topic Re: Paid vs Unpaid Collections in Rebuilding Your Credit

Paid vs Unpaid Collections

Anonymous — Tue, 07 Oct 2008 02:57:18 GMT

My spouse has several collection entries on their report and they asked my opinion. I told them that a collection is a collection is a collection......it shows (to me anyway) that you failed to pay as agreed, so an unpaid collection is no better than a paid collection. My spouse wants to pay them off (Example: Bal is $400 in 2 payments of $200). I told them pay it but not in large sums like that. Any opinions...

Re: Paid vs Unpaid Collections

FreedomTrain — Tue, 07 Oct 2008 03:29:21 GMT

Yes you are suppose to pay your bills. But I would DV the CA. If they produce what you have requested then I would send a PFD. We all make mistakes in life I never heard anyone taking a Credit course in High School. This is my opinion

Re: Paid vs Unpaid Collections

llecs — Tue, 07 Oct 2008 03:33:26 GMT

A paid collection is scored the same as an unpaid collection. In other words, paying a CA without deleting it will not help your score at all.

If you want them off, the DV then PFD. Never ever offer a payment plan to a CA or accept one. CAs are notorious for going against their word.

Check out Credit Scoring 101 and a couple other stickied posts at the top of the forum.

Re: Paid vs Unpaid Collections

llecs — Tue, 07 Oct 2008 03:34:28 GMT

@FreedomTrain wrote:
Yes you are suppose to pay your bills. But I would DV the CA. If they produce what you have requested then I would send a PFD. We all make mistakes in life I never heard anyone taking a Credit course in High School. This is my opinion

As usual, I am the S - L - O - W - E - R typer.

Re: Paid vs Unpaid Collections

RobertEG — Tue, 07 Oct 2008 04:11:06 GMT

Lil, it is true that a CA counts the same in FICO scoring regardless of whether it is paid or unpaid. But FICO score itself is not all that propspective creditors look at. In a manual review of your CR, they will see the CA as unpaid, which does not look good.

If the decision is made NOT to pay the collection, I recommend that you carefully review your state SOL laws. IN many states, any later account activity on your part, such as making a charge, making a payment, or in some cases even offering to make payments, can reset the SOL. The SOL date is totally different from CR dropoff date, which is set by the last DOFD. Legal action is always a concern, apart from FICO scoring.

Bottom line, paying it will cost you money, but it wont affect how long it remains for FICO scoring, and will stave off a suit that could result in a judgment if it is still under SOL. A personal decision that onnly you can make, aware of the possible impacts.

Re: Paid vs Unpaid Collections

holhat — Tue, 07 Oct 2008 04:27:53 GMT

I don't understand why the CA or CRA doesn't take it off if you pay it. Seems fair and would be an incentive to pay off others on the report.

Can it even be deleted or is it law to keep it there for 7 years? In other words, is it the CA's decision to either take it off or not??

Re: Paid vs Unpaid Collections

RobertEG — Tue, 07 Oct 2008 05:34:59 GMT

Their argument, which is legally sound, is that they are requried under the FCRA to accurately report to the CRAs. Later payment of an account does not negate the earlier reported delinquency, CO, or CA. So they dont usually even consider this as a "decision" to make.

Some will agree, in their greed to collect a debt or keep your further business, to accept a PFD of GW offer. But it is totally optional, and their refusal to do so is totally legal.

Once you pay a CA, you no longer have any leverage, and they certainly wont GW away a prior CA post, for they are not seeking your good will.

Politically, the FCRA was enacted against heavy lobbying by the credit industry, and any provision that payment of a prior debt would erase it from a CR was not something that the credit industry wanted, or that politicians were willing to fight for at the expense of losing the chnace of enacting the FCRA as law. So we must live with some of its "unfairness" to consumers. Its the name of the political game.

Yes, it is the law. Mandatory drop off dates from your CR run, under the FCRA, from the date of the first delinquency in the last chain of delinquencies, and are unaffected by any later DOLA on your part.

Message Edited by RobertEG on 10-06-2008 10:34 PM

Re: Paid vs Unpaid Collections

Anonymous — Tue, 07 Oct 2008 10:37:32 GMT

The last point was very good regarding score. I've been preparing for a car loan and have been told the score will dictate the intereate rate, but what's on the report will determine yes or no.

With each posting I "get" more of this process, but its all the little nuances that are very critical to success. DOFD caught my attention in regard to reporting period. Would a person argue that an old account on their CR should come off from the DOFD or the chargeoff date that appears to be used? Are there guidelines or rules regarding that?

Thanks everyone!!!

Re: Paid vs Unpaid Collections

holhat — Mon, 13 Oct 2008 18:27:03 GMT

Robert-

Maybe I missed this if you already answered it but can a CA or CRA delete a paid account if they just wanted to be nice? Say if I were write a letter asking them if they would be kind enough to delete a paid account, can they or is it out of thier hands legally? Probably not a CA usual practice to do any favors but if they felt like being sweet that day, do they have the power to get rid of it?

Might be worth the letter if they can. Thanks!

Re: Paid vs Unpaid Collections

Anonymous — Mon, 13 Oct 2008 18:35:09 GMT

The CRAs cannot delete information based on goodwill - the CRAs only distribute information provided to them by third parties.

You can only force a CRA to delete information under penalty of lawsuit for incorrect reproting of inaccurate information.

You can definitely send GW letters to the reporting entities to correct or remove their entries - that's perfectly legit. Third party information providers (Original creditors and Collection Agencies) have full power, the ability, the right to edit or delete the information they are responsible for.

Re: Paid vs Unpaid Collections

holhat — Mon, 13 Oct 2008 19:14:49 GMT

Thanks! That answered my question. I have faith that there are still some nice, GW people left in this world.

Re: Paid vs Unpaid Collections

Anonymous — Tue, 14 Oct 2008 03:43:54 GMT

@holhat wrote:
Robert-

Maybe I missed this if you already answered it but can a CA or CRA delete a paid account if they just wanted to be nice? Say if I were write a letter asking them if they would be kind enough to delete a paid account, can they or is it out of thier hands legally? Probably not a CA usual practice to do any favors but if they felt like being sweet that day, do they have the power to get rid of it?
Might be worth the letter if they can. Thanks!

We never had the CRAs delete anything unless it was a duplicate. We did have a few CAs delete some paid collections, and a few CAs who just deleted upon receiving DV. As faw as GWs, we've had NO LUCK.

Re: Paid vs Unpaid Collections

RobertEG — Tue, 14 Oct 2008 05:06:44 GMT

In this litigous world, if I were a creditor, I would not grant a GW request unless it was extremely compelling.

Creditors are legally bound by the FCRA to accurately report, and that does not include the legal words, "deletion of prior, legitimate reporting may be excused, by creditor discretion".

If they enter a discretionary, rather than factual, change in your CR, that opens them to later charges of discrimination. It could be based on age, sex, race, etc.

They are takiing a chance when they do this.

Sure, if a creditor reports a deletion from your CR, the CRAs dont demand justification. They just do it.

But that raises the nasty head of what are their PFD criteria, and a later denial will certainly raise the possibility of a discrimination lawsuit.

I dont not fault them, as a business, from simply sending out a letter stating that their policy is full compliance with FCRA, and dismissal of the GW plea if their prior reproting was legitimate.

Just my opinion.