgage, the fact it is PAID will look better on you.  But otherwise, no difference.

For this reason, so many people DV and then PFD collections.  Once they are removed, your FICO score will go up as the collection no longer exists.

In regards to SOL's....looks like KY is 5 years for credit cards per the following:

http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-2.aspx

So technically until June 2010, they could sue you assuming DOFD/DOLA is correct.  If that is the case, paying them now would avoid them bringing lawsuit.  Of course, if you have the money to pay them in full right now, then I'd put that in a savings account and DV the debt and then negotiate a PFD.  If they won't give you a PFD right now I'd try another time or two before SOL expires and then I'd hold out until SOL *does* expire and then try again, maybe writing the letter in a fashion to remind them you are out of SOL and this is your last effort (yes, playing hardball) for them to get paid and in return the negative account removed.  

Really worst case scenario by "playing the game" is they do try to bring lawsuit, in which case you pull the money from your savings and pay in full anyhow, which is what your original plan was...but playing the game at least enables you a CHANCE to get it deleted.  

Another option would be just to lay quiet until SOL expires and then DV and PFD.  As noted, doing it after SOL has expired increases odds they will negotiate as they no longer have any leverage (ability to sue) to get the money.

[aman31]

Ok, let me see if I understand this. After the SOL (5 years), then can continue to report on my credit report for 2 additional years for a total 7 years, but between years, 5 years and 7 years, they really have not right to collect?

I'm probably going to have to pay since I am wanting to get a mortgage, but I am also trying to understand my options. Thanks for the information.

[medicgrrl]

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@aman31 wrote:

Ok, let me see if I understand this. After the SOL (5 years), then can continue to report on my credit report for 2 additional years for a total 7 years, but between years, 5 years and 7 years, they really have not right to collect?

I'm probably going to have to pay since I am wanting to get a mortgage, but I am also trying to understand my options. Thanks for the information.

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SOL is what gives them the opportunity to collect in a court of law by being awarded a judgement against you.  Once the SOL is over they aren't supposed to bring legal action against you but if they do then you use SOL as your defense in court and the case should be dismissed.

A creditor will always and forever have a right to attempt to collect a debt owed, they just can't use the courts to collect after the SOL has run out.

[aman31]

A creditor will always and forever have a right to attempt to collect a debt owed, they just can't use the courts to collect after the SOL has run out.

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It seems worth paying to get rid of the headache then. I wish MCM would do a PFD.

[medicgrrl]

Some CA just have to be pestered for a while before they agree.  I wouldn't give up yet.  Try and find an email address for the higher ups.  This worked great for me.  I found that killing them with kindness and begging worked quite well LOL  Worst case, as the other poster stated, if they decide to sue then you PIF real quick and then they would no longer have a reason to sue. 

[Anonymous]

Yes, they still have a right to collect after 5 years....just after that point they can't sue you.  Basically when SOL expires, they are stripped of all their power and are now at your mercy to pay, which means they are more likely to negotiate a PFD.

And yes, any debt you owe you should pay.  It's the right moral thing to do, and it will be helpful when doing your mortgage because most lenders require they be paid anyhow.

However, I want to get the most bang for my buck; therefore, I would always suggest negotiating a PFD.  And think of it this way, getting that mortgage will be alot easier with NO collection on your record to explain and your score might even be high enough to get a better interest rate or take advantage of loan programs that otherwise you couldn't get.

[aman31]

I called HSBC (the OC) the other day and the automated service would allow me to make a payment. Could I pay HSBC, and bypass the collection agency this way. At this point, HSBC is reporting a zero balance, but I was wondering it this would be an easy way to avoid the collection on my credit report. Thanks for the great info so far.